have scarce content players and many distributors and that's good for content, so the media companies welcome the new entrants on the distribution side. >> we'll leave it there. thank you for joining us. we appreciate it. everybody, a fun day here today. >> it was. that's it for us, everybody. we'll see you tomorrow, bye-bye. good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber is back at the new york stock exchange. great to have you back, david. what a morning we have in store for you today, king digital goes public right here on the floor and facebook another multibillion deal, futures are higher this morning. ten year above 274 and europe is also having a nice morning as the ecb suggests it is prepared to fight deflation if necessary. the roadmap begins with what else but candy crush. king digital entertainment maker of the hit game going public right here at the nyse and king

is valued at almost $8 billion but the question everyone is asking is it worth it. we'll talk to the ceo after the opening trade. and facebook is jumping into a new arena, virtual reality, they are buying oculusvr in a deal worth about $2 billion. so what can virtual do for social? we'll try to find out. blackrock ceo larry fink sounding the alarm about the recent popularity of dividends and buybacks. in a letter this morning we'll tell you exactly what he had to say. first up, though, king digital entertainment set to debut on the new york stock exchange, the maker of candy crush saga saw its ipo at $22.50 a share, gives it a valuation of about $7 billion and ticker will be k-i-n-g and we'll speak to the ceo right after the company's first trade this morning over at post eight. jim, you have said you like the way the deal's structured so far. >> it is not an expensive stock.

those who compare it to zynga, zynga was trading at 58 times earnings. this is sa very well multiple stock versus that. now, where they are similar is and i'm using renaissance capital, i think they do the best ipo research point out in terms of bare insights, monthly unique payers only 4% of user base but fell 7% in the fourth quarter of 2013. >> on candy or all games? >> for their -- for their games. for the games. but candy car saga was 78% of fourth "q" bookings. let's say you were buying a band, okay? let's say you were barry gordy or you're ed sullivan -- >> clive davis. >> wow. can i be clive davis? the coolest man in the room. i want to know are there more hits. when you sit with zelnick who understands the hit business at take-two and you recognize how well he's done and the valuation is one times sales i question whether this company has that second hit.

>> although activision and electronic arts i believe trade at revenue multiples that may be a bit higher than this may go out at, we'll see where it actually opens today, where it's been priced. you know, what's the difference, then, when you look at a company like this which at least is trying to develop new games, of course, new hits. and more established names such as electronic arts which to be fair relies on hits as well and new franchises or refreshing the old franchises. >> we knew that zynga had to keep buying, they were overpaying once they got the money. you are making a bet on the gentleman we're going to interview. you're making a bet that they have dna which allows them to be able to come up with game after game after game. i just know that people at home are saying $7 billion? no. $7 billion this is the beginning of the end of the ipo market again. that is the subtext. the one thing i would point out is that, geez, you know, the company is not being priced at a wild high multiple. it's just not. but at the same time i know how people viewing this are saying,

i knew it was going to happen -- i knew it had to end and it ended with king vision. >> yeah, that an easy -- >> right? >> it's an easy conclusion to make. the company's ten years old and although three-quarters of the revenue comes from candy crush saga, they have 180 games and three of them if you put candy together with pet rescue and farm heroes, that's 95% of revenue. so, we'll ask them a lot about farm heroes is that as you said the next step in the diversification of revenue. >> we're worried about it generates a majority of its revenue from a small percentage of its user base, how do you get more users to pay. and basically, we'll be able to do that the stock had a very big move. i don't want to draw any conclusions that are larger exteistential about how this de marks the end because it would if it were trading at where zynga came. it's just not.

i feel that people are going to say $7 billion, oculus, facebook, whatsapp, the decline in these high growth stocks that goes on every day. >> i'd love to stop and talk about it briefly and i've only been back this morning and made my phone calls as i tried to and that's the theme that came up from a number of the people i've been talking about, growth stocks have been crushed since you went to italy, values are hanging in there. you don't know the pain. >> thank you for saying that. >> i'm telling you what i'm hearing this morning especially on the short side we're getting our faces ripped off, too, what's been going on here. and by the way, if growth is suddenly being penalized or the multiples are starti ining to c down, it can't be a good thing for new ipos. >> they are selling workday and veeva. >> selling netflix. >> priceline. >> selling tesla and they're circling into these deals where

q-2, paylocity. amber road. you may have an amber road on the plane home. but amber -- these are all, like, data, you know, look, i don't want to generalize too much, but software as a service. so you sell the ones -- >> on a day where google is cutting prices on that. >> you sell the ones that are not giving you any performance and you get into the companies that are giving you a pop and it's worth it if you are a momentum guy. ibm was up six points yesterday. what does that say? >> i don't know. >> it says we've got a huge cloud business. we've got a huge software as a service business. >> and we're not a growth company. >> but people just like they like hewlett-packard look at microsoft. >> you talked about all these last night. you talked about cat. >> caterpillar. >> schlumberger, celgene. >> this is incredible. celgene has lost 32 straight points it's now gotten to where it's 12 times 2013 earnings but it was perceived as junk, right? because what people wanted to be in is bristol-myers and now it's come down, too, one of the

things going on you got a lot of biotechs that are development stage biotechs. people are selling the celgene for the biotechs that don't have actual pipe. they're circling back here. >> i don't know if we have the iwn, the ishares russell value versus growth over the last week, but if this keeps up and you start to see multiple compression on some of the growth names isn't that going to put a lid on the ipo market to a certain extent? >> actually i would -- >> there's the ishare value, one year. not what i was looking for but -- >> let me go -- let me look at it another way. you need the ipo window to close before the other stocks can go back up. >> right. >> this is just a shuffling of shareholder base. they are leaving the momentum names and not going to ibm. they don't do that. what they're doing is going to ipos. you need the ipo window to close which is why let's go all the way back to king digital. there are a number of people at hedge funds i talked to saying i hope king digital fails.

i hope the ipo window closes. i hope drop box and box don't get to go because we need to have the concurs and the workdays snap back. >> right. >> look at splunk. i know you look at splunk all the time. >> all the time. >> it's the key to the market. >> that's his nickname around here, hey, splunk. >> look at yelp, holy cow. priceline. >> look at facebook, you know, i mean it's -- >> dr. ocularis here. >> its performance has been good but lately it's a clunker and not a splunker. >> they are horrendous. but you've been away, it's been going on day offer day after day. you don't want to say holy cow, look at that. maybe it's running its course. >> yep. >> but the plug powers of the world that's what people are. they are in plug power. they're in the most frothy and they're also in the least frothy, hewlett-packard, ibm, microsoft. >> hewlett almost hitting a new high recently. not that far from its all-time

high. >> ibm may not have revenue growth this year but it has great cash flow. warren buffett stuck by it. cash flows are king not king digital thesis is running through my head. >> i mentioned facebook let's move on to that, facebook strikes another deal the social network acquiring oculusvr, $2 billion in cash and stock is the consideration. last night on a conference call discussing the deal, facebook ceo mark zuckerberg spoke about how oculus positions his company for the future. >> mobile is the platform of today and now we're starting to also get ready for the platforms of tomorrow. to me by far the most exciting future platform is around vision or modifying what you see to create augmentative and immersive experiences, it's a long-term debt on the future of computer. i believe oculus can be one of the platforms of the future. >> wow. just buying whatever appeals to them. in any way regardless of what

the future -- >> that's the knock. spending like a sailor, my shiny objections. >> immersive gaming is the first big opportunity. now, i mean, this is -- i'm quoting from the man. okay. >> going to make me sick to my stomach. >> the opposite. so, you don't. it's dramamine, it's kind of go pro meets dramamine. >> still. >> somebody said it's a gamestop you strap on your face, i think that's what josh brown said. >> it's one of the ugliest thing i've ever seen. and you'd be arrested the moment you walked out with it. if you look at youtube 2006, right? google bought youtube. $1.6 billion who the heck knew what it was about. it's probably worth 15 times that now? >> this is google, facebook is late to mobile and we're trusting them to get this right? >> google did buy motorola which hasn't worked out as well. >> like joey brown, nobody's perfect, partner. >> no. >> bear with me, okay?

now, you are microsoft. all we ever wanted microsoft to do was to go further with the xbox, it has the most momentum of any product. do you know it's only now that xbox has been saying brought to you by microsoft? all of their money has been spent on windows. windows -- everyone hates windows. your kids hate windows your kids will hate windows. i'm making a promise that your kids will hate windows. but microsoft, dr. ocularis which is a reference to a "wild wild west show" when i was younger. >> yep. >> if they did it two years ago they'll own gaming for good. they owned connect dos but it turned out apple bought connect but this is what you want versus what larry fink says is which, you know, he doesn't want companies staying in there and buying back. this company is thinking. >> i'll make the point i've made a number of times companies like facebook and google have dual class share structures that means no activists and we'll get to larry fink in a minute will ever get to be involved and they

can do whatever they want and they can think about the long term and completely dismiss those who might say, what are you doing? worrying about what might be short-term -- >> but they are profitable. >> they are. >> facebook's profitable. >> the dual class structures do enable them to make these kind of decisions without worrying about a chorus of naysayers. >> let's fill people in. too many companies have cut capital expenditure and increased debt to boost dividends and increase share buybacks when done for the wrong reasons at the expense of capital investment and can gem diz a company's ability to generate sustainable long-term returns. he's saying think for the long material. your point is that's exactly what mark is doing. >> yes. this note is basically saying this whole idea of cutting back on cap-x in order to broost yoo stock price is short-term thinking. i think what zuckerberg is saying five years from now this could be the way. i'll place a number of bets. i'm not going to be like steve

balmer who did two 26. i am going to be better than ballmer. and i think that what larry fink is saying that's how you have to think. you have to think like zuckerberg. >> i'm going to focus on investing in continued growth instead of generating free cash and returning it in the form of dividends. they are controlled companies. rupert murdoch controls fox. red stone controls cbs and viacom. very interesting. >> look viacom has been an amazing stock. time warner has been amazing. >> right. now, time warner not controlled. >> yeah, true. >> there is that point to be made that there are companies that are not subject to any pressure from activism that have chosen to return capital to shareholders in that way and their stocks have done extraordinarily well for fairly long periods now. when we come back the home of candy crush goes public.

we'll talk about the ceo of king digital at post eight behind us and stick around to see how the stock opens for trading. find out what manny chirirco told jim. a lot more "squawk on the street" is back in a minute.

♪ pvh reporting a quarterly profit of $1.43 a share above estimates but the apparel retailer says it's being cautious in its current quarter outlook. here's what pvh ceo and chairman manny chrico told jim on "mad money." >> we continue to be optimistic that once the weather breaks we'll see pent-up demand and an uptick in business but right now as we're working our way through it, it continues to be uneven. the trends we saw in december and january have continued into february and march. >> fair enough. >> it's forcing us to be more conservative in our guidance particularly in the first quarter. >> talking about some 4x headwinds but it's not impacting the stock this morning. >> what happened in that

interview, he said, listen, we're turning the corner. goldman is saying they have $10 in earnings power. let's say they do $8 it's a double digit grower. it can go up substantially from here. this is a company that was relly hurt by an acquisition that they made in order to get all the calvin klein brands and warneco hurt manny and his team. the jeans businesses is turning up all over the world and this stocks needs to be bought. >> i wonder if they are benefiting from five today which comps came positive even after they warned negative. some analysts are saying if that's the playbook, maybe it's time to get long exposurexposur. >> i won't disagree. the five below conference call was uniquely, listen, when it was sunny out we did well and when it wasn't, we didn't. i know we shouldn't blame the weather but, boy, they did -- >> they all want to blame the weather but there are those who say they are desperately clinging to the one excuse they

still have instead of recognizing that retail has changed in a fundamental way and it ain't never coming back. >> i disagree with you. >> i didn't say it was my opinion. i said it was an opinion. >> you want to see my receipts at my mexican restaurant when it's cold out? i might as well just shut down. i'm telling you that right now, between that and the high price of guacamole. >> it's avocado related. >> when the weather's nice, cha king. >> five will open up 17%. >> i think five is back. we've got the big things around us. give me some alka zelts seltzer. >> do you recognize these guys? >> pet rescue. >> farm heroes. have you played pop-up pear or bubble witch? >> i played scrabble. >> scrabble. okay. obviously this is what the tone is going to be down here at the

floor today. that's called marketing. >> look, i think that this is a branding event. and there will be people playing this game not unlike omg pop! >> without a doubt. ipos are a very big branding event. that's one of the selling points that the nyse uses to say, hey, come over here. >> wouldn't it be great if the ceo popped out of one of those and came to the set? >> that would be remarkable. not expensive stock. it's not expensive. the market cap is big but you got to price it somewhere, david. >> you got to price it somewhere and we'll see if they priced it well. you're critcriticized either wa. >> that's what the box ceo said. and the box ceo, he must know, he graduated out of middle school a couple days ago. >> did he? >> he's been around. >> i talked a number of makeup artists -- >> he wasn't alive during -- >> he wasn't alive during the dot-com public.

>> i need a ceo right now who is embryonic. >> the oculus founder's 21. >> yeah, now you're talking. >> you're talking youth. we'll get jim's m"mad dash." ♪ because i've been acting like ♪ like ♪ [ bagpipes play ]

make it happen with fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today. ♪ tastes like candy candy can candy ♪ ♪ ♪ tastes like candy candy candy ♪ all right. we're a few minutes away from the opening bell. jim, you were threatening to give a beat-down to a couple of these plush toys over there.

>> they're annoying the heck out of me and i got to tell you something, i think i could take them. even at 59. i could give them a beat-down. you, you, oh, yeah, yeah, you look -- oh, yeah, you're fine. >> carl and i are right behind you if there's any trouble. don't you worry. >> go right into that crowd. >> it's a richard sherman that thing. >> it's a kid's nice game. let's talk about sirius satellite. >> while you were away you said a lot of stocks have given up the ghost and this one has been horrendous ever since they walked away. >> ever since liberty said we're no longer to acquire it, right. in fact, we'll sell down a bit -- sell into a buyback that's turned back on that's big and significant. >> yes. i agree with the barclays call. i think enough is enough. the cash flow's great. it's a story based on new cars. it's a well-run company. i wanted the liberty deal because i wanted the liberty stock. it's overdone to the downside. i like it. >> right. and liberty did, again, move into tracking stocks but paving

the way for what could be a reverse morris trust which was the original thought perhaps down the road yet again for sirius. but the business -- >> it's good. >> you think it's okay? >> that's the point. at this point you want to own the business and those who are throwing it away don't seem to understand that it is a cash flow story. and it's bountiful. the barclays call is right. >> you could give that guy a very big black eye because he's got some very big eyes. >> i don't like the way he's hooking at me. who does he think he is? >> i don't know. look at that eye. that's a big target. they're coming to wall street, you see them right here at the nyse and king digital making its stock market debut. making the first trade and we'll have the ceo as well. the opening bell is coming up. [ male announcer ] what if a small company

became big business overnight? ♪ like, really big... then expanded? ♪ or their new product tanked? ♪ or not? what if they embrace new technology instead? ♪ imagine a company's future with the future of trading. company profile. a research tool on thinkorswim. from td ameritrade. that is the candy crush theme. you're watching cnbc "squawk on the street" live from the financial capital of the world. the opening bell in about 90 seconds and, of course, a big day down here. where the s&p begins the morning

within 1% of the all-time intraday high. but, of course, all the pictures today, jim, and david, are going to be about king digital. the ipo at post eight and whether or not investors, traders feel this has the color, the tone, of some market event, some touchstone in the market. >> well, if you had to do a hollywood script of what a top felt like, it would be this -- these lunatic little things in front of me. honestly. i mean, this is not -- if they were haynes and fruit of the loom, i'm a buyer. obviously, there's a top feel. but, geez, this is like central casting. >> we remember back to '97, theglobe.com. that feels like a top. >> you're right. >> three years. and here you are still talking about profitable companies. >> i agree. >> with what might be argued are reasonable multiples if they can actually achieve the growth that some would hope. >> if they have a second hit, we

would say why were they making fun of the little animals, it turns out there were 42 other little animals. and it's disney and we're looking at mickey mouse and along comes pluto and all the other characters. >> so the guy that runs king has to be walt himself. >> walt himself. i mean, i don't know, look at it, carl -- >> i know, i know. there is the opening bell. the s&p at the top of your screen, pretty good breadth at the get-go, at this big board king digital entertainment known for candy crush saga celebrating its ipo and we'll talk to the ceo in a few minutes. over at the nasdaq drug developer vine therapeutics doing the honors over there as well. we'll keep our eye on that. again, pricing at the middle of the range $22.50 but other than that, i will be on facebook today, buying ining ining ocul. >> and whatsapp did cause the stock to go down over the course of the day. initially it was well received and then it declined.

this is a stock that fits the depiction of lompoc, i like it because i don't want them to be microsoft. they don't want to be microsoft. in the meantime it's very clear that this market likes hewlett-packard. it loikes ibm, it likes value. it's a value-driven market. >> right. we should point out in this market so to speak which is, what, three months old this year, more or less, facebook's up almost 18% still even with the recent drop. >> right. >> hewlett-packard up about 17%. both doing extraordinarily well thus far this year in terms of their stocks. >> that's why i was mentioning splunk because it's still up a lot for the year. you got the people that want to ring the register, splunk, and then get into the next hot deal because that's their mantra and i'm sure that the brokers are more than willing to accommodate. they sell them half of the stock on the ipo and they go in the aftermarket and buy the other half and that's why you get the pop and everyone gets very excited. you want to see the excitement

quotient decline, that's what has to happen. i want everyone to make money, and i can barely read my feet. why are you trying to -- >> i watched it. >> how can you take the food out of our mouths and all i can think of in 2000 people said how could you not tell people? so, you know, kind of tell people this is what it felt like but it could be 1999, it could be 1998. but i know that the heat is so -- the hatred for even saying, listen, maybe plug power shouldn't go up this much on a press release that maybe they have a contract. makes me into something that is regarded as being a curmudgeon. curmudgeon. >> i never think of you as a curmudgeon just show you know. >> cranky old man is one thing but not a curmudgeon. let's talk about the degree to which some of the momentum names are stabilizing. tesla's down at the open but netflix is up. what did you make of yesterday and was it enough? >> i've been watching the biotech index, that's where the

action is. yesterday you saw a very nice reversal in celgene with big action, big charitable trust name for me. you need to watch the ibb. this is one that's either get a bounce or it's the beginning of something big, but gilead has stabilized. celgene has stabilized. these are the stocks if they can maintain this stability, will signal that the froth part of the market is going down and the higher quality biotech stocks are going higher which is what the ibb is made up of. >> right. on the whole growth notion or multiple contraction that we've been talking about, priceline i would note is also up. it's up 100 points. >> it's such a good company and sells 19 times earnings and it's just been annihilated and i think it's a mistake. it's good to see it come back. trip adviser is much more expensive but also very good. keep an eye on yelp, yelp is social, mobile, cloud and those became curse words while you were away, david.

while you were in italy if you mentioned -- if we mentioned social, mobile, and cloud it was, like -- >> meanwhile, do you know how many times i used yelp, i used trip adviser, i used google maps, of course, all of those very things. >> i like them. >> on an international trip having your iphone with you is a remarkable -- it's so different than when i was 21 and, you know, backpacking through with absolutely no idea what was going on. which was better but -- >> that's why i say buy these stocks, don't sell them. buy them here. >> i would also point out on priceline it is one of those names that we were -- that we were in awe of back in the day. >> jaywalker. >> back in the day. and here it is at $64 billion in market value and that's after actually a recent retreat. >> when i check in people at my inn, they got their tickets via priceline if they're from europe. it's hotels.com, priceline. and they think that, well, why aren't you using priceline? i don't know, we just switched to concur. i don't know if you know that,

we just switched to concur, cnqr which is another travel site. i want to warn people that the real growth is in social, mobile, and cloud and everyone's throwing those stocks away to be in some companies that aren't as heavyweight. when that rotation's done, the money will flow back in. but i totally agree. >> switch to concur. we used them for our expenses and the user interface makes me want to -- >> yeah. i've had two tutorials and i still don't know how to use it. >> it's a nightmare. the user interface. >> i had the ceo on, i kind of like it. i like the interface. i like to -- >> maybe it's a different interface. he has somebody that does his. >> no, that's the -- >> carl and i are trying to -- >> talk about rotations, i know you were watching plug which had a wild week already based on what the ceo said about a potential upcoming account. it's off 12% today. >> well, you know, plug -- this is one of those you got to go in the witness protection program if you say anything bad about

them. i want people to go up. but cowan points out, lathan fuel cell maker plug power signed an order with a global auto maker the company confirmed thursday. details of the deal will be announced in two or three weeks according to a plug power spokesman. what people are more used to is a proper disclosure that this is the kind of disclosure that irritates, you know, the blue chip kind of cfos. you don't put that out, say, hey, we got a big contract coming. you wait until you have the contract and then you announce it. but, you know, this is a different kind of market. >> but that's a good point. you don't do that. that's unusual. >> but, you know, maybe they think that we're old fashioned. we're addicted to this proper disclosure thing and we're just fools. as long as the s.e.c. doesn't call them, what do we know? like, maybe we're just, like, smith corona typewriters. the things staring at me. wave away. i have no idea who you are, but ignorance is not bliss. i know i should know you better.

>> very upset about it. >> don't cry. >> you say you do your home work, reading charts and reports. >> i stand corrected. this is probably the greatest thing ever. >> s&p at 1872 and the dow's up 71. let's check in with mary thompson on the floor, mary? >> hey, there, carl, we're inside post eight here at the new york stock exchange and joining me now is scott cudler who is head of global lisings here at the new york stock exchange. we're talking about king digital media, priced in the middle of the range at 22.50 $and selling 22.2 million shares. walk our viewers through what is happening behind us right now. >> this is one of the hallmarks of an nyse ipo this price discovery process, posted the pricing and allocation last night. what you see behind us actually is all the public interest that has the opportunity to buy this stock for the first time, coming into a centralized -- centralized place and that price discovery process between the

allocations last night and now the public order flow is all converging in one place and they're really trying to determine the price and the time at which this stock should open. >> how long do you it might take for an ipo like king which is very popular, getting a lot of buzz, how long do you think it might take to price? >> it's a process that is in control of the underwriters. the underwriter when they sort of feel that all of the interest in a public and from their own accounts is represented in the book, they will then say we're ready to go. and that process can take time based on, you know, how much volume and at what price levels the indicationing of interest come in at. >> talk a little bit about the ipo market because a number of people have looked at this listing and said this is a top. so, are you getting a sense that people are rushing to bring their companies public now because they sense a top as well or is it still more moderate? >> we had $55 billion in ipos at the nyse last year, more than the next four exchanges combined. we're already off to a hot start this year. this is the seventh technology ipo that has come to the market.

>> and one of the largest. >> out of the ten that have come and it's one of the largest deals, but we have four more this week and we've got a number over the next couple weeks, so this is actually the beginning of a new wave of tech issuance that we expect over the coming weeks. by no means do we think it's the end. >> a lot of people also pointed out while they say this company is a one-trick pony, doesn't have any decent sales, valued at four times sales and on net income about 12 1/2 times on that. we'll be back in just a little bit with scott outside the booth as we get closer to that final pricing for king digital. back to you. >> thank you so much. we're going to be talking a lot about it over the next hour or so. if you're not as familiar with the company as those who play the games, by the way, 324 million monthly unique users. >> huge. >> 180 games in 14 languages. they have studios all around the world. they got offices in malta and san francisco where they develop some of these games.

ricardo zacconi is the ceo and founder who will join us later on. company is ten years old. it has somewhat of a track record, jim. >> e/a liked that stock over many years. i liked take-two very much, these are big hit merchants, grand theft auto. they are real franchises. for a younger viewer, it's no different. game after game. i think we're more struck about the idea that it's such a big deal, but yes, again, this is not zynga and it should not be compared to zynga, it's a real company if it does have a bunch of new games that continue to be exciting will represent a tremendous value over other entertainment companies. so, there's the way i want to look at it. they need another hit, though. >> company selling about 22 million shares or i should say the ipo is being sold 22 million shares. 15.5 million from the company, that will be used as primary capital. but you have selling

shareholders here, too. apax partners what a score, 10,000 percent return. they're not in this. they're largely focused, almost solely focused on private equity as opposed to any venture investments but this one may give them second thoughts on whether they should return perhaps to that as a focus. it's extraordinarily successful. some of the selling shareholders. >> if it's so cheap, why didn't another company buy them? why didn't entertainment company buy them? >> that's the question that's also been posed of oculus. if the future is really in vr, why settle for $2 billion? i know that sounds kind of crazy, why settle for $2 billion, why settle now, and why to facebook? >> you know, geez, you never get hurt taking a profit. there's a lot of guys say, listen, do you know what, here, sold to you. but i look at king digital and i think, wow, i mean, if it's as lucrative as it is, then i would if i were bob iger i would have called some banker and said, do

you know what, maybe this king digital is the answer to my digital strategy, but instead he bought a company yesterday that does short videos for youtube. >> maker. yep. >> and he's a smart guy. i've not bet against iger very often. >> no. and his acquisitions have been particularly strong. >> just pointing it out. >> by the way, interesting to note pixar was a $7 billion deal around the valuation of king. >> you got an unbelievable man with that. >> jon lester. >> but, look, i think if we're not skeptical, what will happen is people will say, do you know what, they just cheer leaded this. i think there's good and bad. there's a bear case and a bull case but it's certainly not zynga and i think those who -- i keep reading, jim, tell me why it's not zynga. it sold at 58 times earnings and all the growth games had peaked and they didn't have anything going. here you have daily average users that have come down, but the install base is big and it's very lucrative. >> we're going to, of course, bring you that open of king. but for now let's move from

equities to bonds and head to the bond pits and rick santelli is at the cme group in chicago. rick? >> thanks, david. well, if you look back to last wednesday's statement what you would notice is, no matter what maturity you look at, it's been pretty tight closes and the ten-year, for example, every day has had a closing yield between 277 and 273. not a wild one, and here we sit again. look at the one-day chart, what that will glean you is that durable goods especially the proxy for cap-x a bit lagging. mostly aircraft was the strength of it. there you are right above the market the 276 area. good resistance just like good support, a whisker above 270. open the chart up to a couple of months. boy, there's a lot of activity in this zone. we could stay here for a while. now, it's been all about the yield curve. but there are a few issues to pay attention to. the tens to 2s that you see here, it's mostly been

steepening. but today a little bit of flattening and the flattening trades whether you look at fives to tens, virtually the flattest since may of last year is definitely having a couple of days of steepening as is the bigger one, the bigger spread, fives to 30s. hovering at the tightest in a zone, the tightest since 2009 but, yes, a little steepening today. why should we be concerned? because that could imply a bit of a direction change. despite what everybody talks about for 2014, yields are still down. and if we look at something very important overseas, bund yields have been on the spongy side. yen yields more on theupside. and look for arbitrage, interspreads from bunds to tens and the last couple of charts these are very interesting. here's a two-day of the dollar/yen, you can see the dollar is improving and if it improves above 103 would be significant. pause everything's in

transition. but when it comes to looking at the easiest play we've talked about it, look at ten-year yields overlaid to the dollar/yen that will still keep you out of trouble! carl, back to you. >> thanks a lot, rick. let's get to mary thompson and check in on what's happening down here at the floor and at post eight, mary? >> hey there, carl, again, we're joined by scott cudler. we're looking at king and the insidecation is $20.50 to $21 a little bit below where it priced at $22.50 is that disappointing? >> no. this is the first time the public, again, has the opportunity to reflect whether they are buyers or sellers en masse and what you are seeing right now the indication is 50 cents wide so we're getting really close. >> about how soon do you think it is from here for 50 cents? >> i think we're very close. once we start to get into the cent range, we're getting very close. >> what i notice is i've been down here for a couple of these ipos usually you hear a lot of shouting and things like that. it's gotten very quiet. is that an indication it could be a couple of minutes?

>> you are starting to see an indication of what volume is as being represented in the market to buy at these various levels and so that discovery process is transparent and you can start to feel the fervor of things opening up. >> okay, again, the indication is $20.50 to $20 below $22.50. we'll be back with the open. >> thank you very much. we keep bringing back the comparisons to zynga which cramer has said is unfair. they did come public in 2011. they came public at $10 and since then the stock is down 52%. i can't remember the multiple. >> 58 times earnings. >> and here we're talking nine-ish, right? nine-ish and change. >> that's why. >> off of a big year, though, that many say cannot be replicated i believe from a profitability standpoint given how big candy krawcrush was. >> people want to know how many people are converted into paying customers because otherwise you have a lot of players but it

doesn't make any money. look at igt, okay, let's use this as a paradigm. down badly again. they have a lot of games but haven't been able to convert a lot of people in the meantime their gambling business is not that good. igt has been a straight line down and patty hark is a pretty good ceo so you have to be careful. >> i wonder if the conversion is affected by the fact that there are impulse purchases you can make in the course of the game. you are playing the game and if you want an in-game fix so to speak you buy it on the spot as opposed to deciding before you start playing the game whether you want to buy. >> i started buying when i was playing words with friends with my kids -- >> i was buying some stuff. and i said, forget the buying thing. >> meanwhile $20.50 on a 22.5$2 is ugly. you'll get an opportunity to buy less than what the institutions paid for it. >> are you thinking this could be, i'm use a curse word, you can blank me out, actually what

i'll spell it out, c-h-e-g-g. >> it's not been a good story. >> is this chegg? it chegg? >> i don't know. i don't know. >> wow. >> but it is rare to see something open immediately below syndicate bid. >> people are just smarter than they used to be. they're afraid. and maybe this an opportunity and they're afraid. it shows you the level of skepticism i kind of like. i like it. >> it's encouraging. >> yes, yes, thank you. because what you want it to do if this thing opened up at $35 then we'd say, do you know what, there's no accounting for taste. it doesn't matter. watch to see if the gileads go up on this kind of thing as people will say the ipo window is closed other than for box. all right, box, and grub hub. why didn't amazon buy grub hub? >> you think it could be a healthy dynamic if it prices under -- >> i've been waiting for the froth to end, when the froth ends you don't sit there and say, hey, listen, the froth has

to end. i think when the fcels -- down a little bit. fannie mae. you know, these are all the things that have just been, you know -- marijuana stocks, have you been following the marijuana stocks? i mean, geez, guys coming into the gym how can you not -- >> people on twitter saying you need to write a book on some of these stocks. >> people want to know am i high on. it's so funny. are you high on gw pharma? >> never heard that before. yeah. i like the response, too, thanks, very helpful. very nice. the indication as david said $20.50 to $21 hasn't budged. it's relatively early a lot of the high profile names actually don't start trading until quarter after, 20 after 10:00 eastern. >> it seems like it's going to price earlier than typical. i'm seeing indication of $5 million so they're getting decent size. >> do the things -- do you

deflate the animals? >> they're not dancing around as much as they were. >> if it goes to $20 do they kind of wicked witch, just kind of melt into the floor? >> i don't know what happens to these animals. >> what a world, what a world. >> i think they'll inhabit your nightmares is what they're going to do. >> here's a case of what is called breaking the issue, where the stock is expected to trade below its price. where it priced last night at $22.50, right now the indication remains $20.50 to $21. >> we're hearing 4 million shares will trade at the opening price, we'll typically see around the entire deal trade during the first day. people that bought the stock will sell and buy throughout the open and the first day. >> is it the institution that is that bought last night that are

selling right now? >> typically the institutions have a long-term view of the investment thesis and you want to sell to the hedge fund community that comes in and out of stocks that provides liquidity for people to come in and buy as well. as many sellers there will be buyers as well at various price levels. >> we're seeing the indication remaining at $20.50. we're about ready to open so let's wait right here and see if we can get that price. again, last night it priced at $22.50 it looks to open below the levels today. king digital entertainment is the maker of the candy crush mobile game. $20.50 is the open. >> already trading a little bit up on high volume. >> looks like $20.84. again, opening below that price last night of $22.50, the first trade $20.50 $2 below it. >> i see duncan shaking hands under post eight. >> a steven king horror story,

"misery" or "cue jjo." >> we took a hit, what will you give us next time? >> it's one of those where it feels like they're making a "stand" the famed lincoln tunnel scene in the book "the stand." this is the kind of thing that people got scared off. i go to my feed, you scared everyone off. am i that -- >> you don't realize your own power. >> i need this om n. why can't that button come right back on? if i'm that powerful, why can't everyday needs be fulfilled by me, right? if i can bring down king why can't i have better granola this morning now that i've run out of your wife's granola. >> now that it's a shade below $21 how interested are you in owning it? >> it makes me interested in companies that are in that business that are pulled down. i happen to like take-two very

much. if that comes in. i would want to buy that. king digital. i don't know, it's a broken piece of merchandise. they tend not to recover instantly. this isn't facebook either. remember, it -- look, this was one where they did too much stock. and this should have been done a couple of quarters ago but i don't know. it shows skepticism, skepticism's good, not bad. >> with that the s&p did briefly take out the highs intraday of the week but we're back to 1871 and we'll talk to the ceo of king digital about their prospects and today's opening trade when "squawk on the street" comes right back. ♪ [ male announcer ] how could switchgrass in argentina, change engineering in dubai, aluminum production in south africa, and the aerospace industry in the u.s.? at t. rowe price, we understand the connections of a complex, global economy. it's just one reason over 75% of our mutual funds

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if you're curious about the opening of king digital, they did price at $22.50 but the stock just a shade above $20 now a decline between 10% and 11%. as cramer said some good scared off skepticism in your words is good in some cases. >> maybe under $20 take a look at them. it shouldn't have broken --

>> being said, you said earlier, that you're encouraged in a sense because people are -- there is judgments being -- there are judgments being made here. >> right. >> to use a hitchcock term, it's a mcguffen. i'm not picking on it. you want to see that people can't bring company after company after company and everything go to a premium because we've seen it before. and now you need to see deals canceled because of king and we'll circle back to buying high quality growth stocks that people have hated. i like this. >> with that we'll keep our eye on and it talk to the ceo in a moment but, first, let's get to phil lebeau with news. >> we have a recall and it is a big one announced by nissan. it is recalling more than 1 million vehicles almost all of them here in the united states. to repair software that could deactivate the front passenger air bag. nissan said they identified two accidents where this may have been the case. 13 and '14 model year vehicles is what we're talking about nissan ultima the best selling

vehicle, the sentra, the path finder and the leaf and more than 1 million nissan vehicles being recalled to fix software that could -- could -- deactivate the front peak air bag. carl, back to you. >> thank you very much, phil lebeau. it's been a tough couple of weeks for automakers all over the week. my charitable trust owns gm and we sit there and say every day, wow, i mean, this is just horrendous. and i know it's cheap. it was defended again today. it is certainly cheap on cash flow but when you own a stock and it has those headlines it just feels like it never's going to end and it's so much easier to sell a stock than to take pain and that's what people are doing. >> "stop trading." you are watching dri. >> yes. there's something interesting happening because the restaurant business has got hard. but barrington capital is agreeing with this and saying if you just remove clarence otis from the company that owns red

lobber and olive goarden, the stock could go up higher. that's correct in my opinion. >> otis is the problem. >> i think he is, let's get rid of red lobster and spin it off, there's other restaurants have done quite well. let's jucxtapose it with panera and they have comp store numbers that aren't as good. although they have the panera 2.0. i'm saying that darden lost the organic, natural, was not really theirs and they lost the pizzazz and if otis leaves it would be $5 higher. >> i'm thinking back to the days he was a superstar in fast casual. >> i know i've been very reluctant to agree with these guys because his record was just bar none the best. but things change. the times change. and people don't regard, you know, minus eight comp number, you can't -- it's not tenable to

olive garden who is trying to make it the new company, minus five comp number not tenable. these things have lost their way. and i think that people feel a new ceo is the way to do it not break up the company into red lobster, badco and then not as badco. >> there's also the asymmetry between garden and red lobster. one will not necessarily turn the other one around. >> i agree with the activists that a change at the top would be very meaningful. >> we'll keep our eye on it. and we're also keeping our eye at king digital and the shares are down now 9%. we've talked about it all morning long the prospects surrounding a company where three-quarters of the revenue come from bookings on one game sandy crush saga but there are almost 200 games at the company overall. i think we'll talk to the ceo now. ricardo zacconi joins us this morning for a first on cnbc interview.

it's great to have you. good morning. >> thank you so much. good morning. >> what happened this morning? what happened at the opening trade? why is it down, do you think? >> i don't know. i think for -- as i see today is the start of a marathon and i think that the opportunity is great if you believe in mobile, i don't think there are many waifs to play mobile, so games is the number one application or sector in mobile. it takes basically time spent with games is more than 70% tablets and 40% on smartphones. we have the largest mobile network with 350 million players. we have a portfolio of games, three games in the top ten and sitting on top of every platform. it's the beginning. >> anyone who has ridden the new york city subway knows about your presence on mobile. everybody is curious about revenue diversification, right? >> yes. >> when is the next hit? is it farm heroes? is it something else? >> basically we launched in the

second half of 2012 for mobile and in the full year 2013 we had basically 2 1/2 games which were available to mobile players because we launched pet rescue in the second half of the year. as a consequence we were on an elevator where there was a huge amount of users wanting to play the games. but for these reasons it's the offering was relatively small and 70% of our revenues were for mobile. candy crush has been a terrific success. what we're now doing is building on the traffic we have built with candy crush to launch the other games. we launched farm heros in january. it got in the top ten on android in 11 days, top ten grossing on ios in less than six weeks. and it's trending terrific. we have now more than 20 million players playing the game every day. and we are now in progress of launching other games. >> riccardo when i search for reasons why maybe the deal

didn't do as well and i think we kind of have to stipulate that, i come back to maybe people are worried about the paying metric. paying users are declining. in other words, the conversion fell. and that that's the relevant metric. can you get conversion to go back up? >> you have to understand what happened. so, what we did is in q-4 we introduced so-called king gold bars. so, king gold bars basically allows you to pay for a trunk of virtual currency which you can then spend over time. so, instead of buying immediately, you store the currency and you can spend over time. now, the definition of payer is someone who spends money. so, instead of spending smaller amounts, you spend a larger amount. so, if you see what happened, the number of payers went down. but the average amounts paid increased. >> okay. >> there's a belief that to put it bluntly you may be a one-hit wonder, that this company is relying for you say for the bulk

of its revenues and profits on one game. to what extent can you tell shareholders and people that might be future shareholders why they should believe that you as a founder and ceo and management team are capable of creating the kind of franchise that you're talking about that's going to be sustainable? >> sure. we developed a model which is pretty unique in the industry, to launch -- to find, first of all, to create the games which are -- which are successful. and the model is very simple. so, people say that the games business is a hit driven business. this is 100%. it is a hit driven business. the only way to find a hit is to launch many games. this is what we do on the web, we launch many, many games. we've been doing it now more than 11 years and we've launched a portfolio of more than 180 games. what we're doing and this is why we have a unique model we find the games that are particularly successful with one level and we repropose them on mobile and on social networks and we've done

this not only one time we've done it several times. we did it first on facebook and then on facebook. bubble witch was the largest game on facebook on the pc. farm heroes we just launched it now on mobile, became the top ten grossing within 11 days on android. and within less than six weeks on ios. and we have three games in the top ten on facebook. it's not just a one-hit wonder. it's executing on our plan of taking games which are proven on the web first to facebook and then to mobile. >> how many developers do you have of your 665 or so employees and will you be adding more with the proceeds from the ipo? >> it's about 400 people are developers so most people in the company are developers. we're very product focused, we think if the game is good the marketing is easy. and we grew -- we doubled the size of the employee force last year and we are the biggest -- good games are developed by good people. we had an acceptance rate of

2.2% last year basically from applicants to job offering. it's more difficult to get into king than to get into harvard basically. >> has zynga been a cautionary tale for you? have you watched what they did right or wrong? >> well, i think that, you know, not talking about zynga but talking about us and where we are different, i think there are -- we have done a few things different from others. number one we correct mobile. we correct mobile not only reach but monetization which basically allows us to buy marketing and be in control of the steering wheel. we are not basically reliant on someone featuring us. >> on facebook, for instance? >> no, on mobile. the best thing which happened to us was when apple didn't feature us when we launched candy crush because we learned that we can promote the game, we can push the game in a profitable way and you've seen that the company's very profitable. secondly, so we correct mobile and we have a very large network of users with more than 300 million users every month. there is no other company in the mobile game space which has such

a mobile network. secondly, we have a large portfolio of games. we've been around for 11 years. we developed a large portfolio of 180 games covering all different segments of casual. we don't have just switchers. we have word games. we have bubble shooters. we have trivia. we have quiz, et cetera, et cetera. we covered all of them and we learned a lot so we learned how to develop good games and we're sourcing from this portfolio to launch the best games on social m networks and mobile. we have a low fixed cost base. we are extremely profitable. we have around 7% costs for fixed cost and cap-x. the largest trunk of our costs is marketing which is variable which we are in control. we grow organically and hand pick every person. we grew organically and we have opened up more markets to have access to a wider talent pool and my and my chief operating

officer stefan, we approve every single person which starts in the company. and fifth i think we have a great culture and over the 11 years we didn't only have easy times. it took us a year and a half to correct facebook. it was not we came in from yesterday. there is hard work behind. when you go through difficult times you learn a few things. one of the most important things in our culture is humble. you have to be humble, if you think you are the best that's the moment when things go wrong. >> you are being somewhat humbled today by the stock opening below the syndicate bid and at a multiple to earnings that is fairly low given the aspirations you are discussing. >> i agree with you. >> why don't you go to your bankers and say why didn't do it at $18? you can do that. i used to do this stuff, you can go to your bankers and say, hey, listen, clown, you want to be diplomatic. you should have done it at $18. why did you do that? i was happy to leave some money on the table. why did you price it like this?

that's a totally legitimate question you can ask when you get off the desk, hey, why did you do that, man, why didn't you leave some more money for the public? just a suggestion. >> and in terms of the longer view which, of course, you as many ceos will take, when you talk about that longer view, how much more -- what kind of revenue growth rates will you hope to achieve not just one year out of candy crush being so strong, but over time? >> sure. so, if i think -- if i step back for a second, what do we want to achieve? what we want to achieve is not to find another candy crush. that's not what we are here for. what we are here for is to build a portfolio of games. we want to build a network of players, of loyal players, who play a portfolio of games. you can see that, you know, we have now three games in the top ten grossing on all platforms. interesting thing is that the top ten grossing chart is actually extremely stable. you know, there will be always let's say many games like flappy

birds who go up in the top ten, free, but top ten grossing is a different matter. there are very few players in this chart, very stable. top ten grossing on ios, only three new entrants last year, three new entrants only and we have two of the three games which basically were launched last year, android exactly the same thing. two of the three entrants on facebook there was only one top grossing and it was a king game. >> look, this is an impressive company and you have absolutely mastered it which you have to do. and i think that people will look back and think, you know, it was an opportunity because it broke. but i wonder -- it leaves a bad taste. >> will i be able to play them with virtual reality when mark zuckerberg wants to put a thing on my face, can i play candy crush in virtual reality? >> i can answer that. if you look at, we are very focused on a category of games, casual games. they are defined as games easy to learn and very wide appeal.

think petrus. and secondly the definition that can be played over a short moment of time. the mobile user short moments of time. you don't have hours. thirdly, the core game play is more important than the graphics. think petrus and think candy crush. it doesn't matter where you play it and it explains why casual games have been so successful on mobile. 67% of all the games, of the top 100 games on ios today are casual games. now, we are the first company who cracked not only the reach, there were other companies before us, but monetization of casual. so, the answer to what you said basically is the -- the graphic display is not really key. this is why casual has been so successful on all different platforms. >> simple. >> simple quick and the game play is the key thing. >> do you think oculus makes sense for facebook in any other context other than your own? is virtual reality the future i guess is what i'm asking. >> i think it depends.

if you are on your mobile device probably you will not go around with your oculus all the time. it's a bit bulky to carry around. >> it's not mobile. >> it's not mobile. if you want to enter into different kinds of games, let's say car racing games or the console type of games it makes a lot of sense. for the home play user it makes a lot of sense. i think for carrying it around everyday user, each moments which is the bulk of the mobile usage, i think it -- >> it's the intellectual property, right? it may not look like that space thing on your head. lampshade. >> you will have to get these guys off the floor. >> they are also. >> riccardo, thank you so much for coming by. >> thank you very much, it's a great day and it's a great pleasure and honor to be here. >> in the meantime, what's on "mad money"? >> i think we have to stay on the ipos. i'm analyzing grub hub. i want to know why amazon didn't buy it and i want to know what's the real growth and if it's

froth. just because you use it doesn't mean it's not necessarily froth. we need to see froth end and maybe this is the beginning. >> we'll you tonight, jim, 6:00 p.m. eastern time on "mad." when we come back we'll look at king digital and a closer look at the facebook deal with oculus. "squawk on the street" will be right back. ♪ [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪ all on thinkorswim from td ameritrade.

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welcome back. a very big day at the nyse king digital the maker of candy crush opened for trading for the first time. opened down at the get-go and has been anywhere between 9, 10, 11% in the red. we just talked to the ceo ricardo zacconi trying to put a good gase on what was obviously a weak open. david, simon is here as well. jim put it best to him saying go back to your bankers and say, hey, you did me no good service. we'll see how the day ends. >> $600 million they lost from the initial pricing. i thought what was interesting the way he kept emphasizing the fact that they have the suite of games and it wasn't a one-hit wonder and essentially they can get people on, it's a sticky site. it's a community and they can keep throwing new games up and by that scatter gun process they'll have more candy cane. >> that was the phrase they used in their prospectus that they have a scaleable and repeatable

model in candy crush. investors aren't convinced there's a lot of skepticism going into this with 78% of revenues coming from one game, i guess the question is how will they convince investors that they'll have future growth? >> they'll do it reporting that growth quarter after quarter obviously. one day not a good day for the company in terms at least the performance of the stock, but that will go back to the underwriters who clearly did not anticipate the lack of demand in these so-called secondary market if you will after pricing the deal. we'll see. typically when you do see something break syndicate bid it's not good for a while to touch it and so nobody does. so, king may have some downside from here. but in listening to him, carl, answer many of our questions, the larger issues about the company we'll have to see, of course, over time but he does give a compelling case as to why they should be judged differently perhaps han the activisions or electronic arts. >> mobile, low fixed costs.

obviously having made friends with facebook as squirrelly as they may seem to be from time to time regarding games. >> if you try to rationalize why you might have a valuation, it's marginal cost of product is zero and it has perfect distribution. it's perfect competition with everybody else. everybody else can switch on a whim. it's a fascinating place to be in. >> it's a little bit unusual to have a hot ipo, a hyped ipo open lower going against the trend. >> maybe it wasn't as hot as the cloud. >> there's plenty of excitement with the walking candies all around us down on the floor. speaking of, let's head over to jon fortt who is on the other side of the floor with a little more details on king digital as a company, jon? >> yeah, a number of interesting things, concerns i see here. you talk about a portfolio of games. that's true in a sense, but they're really only three games that king is successfully selling. three games make up 95% of gross bookings in the most recent

period. i think it's safe to think of the other 177 as mostly being development and marketing costs. they're able to use loyalgames.com, that's in-the-browser website a farm team for games where they see people are playing for free and how the mechanics work and decide from there which games they might put forward onto mobile and put some of their monetization goodness and give people a chance to buy this or buy that and see how it will work. where right now it seems at the peak for candy crush their most successful game to date, that as you guys have mentioned has been 78% of gross bookings in the most recent period. now, the ceo also mentioned the gold bars that people are buying in essence they're paying more up front for money that they're going to be able to spend later. the hope there from king's perspective is that people spend that on more games. what's actually been happening from september quarter to december quarter, the amount of

payers actually dropped by 1 million payers but some of those people spent it on more games so they got to be able to ride the popularity of this one game candy crush and spread that among other games if they're going to justify where they are here, guys. >> okay. all right, jon, thank you very much for that. for more on whether king is candy crushed buzzfeed president and ceo and cnbc contributor jon steinberg joins us here. jon, in fairness way before the opening of the market this morning you thought it might have a tough open. >> then i got nervous it might have a good open. >> you are very relieved you were right. >> i can't take a victory lap. what's interesting is what about the other 22%? what about the other games? those games contributed $139 million in gross bookings. the company has a 30% profit rate. if they didn't have candy crush, if they didn't have the megahit, there would be more forecastability in the singles and doubles with this company. we'd probably have a $2 billion company instead of a $7 billion

to $6 billion company but it would be a lot more stable. candy crush is actually the problem. >> he actually said they don't want more games like candy crush which i thought was somewhat surprising to hear but i assume the perspective you are describing some investors might embrace that. >> in disney's days they wanted to have lots of singles and doubles that was the goal with disney and if king becomes that kind of company and seeing the ceo talk here i was quite impressed. if they could become a singles and doubles casual game mobile company that doesn't have the flying arounds based on candy crush, it could be a solid stock. it might be a good buying opportunity after get past the breaking thing. >> no barriers to entry. aren't you going to commoditize the space? >> i think there are a few barriers to entry for anything these days. you have to compete every day. netflix can be competed with new product, anyone can be competed. maybe they have a great studio and a design team. if i was a hedge or mutual fund,

i would spend time with the ceo and say to myself is this disney or pixar or is it zynga. >> what's next in terms of acquisitions? they have cash flow and they don't have debt. why are they going public now? >> i hope they don't make acquisitions. they've been cash flow positive for nine years. it's a team that has congealed organically. they've only ever raised $9 million of outside capital. if they start going crazy with acquisitions and buying some things like zynga did, that's a mistake. i want them to buckle down and organically figure out the singles and doubles. >> if they don't, are you a buyer here? you sound like you would want to buy here. >> i would wait it out and spend time with management. i'm interested as a buyer and i think the public should be interested. >> you talked about the corporate culture being humble being the key word and when we asked him about aculus, he didn't have grand vision for developing games for that platform he wants to keep it limited to simple and quick and easy games to use. >> when you are a start-up you

got to stick to your knitting until you get so big and you get so much cash and you got to do crazy things or carl icahn takes it away from you and they need to focus and barrel down on casual games, more platforms, ipads and different formats. i looked at all the different games last night and they're quite varied and different. >> the guy that originally lent him the money that moved on he makes the point they were very clear right from the begin as to what they wanted to build and how they would grow the games market and it was about being sticky and about affirming customers as they play so they get positive feedback and that is why they would stay with the game and play the game. >> look at the first page of the tombstone thing put out, there is overlap between the games but candy crush does 97 million. they have half the active daily user base across a few other games. the rest of the business might be better than candy crush? >> what about the premium model? it seems to be a winner where the game is free to download and select people spend a ton of money buying riots.

>> dan porter was on the show exclusively earlier in the week he said this is a game that nongamers play. everyone in my office was playing it and we all ended up buying the lollipops, right? which is a cheat, but you buy the lollipops because you want to keep playing. >> we've got to leave it for the moment, jon steinberg and we'll see jon in the next half hour to talk about facebook's eye on virtual reality. >> facebook will acquire virtual reality company oculus vr for $2 billion. oculus makes the okay ckcue ocus rift. it was started on kick-starter. we're asking you when zuckerberg puts them on, what does he see as the future? tweet us and we'll get your responses later on in the morning. let's send it over now to dominick chu for a quick market flash. hey, dom. >> all right, sara, all this talk about oculus, buyer beware, there's a tibe tiny medical com

called oculus science and people are confusing it. oculus innovative sciences has nothing to do with facebook and oculus, it's already trading double its normal volume and surging up about 80% buyer beware they're not the same thing, simon, back over to you. >> wow, thanks for the warning. the stock is open and you just heard from the ceo how should you be playing now king digital? more on that after the break. ♪ a little crush a little crush ♪ crush ♪ power consumption in china, n impact wool exports from new zealand, textile production in spain, insidecation. inside inside at t. rowe price, we understand the connections of a complex, global economy. it's just one reason over 75% of our mutual funds beat their 10-year lipper average. t. rowe price. invest with confidence. request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing.

♪ the music for the candy crush debut, king digital the parent company. there you see shares in their open down as much as 12% as we speak. so, how should you play the stock now that it has opened lower? we've got the deputy editor of a

gaming site and arvin is a senior analyst with stern a.g. and you have actually published on this company now that shares are down more than 10%, what do you think of the price? >> well, i think we're still sort of in the process of evaluating the future of this company. mainly because one uncertainty is the decay rate off candy crush that revenue concentration and the slowing growth are the main issues with this company. and the stock. but clearly, you know, day one stock being down 10% or 12% not a very good sign for the near term. >> clearly investors are skeptical. tina, you know the industry inside out, candy crush is the hit. is it repeatable for this company? are you optimistic about future growth and future games for king digital? >> it depends really. they are very good at identifying trends and games that work and able to put out games that people are basically

getting addicted to. so, it really depends if they're able to. i mean, for now candy crush is probably their -- definitely their biggest currently, so -- it's yet to be seen for now. >> tina, we keep going through the risks and the rewards here. it seems to me in many senses these gaming guys, this ceo in particular is almost behaving like a teen apparel retailer, that they're going to have quick fires and hopefully get a style of the moment that actually is a hit and then move on. it's going to be quite a rapid pipeline in order to succeed arguably. >> definitely. i mean, a lot of this also depends on luck especially for mobile gaming. if you look at some of the previous successes outside of king, some of the games have been sitting there for a while before they've been discovered. so, it depends on what's catching on, what people are talking about, and it does tend to spread like wildfire once it does. >> arvin, this is a profitable company. revenues of almost $2 billion last year. what do you make of the

financials here? it's very different than even twitter or facebook when they went public. >> it is. i mean, again, i think the fact that one game represents 80% of their bookings is obviously the key issue with investors and will be for a while. when we've looked at other games, similar games that are as big as this one and companies with that kind of concentration in mobile, within a year, their top game after peaking becomes -- comes down about 50% or so. so far candy crush is down about 20% in the last six months. so, clearly the next six months will tell us if candy crush is going to be down only a little bit more or significantly and can other games like farm heroes and pet rescue can they make up for that decline. and if they can, then they would have diversified the model. but if they can't, i think investors will extrapolate that and assume that this company is

going to have a hard time growing for a while. >> we asked the ceo about the prospects for farm heroes which does appear to be at least on deck to be a replacement or the next in line hit after candy crush. is that game specifically exhibiting the kinds of growth signals that we saw from candy crush early on? >> i think they're lucky in that they've created a saga brand and people can identify that and follow through with that. but it's not to the level of candy crush at least not yet in terms of how popular and well known it's become. >> arvin, what are the broader implications here for the market and all those questions we have over froth? the fact that it was priced in the middle of the range $22.50 buy the bankers and it fell at the open? what are the broader implications for that, do you think, as we look now to the really big one alibaba hitting the market in a few weeks? >> i think, you know, this is sort of a unique animal because of the concentration of revenue. i think companies with more

diversified models such as an alibaba, i think things could be different. but what we hear from investors is there are a lot of ipos coming to the market so they're being more selective these days. that's the sense i get. and the overall market, you know, is also a little bit dicey, so i think that also has an impact on companies like king going out public right now. so, those are some factors i think. >> arvin, buy, hold, sell? >> to be determined. like i said we don't have a rating or target price on the company right this second. >> all right. well, we'll be here. let us know when you've got it as we look at these shares off more than 10%. tina, good to see you. thank you. arvin also from stern a.g. on king. straight ahead king may be trading lower but the markets are trading higher for the second day in a row. we'll tell you which stocks you should be watching after the break. if you have moderate to severe rheumatoid arthritis, like me,

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welcome back, what a morning, candy crush maker king digital trading lower in its nyse debut down 11% and our mary thompson has some details at what happened at post eight this morning, mary. >> that's right, disappointing debut for king digital as you pointed out, carl, it priced last night at $22.50 in the midprice of the range of $21 to $24 a share. it opened at $20.50 and it dropped to $19.08 a decline and

right now it's trading at $20, at about $20.02. and volume 22.2 million shares were offered. 24.6 million have been traded so far today. again, a disappointment because usually, of course, everyone likes to see the ipo trade higher. if this decline sticks, it would be one of 13 ipos to close below the ipo price so far this year. disappointment for the lead underwriters those being jpmorgan, bank of america as well as credit suisse right now. again, you guys throughout the morning have been raising a number of questions about this company, the fact that it's so dependent on one game that being candy crush and investors obviously taking notice of that. back to you. >> yeah, especially disappointing in what is an up market. mary thompson we'll continue to check back with you on the price action. meanwhile, president obama has been making some comments on ukraine. he's on a trip to europe right now, our chief washington

correspondent john harwood is live in d.c. with the details. what did the president say? >> sara, the president just completed a news conference at the european union in brussels, and ukraine, again, dominated the session, one of the issues hanging over the response of the west to russia's takeover of crimea has been europe's dependence on russian sources of energy and the president said this crisis only underscores the need for russia -- need for the eu, rather, to reach out to other sources. here's the president -- >> energy is obviously a central focus of our efforts and we have to consider very strongly. this entire event i think has pointed to the need for europe to look at how it can further diversify its energy sources. >> now, the administration has said and the president said in his news conference yesterday that if russia goes further into the ukraine, broader sanctions

on sectors of the russian economy including energy are possible. big question's going to be whether they can get european allies to go along with that, guys. >> yep. with all the natural gas coming from russia, it's a tough call, john for the moment, john harwood in d.c. for all the excitement here on the floor of the exchange this morning let's just have a look at where we are on the markets. all three major indices are in the green and the s&p is within 1% of its all-time intraday high set on march 21 and we are six, seven points away from the closing high of 1878 set on march the 7th. let's bring in andrew berkeley managing director and head of institutional portfolio strategy with oppenheimer and company. good morning. >> good morning, simon. >> where do you think the markets will go from here? >> i'm in the more optimistic camp, i think we resolve the ranges to the upside essentially. i do think better data, better weather, better data will start to come through and i think expectations have come down enough where you start to get upside surprises. >> a lot of people are stressing about the second half of the

year when you have this kind of intertwining of central banks withdrawing or even the ecb not doing anything further. and then the whole question of whether the growth is strong enough to -- for them to pull away, will they pull away anywhere. how do you resolve that? >> i think the growth will trump the -- the slow withdrawal liquidity. >> why do you say that? what do you see? >> i think the big factor is just the buildup in household wealth over the past two years. household wealth is up $16 trillion or so. we see employment going back and wage gains have gone back. cap-x hasn't gop up as we see from the durable goods data but it should follow profit growth eventually. >> i'm curious about the nasdaq moves. that's been the showstopper and some of the wildest moves. still the outperformer on the year but with the tech-heavy trades, a lot of air has come out of the trades, what does that signal that the momentum trades are losing steam? >> i don't think it's terribly

surprising we came and the s&p 1500 was trading 17 1/2 times people searching for value essentially coming out of momentum looking for value that doesn't surprise me terribly. i think the nasdaq will continue to do well but not because of biotech i think it's big technology that will start to do well. if you look at microsoft, hp, cisco kind of the old technology they are really the ones coming on and i think they can propel the nasdaq higher and not biotech. >> i'm curious to your point that cap-x growth should follow profit growth and free cash flow growth because it really hasn't in the last few years. larry fink writing about it today. buybacks and dividends, yesterday, should not be as emphasized as a return for more capital spending. what gives you the confidence it will be different this time? >> there's a fairly long lead time between profit growth and cap-x spending. as profits continue to build, cap-x should follow behind that and i.d. spending is on a cycle and eventually you'll have to get the i.t. spending cycle

going with the microsoft news we saw in terms of putting applications on the apple devices, et cetera, you can see a little bit of that pick up. >> interesting, you know, people take two sides of that debate. some people say companies don't hire or invest in cap-x unless they're overwhelmed with demand which is clearly not the prevailing view, right? >> we've been in this 2%, 2.5% recovery and we haven't hit the nirvana of the recovery, the good news, bad news, if you get the three-plus breakout in terms of the economy then you have to start worrying about the fed a little bit more. i think we're still in the sweet spot in terms of interest rates. >> you like the fact that vix has come off, right? >> if you look at the vix it's breaking down to new multimonth lows right now, so there's been some volatility in big momentum stocks but the volatility in the overall market hasn't been that great. we're right back where we started the year. >> i wonder if the big trade for the second quarter might not be emerging markets which have stabilized recently. we were up for the fourth straight day in a row we've not

had that for six months and we got through the brazil downgrade and they seem to have desensitized from what the fed is doing and obviously the valuations are lower and the position is less. do you think emerging markets could be the place, the trade, the investment for the next quarter? >> i do. i think u.s. revenue -- revenue outside the u.s. is a big theme so if it comes from the emerging markets and europe, i think exports have to pick up and add to growth essentially. >> they are getting crushed on the currencies. >> you'll play it with big cap u.s. companies, are you not? >> big cap tech is a good way to play that kind of emerging market demand. >> you wouldn't buy shares or bonds in indonesia or -- >> i mean, there's so much country specific risk you have to be, you know, a little bit more specific. but i like the u.s. companies, deriving revenue abroad being better. >> good to see you, andrew. >> thank you for having me. >> andrew berkeley from oppenheimer's. as we are watching mobile gaming facebook is making a big bet as what it sees as the future and that is virtual

gaming. we'll talk to someone who spent five years developing new products for mark zuckerberg including facebook home, that's coming up on "squawk on the street." reet." are you still sleeping? just wanted to check and make sure that we were on schedule. the first technology of its kind... mom and dad, i have great news. is now providing answers families need. siemens. answers.

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♪ people loving the gaming music today. let's get over to dominick chu and get a quick market flash. >> i have to agree with sara i'm having a flashback for super mario brothers. the plug power shares are plummeting, the major order they spoke about yesterday were misinterpreted the deal had been announced two weeks ago and the stock surged late yesterday when he told market watch the company would launch a major deal in the next two to three weeks and the deal has been announced and the

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on this day when we're watching mobile gaming, there's the king digital ipo opening lower. down now 11%. facebook is making a big interesting bet on gaming technology that could make it an immersive 3d experience. it will buy it for $2 billion. we're lucky to have bubba who led product development for facebook, for android, including facebook home. he's a partner at sdrdraper fis where he leads investment and mobile companies. it's great to have you here on a day when mark zuckerberg makes another multibillion dollar bet that he says is a social experience of the future. what do you think? what do you think mark zuckerberg wants with opulus? >> i think it's good. he's betting on a new platform that is going to become dominant

in the world and he is picking it up obviously much more eb expensively than google was able to buy android. i think it's unquestionable a massive success and an area where i'm keenly watching for investment opportunities on behalf of bfj and think there is unlimited potential given the scale of the platform and when new platforms take hold, new opportunities are created. >> bubba, i just wonder how much of a gamble it is because there's no proof that virtual reality is the future. it's not even in consumers' hands at this point. how risky of a bet is that? >> i definitely think it's a risky bet. but i think at the same time you only make returns by taking risks. that's what we learn as venture capitalists. we've made tremendous bets with space x and tesla that have returned great returns for us and we continue to look for big ideas that have these out-sized

potentials. i think very similarly that's what mark is doing. he's making a big bet and he's going to reap the benfys or hold the consequences. >> i don't understand why we're not talking about this product category more because, of course, sony has unveiled forefor playstation iv. if you were thinking of new products to invent it is obvious a virtual reality headset would be among that product offering. it wouldn't surprise me in the slightest if apple were not working on this because this is another form of wearable tech, isn't it? >> no, it's a great observation. i think the movement in wearable tech is certainly coming. and if you listened in on the call where mark announced the acquisition, he talked about it as a vision platform, which is really interesting note to me. if you think of the things that google is doing with google glass or androidwear. you see a lot of new opportunities in this wearable moment and obviously a lot of speculation on apple. but in general, i think these platform shifts lead to huge opportunities. especially platform shifts that allow you to build applications

that have network effects. and obviously social networks and communications with huge network effects and something we look at very carefully at dfj as we've seen with some of the mobile communications app like tango which just announced a large new funding from a strategic partner alibaba from the asia sector. >> bubba, i'm curious about your take on king, which as you know went public. we're all over this story. trading sharply here after the open. you look for these next hot start-ups. what do you think about king as an investment of a company which gets more than 3/4 of its revenues from one game like candy crush. would you buy it? >> well, i definitely think candy crush is -- and king in general, is a very interesting company. the metrics and numbers look incredible but it is all in one concentrated source of revenue. that create asterisk. but i think we've learned from a company of ours z2 live one of

the first in free gaming segment which we are, it creates a flywheel effect where you can really as a company take the learning from one hit and start to apply them to creating more and more hits and the leverage of distribution you acquired. if you buy into king you have to be comfortable with one mobile gaming as a sector is going to grow and i think that's obviously true and i can elaborate on why. and they're going to create other hits. i think that's why you would be buying in. for myself, i'm not 100% sure what i'm going to buy. i've been happily continuing to stay as a major investment in facement as a way to play into the eco system. >> as a major investment in facebook and thinking about buying things, how should we view their continued incredible appetite it would seem to buy companies of different types in different areas? what is the view in your point that zuckerberg is trying to

make into reality if i can use that phrase? >> yeah, no, i mean, look, i had a great chance to work with mark and learn a lot observing him. the thing i took away is he plays to win. to play to win you have to bet big. and very much i've taken a lot of lessons with me as a venture capitalist. you don't go into something timidly. you don't go into something without betting on bold verges of the future that you think can happen and then looking at the expected value. you know, we won't know for a long time whether the acquisition of oculus will end up being cheaper op in the. if you told me how to value android in 2005 when google bought it i would think it was a lot more than $50 million. similarly i buy into the logic of what is in the industry on e-share. >> expensive price tags, too. he spent more than $21 billion so far this year. bubba, great to have you here when facebook made a $2 billion

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street." here's what's happened so far. >> i want to know, and when you sit with someone who really understands and you recognize how well he has done and yet the valuations one-time sales, i question whether this company has that second hit. yeah, you, you, you, yeah, yeah, oh, yeah, you're fine. >> carl and i are right behind you if there's any trouble. don't you worry. >> getting below that price last night of 22 pin .50. first trade, $2 below it. >> what happened at the opening trade? what is it down, do you think? >> i don't know. as i see today is the start of a marathon. and i think that the opportunity is great. >> it's good to see you again.

it is 11:00 a.m. on the east coast. here's what we're watching today. a rough morning for king digital. the maker of candy crush is slipping. what does the future hold? the former ceo of myspace is here to weigh? >> future of facebook is in virtual reality? social network buying oculus for $2 billion. a company that specializes in virtual reality headsets. we'll try to figure out what face book is doing in the virtual space in just a few minutes. >> and get ready to pay a tax on your bitcoins. the irs offering some new rules that could push the digital currency closer to the mainstre mainstream. we'll explain later on this hour. >> the big story this morning though. king digital entertainment going public. the stock didn't open well. opened below pricing. $20.50. right now just hovering above the $20 mark down nearly 11%. an hour after opening. that would value the company

just about $6 billion. earlier this morning we spoke to king ceo and he commented on concerns that the company is too dependent on its flagship game candy crush and is planning to stay profitable moving forward. >> not to find another candy crush. that's not what we are here for. what we're here for is to build a portfolio of games and we want to build a network of players who play our portfolio of games. you can see that, you know, we have now three games in the top ten grossing on all three platforms. interesting thing is that the top ten grossing chart is actually extremely stable. there will be always many games like flappy birds who go up in the top ten free. top ten grossing is a different t matter. there are very few players, very stable. >> he was saying that there are a very few playersing in sector. very few are stable. he also said earlier today that this is the beginning of the

marathon. he doesn't know why the stock is down right now. certainly the investors are watching it today. the next guest knows a thing or two about the mobile industry. credited with the turn around of motorola. he was name best of 200 executives in the last 25 years. joining us for cnbc exclusive former motorola chairman and ceo and ceo and co-founder of harrison street capital and our on jon fortt is joining in on this discussion. when you look at a company like king so dependent on mobile what do you see as the future for the earning stream? >> first of all, obviously the smartphone space in mobile is going to expand hugely. lots of functionality is going to come to it, gaming. media. movies, et cetera. it's a huge opportunity. so i think that i would only say relative to the pricing models that are kind of going on right now feels a little bit like the late 1990 fz you know what i mean. getting a little frothy but hopefully investors can make some money on it.

>> ands that what i was going to ask you about. you've seen a number of cycles. where do you think we are philosophically in technology right now? i would ask what do you think people should be investing in but instead i'll ask what are you investing in? >> thank you. first of all, creativity is abound everywhere. great smart engineers are inventing all kinds of new things so the future is really very bright. certain segments of the striz li industry like infrastructure. but the appliance side is going to continue to grow, the integration of content is going to continue to grow. and -- >> the appliance side meaning what? >> handset business, if you take that, just the consumer side of it, all the things that you can attach to it, whether it's rings or watches or whatever they want that to be. you can put whatever you want on it, which is great. we talked a little bit before i came on.

said the way we had such a passion for driving innovation at motorola was to look for the things that no one thought would ever work. you know, the things that were in the minority opinion that were very disruptive. we're doing that today in digital storage and microskuper computers and i.t. and automating the way software is written and nano technology and we just enjoy kind of pursuing the things that are kind of way out there, if you know what i mean. >> you mention online storage and box ipo filed yesterday. we talked a lot about that. a lot of people wonder though of these spaces, exciting as they may be, how many are commodities and how many are going to flush out a wave of underdeveloped players. is that a danger in your mind? >> that's always the case because only a few companies end up prevailing being the leaders in each of these segments. and then there are lots of other people attempt to copy and catch up. you always have to wait and see who is going to prevail. people are trying to

differentiate in all of these space, differentiate in approach toes storage, large digital storage, make up like clever safe, company i'm a chairman of. it's a quite different approach than everybody else is using and gaining footholds. >> when you see an about face like google's decision to sell motorola mobility after such a quick tenure under their ownersh ownership, what does that signal to you about the capriciousness of the tech space and their willingness to buy something, invest in it and build out a footprint. facebook doing virtual reality buying whatsapp. there are so many different spaces they're trying to operate in, how do you know what's real? >> i think what google discovered is the handset smartphone business is one of the most comp my t indicated hardest businesses in the entire world. and trying to catch up to that quickly is a difficult thing to do. but, i will pay them a huge compliment. they did probably the single intellectual property deal of our lifetime na.

they bought 20,000 motorola patents. they paid about 2 $1/2 billion, net, net all? >> definitely a good deal for them. zuckerberg, facebook, going into vr. does that fit your philosophy of investing in the thing before people see its potential? >> yeah, well, i mean, mark and that model is a lot like loosen at the end. they have an enormous market capitalization. they can use that to their advantage to diversify and i just sort of awhy are they doing it, because they can. and so i applaud them because they've got the capacity to do it. >> there's a point to where it's funny money and you can spend it irresponsibly because it's so easy. on which side of the line are they right now? >> first of all, they are obviously taking advantage of the market capitalization of this instance and we'll have to see how it all plays out. some of the things they're buying are leadership and their space and the question is do

they scale into the size of that market cap that will play out over the last few. >> valuation of whatsapp make sense to you? >> well, let's just see if you're selling it to them, it really does. okay? i'll tell you, that's the best of all worlds. >> chris galvin, thank you for joining us today. former chairman and ceo of motorola. and founder and executive and private equity right now, chris gal lynn. jon, you will be with us later in the hour. but thank you for joining us as well. we've been showing you the chart all morning, king digital slipping after opening for trading. it's a big moment for mobile gaming but where does this sector go from here? the former ceo of myspace tells us the lessons he learned in this space. how he's moving forward as the ceo of a new mobile gaming company. that story coming up next.ex ♪

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take a look at health care today one of the winners on the s&p. let's get to dominic chu for the market flash. hey, dom. health care stocks obviously up for the second straight session among the leaders. dow hanging on to a 40-point gain. s&p did take out the train day highs for the week but has since

settled back to 1870. meantime, shares of king digital went public this morning at post 8. a big player in the mobile gaming space. joining us to talk about some of that, the co-founder and former ceo of myspace and currently the ceo of sgn, mobile game developer. and he joins us this morning from san francisco. chris, good to have you back. good morning. >> thanks for having me. good morning. >> i assume you're up to speed on the way it was priced and the way it was received. your thoughts on those two things. >> i'm super interested in this company. think about a company that's gone from $60 million in revenue to $160 million to $1.9 billion and 509 in profits in a three-year period of time. it's really phenomenal. so i think there was a little bit of doubt from some camps in terms of where it was priced. so there's certainly going to be some volatility along the way. >> chris, for me the big

question here is what is sort of the normalized run rate for king digital? once candy crush settles into whatever pace it's going to settle into. you've got interesting insight here because through sgn you rolled up a number of gaming properties. you know how these things tend to pace themselves. what's your best guess at where this ends up and how king's metabolism works out from here? >> so there's a couple of things working here which i think are really interesting. one, the market is only growing, so they clearly have the wind at their backs as does sgn, my company, and every other mobile gaming company. but i think secondly, they've developed a framework to continue to build these kinds of games that clearly resonate well with our user base and monetize incredibly well. so i think they're in great shape. they have three games that are, you know, close or near to the top ten. >> chris -- >> and they've developed a model where these games are quickly in

and quickly out. we have to all remember that candy crush has been around for 2 1/2 years. >> but exactly, chris, isn't candy crush a once in a cycle type event? no other game they've got is anywhere close to it. so what's the sense that that's at all repeatable or even that they can take the success of candy crush and spread it out to other games? >> they do have two other games that are incredibly successful. and they have learned a tremendous amount with candy crush in developing a frame work that candy transferred to new games. i think candy crush still has new legs. that game is solely built on continuing to develop new levels and new content. so they have a content cadence that keeps their current users and current players very engaged. so i think this stock is going to be somewhat volatile in the short and immediate yum term. they have a great management team. i think long term it's great for investors and great for the

drink. >> chris, engagement is the key question for business like this. you take a look at the number of games played, the number of users king has. it's obviously a multiple of any of its digital peers. you have to keep mobile on the network and the fear on investor side is what happens if all of a sudden overnight everyone leaves that network. i know we have experience at myspace being e clipsed by facebook. i'm wondering how you think that translates to the gaming industry and what a company like king can actually do to keep those people on their network and in-house. >> i think they've done an incredible job and actually developing a network. so their first game that was of any kn notoriety was bubba wits and candy crush and two or three others that are doing quite well. i think the secret is in developing a network, staying super focused in building similar types of games where they can cross-promote people

from one game to another to really take advantage of that network. >> we're obviously today seeing that facebook has decided to move into virtual reality whereas king is still on the mobile side. when you look at its numbers it introduced candy crush to mobile at the end of last year. its earnings went up by tenfold as soon as that happened. how sticky do you think that mobile gamer is on that platform? >> so it's not only the stickiness on the mobile gaming platform but it's a lack of friction when users making a purchase. so you look at a platform like apple and they have over a billion credit cards so in order to make a purchase all you have to do is insert your password and the transaction is complete. i think that's really been one of the big differences in, you know, why there's so much more revenue in mobile other than the fact that the majority of players are now playing on mobile and we're also seeing a

huge, huge bump on android at sgn with our key game cookie jam. >> all right. we will see. you mentioned candy crush being around for a couple years. the big question will be what is the average lifespan of some of these games, chris. we'll see you next time. >> thanks a lot. thank you for having me. >> time for squawk on the tweet. as you know social network facebook will acquire virtual reality technology oculus. oculus makes this, the oculus rift, a head seat originally funded on quick starter. josh brown said like a gamestop that you strap to your face. when zuckerberg puts them on, what does he see as the future? tweet us @squawkstreet. a major shake-up at jpmorgan leave many people wondering what who is in the running of the next company's ceo. first, rick santelli, what are you watching today? >> well, we're going to continue to look a bit at the yield curve but we're going to see which

parts of it has dipped in the negative territory for the year. might be surprised how few maturities and see if we can help the president come up with ideas on how we can supplement the need for energy in germany specifically, europe generically. where, oh where, can we find some energy for europe? all coming up after the break. p.

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hi, are we still on for tomorrow? tomorrow. quick look at the weather. nice day, beautiful tomorrow. tomorrow is full of promise. we can come back tomorrrow. and we promise to keep it that way. driven to preserve the environment, csx moves a ton of freight nearly 450 miles on one gallon of fuel. what a day. can't wait til tomorrow.

welcome back to "squawk on the street." check out shares of tesla moving lower although off the session lows. ubs began coverage of the electric car make we're a neutral rating saying the upside has already been priced into the shares. down 1 1/2% today. down 12% over the last month. carl, they are still up 45% year to date. back over the you. >> one of the keys to the market. thanks, dom. let's get over to the cme

group and check in with rick santelli. >> carl, you know, a lot has been said about the yield curve since last wednesday. i've been doing a bit of that talking myself. but just to put some of this in per speccive. since last wednesday's big flattening, boy, we're stuck. the short maturities whose yields rose can't see much retracement. same is true for the ten-year and the long end. just to give you an idea. five-year note yields since the statement has been in a closing range of 170 to 173 three tens. so, you know, we're watching to see if long end rates could go higher. that would probably mean everything would go higher. or short rates back off. to give you an idea how important last week was, here's the yield curve. 2s through 30s. here's where they settled as of the last day of last year. you can see that the only portions of the yield curve, and i use dread because lower prices, higher yield. so the only two maturities right

now that are higher on the year in terms of yield are 2s and 30s. this is significant. i would use 174 as a key pivot. we're at 171. i want to run a clip that the president spoke at a european press conference regarding trying to find alternative energy sources for germany and europe. let's play the clip. >> energy is obviously a central focus of our efforts and we have to consider very strongly. this entire event i think is pointed to the need for europe to look at how it can further diversify its energy sources. >> you know, we've done many hits on this and long before energy became an issue specifically in europe. you know, once again, energy is the orphan. everybody from analysts to economists, even those in the current administration like to take credit for the better economy but a chunk of the better economy is energy. so we have to ask ourselves, oh,

where, oh where can we find some energy for germany and europe? i can't even imagine where it could come from. any ideas out there? gee, any ideas where we might be able to find some energy? how about u.s. natural gas? it is unbelievable to me, unbelievable that we can't connect those dots. we can change the course of the aggressive tendencies of putin, and guess what, we with can drop production costs to every industrial country on the planet. u.s. gas! let's get with the program! back to you. >> all right. thanks for that, rick. i was scared you were going to pop that balloon but i guess you're saving that for later on today. >> he has smashed watermelons before. don't be surprised. >> thanks to rick santelli. we want to turn from energy to the financial space and discuss one of the highest profile stories this week that is moving shares of jpmorgan down nearly 1% today. that's the departure of one of the highest ranking executives at the firm.

mike cavanaugh will be joining the carlisle group this summer as co-president and co-coo. one of the reasons why in is so important to jpmorgan's overall makeup is because this was the guy who was tapped to be the successful to jamie dimon when dimon eventually was going to retire. cavanagh and dimon has been taking meetings to figure out the structure of jpmorgan in the coming years, should they break up, what the affects of higher capital levels would be to the firm. i spent most of last night on the phone with a bumplg of my sources both inside and outside jpmorgan who were talking about who now would be tapped to be the successor to jamie dimon. the most interesting thing to me was the rising star of a guy named gordon smith. he's the ceo of chase which is, of course, the consumer bank of jpmorgan chase. he joined jpmorgan in 2007 after spending about 25 years at american express. he was running auto finance but

now he's in charge of mortgage bankers, call centers. and he has 170,000 employees in his unit. i'm told my insiders he has been incredibly impressive in the way he's run that business with a laser focus, cutting costs but also managing to keep moral up even in the face of high end regulations. smith, we should note, is 54 years old and one of the most important considerations of a board when they're thinking about succession, is age. how long they would be able to take that role. no doubt they are still considering two other off-mention names, matt, the coo of the entire firm who has had a swift rise from the mortgage capital markets division over the last couple of years after negotiating a deal for bear stearns. and then you have mary erdos, famed for running the asset management division. $2.3 trillion in assets. nothing to sniff at. but even if jamie dimon is not going to step down for several years, succession planning takes a long time. you have to culminate these

talents. it's something a board thinks about for years. and jpmorgan dow component, criticized for being too big to manage. >> is cavanagh leaving because some undisclosed issue or problem we haven't heard about yet. >> jpmorgan was at the strer cef a lot of regulatory investigations. did he have a falling out? none of that is the case. he really just felt long and hard about this job and how it compared to his potential future job at jpmorgan and said i don't want to go through the gauntlet that dimon went through. >> i think people can understand. >> yes. we'll leave it there for now. jpmorgan shares though now down just about 3/4 of 1%. when we come back, this is the chart of the morning, candy crush maker king digital falling big. we'll take a closer look of where the stock will go from here. facebook is getting into virtual reality and the irs on bitcoin.

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♪ as some would say not sweet enough. welcome back. joining us this morning john steinberg buzzfeed's president and cnbc contributor and jon

fortt here to recap so far a morning of incredible tech news. not a sweet day for king digital. the hit maker of candy crush going public and right now the stock is trading to the downside by 9%. the question we've had, guys, is how does the valuation compare to other media companies. we know going in it was a discount to the s&p. >> and now it is even more discounted to the peer set. on 2014 numbers, $2.6 billion, trading at 2 times that. compare to giant in china, 6.3. zynga 5.2. activision at 3.2, eaa at 3.2. low end of the peer group for a company that has a lot of growth. >> but does it? i don't think the valuation argument makes any sense right now because candy crush is sort of this swan of that -- we don't know what this company actually looks like once candy crush hits its normalized level. i think the question for me is, is this company zynga or is it pixar? remember, disney bought pixar

for $7.4 billion, which is where king wanted to be valued. but pixar had a stable of characters which king doesn't have. it had a repeatable model for churning out hits which king will try to say they have but they say they don't want another candy crush. i think this is more like zynga than pixar. we don't know what zynga like level is yet. >> the question becomes did someone value this incorrectly? when you think about the process that king actually had, they didn't raise the size of the deal. they didn't raise the price of the deal and priced at the mid point of the range. >> i think what happened is the 82% of the revenue that comes from candy crush was not discounted enough, right? so they obviously put a heavyweighting factor against it. to jon's point, we're entering an era where media companies are coming to resemble the studios of a different era, right? there's paramount, disney, some will be great studios that turn

out lots of singles and doubles. some won't. you don't know whether this is going to be one of the great studios or a zynga. >> i'm getting e-mails. it's nice to see a refreshed deal echoing. is this a failed deal? >> i think what we're starting to see is possibly the limits of the premium model. you look to box also, some of the questions that many of us have about that deal. you've got a lot of free users who are actually more like a cost than they are like an asset. then you've got to an ask and a company that wants to be valued as a value company. where is the value that's going to be extracted? what are the barriers to entry? and you can't just count the users and say the users are a platform because they're not. the platform is something you can build on, you can monetize that creates value over time. >> i agree with jim. i think it's a good thing that investors are concerned. there's some error to the market. people will not question the sector overall. i think box should have the same concerns. why are they spending so much money to support users that

probably don't convert if they're going after the enter vi price. >> you can imagine if it went the other way, the criticism the market would be getting today. facebook is going virtual, buying oculus vr in a deal worth $2 billion. deal comes not long after facebook's purchase of whatsapp for $16 billion last month. of course, we were just talking about on that day facebook stock rose today. facebook is down 2%. different take but still. >> it's not in the core business today this is the robot's acquisition that google did. this ask so far out that investors are doubting it but ultimately the phones used to seem like magic. every significantly advanced technology appears like magic. and zuckerberg has the capital to basically invest in something that could be ten years out that could be the next phone. and to my point earlier other wise you've got to get the capital back to activist investors. >> this is not self driving cars. this is not google glass which

are ideas that everybody applauds. i think it's good that google works on this far out stuff, sure. google spending actual money and actual corporate resource on those, too, don't forget, we don't see it in a press release the way we see this. for facebook to be spending on virtual reality, photos and video are incredibly important in social to monetizing it. incredibly important in marketing. if the next thing really is immersive virtual reality, facebook will have a position. >> is this a wearable play or a premium gaming at home play? >> i think it's both. >> it is. >> first, it's gaming though because it's going to be the gaming community that turns this into a real platform if it's going to be one. task one for zuckerberg send facebook is to convince the g e gaming sdmunity that they're not going to abandon them. they're going to make this a serious and viable technology platform. from there they can put it into real estate, put it into automotive. make it a real experience that can be monetized for marketing. >> the coolest part about this is it is straight out of science

fiction. >> until they partner with them. >> straight out of snow crash by neil stevenson. you can imagine to take the stuff thzuck was talking about. pulling down their oculus to watch a tennis match. he talked about watching the sporting events with their friends. you can imagine this happening. >> how do we know where the line is, the point at which they are spending truly like sailors on things that will never pay off. is that in the offing. is that close? >> i don't think we're there yet. with a company that has stock this valuable is to make future acquisitions. >> 8% of their market cap on the last two deals though, that's -- >> look where the market cap is right now. bigger question is what are they saying about their own stock price. >> good question. >> two very different deals. whatsapp more defensive. you see emerging markets play there. and messages. and i think oculus, you're really lookinging forward, rehn, this is the guy who had the discipline not to do a smartphone, not to do a handset

which we can clearly say now would have been a bad idea. he's dhog hardware for a strategic reason and largely with stock which makes a lot of sense. >> when facebook bought whatsapp we talked about it as potentially becoming a holding company. >> conglomerate. absolutely. when people have asked is this like a wearable thing, no, it's like the google robot. they're technology companies that want to know everything in their space, adjacent space. he said amazon should buy grub hub. these companies are puttingten. >> we see how instagram was part of -- i think this is like an r&d project he's holding in. not like a holding p. >> it does bring us to our squawk on the tweet. when mark zuckerberg puts on he's oculus virtual reality goggles what does he see as the futu future? we'll get you responses later on in the morning. a step towards legitimacy to

the bitcoin. the irs will treat boit coin as property rather than for tax purposes. now subject to capital gain taxes and online exchanges. they will have to provide annual reports of their transactions. what does this mean for the currency long term? >> they got one good thing and one bad thing. the good thing they got is the ledgization by the irs that bitcoin is property. the bad thing that they got is they didn't get basically a tax holiday or e-commerce exemption. if you buy bitcoin, if you get a bitcoin at $5,000 and it goes to $10,000 and then you buy a $10,000 boat with your bitcoin you have to pay capital gains on the $5,000 spread. so they could have exempted that for now to really let it go but they don't want to. that's a chilling effect it will have on the velocity of the coins. >> i think more and more, bitcoin is viable as a platform for doing transactions, but as an investment, i'm not so sure. even as he defends bitcoins --

>> great series of tweets yesterday. >> it was sort of like, hey, warren, i didn't mean to insult you but if you want to learn about bitcoin, he's not really defending bitcoin being worth 580 whatever it's worth today. he's saying this is a valuable technology platform. i think those who are looking at this potentially as an investment need to keep that in mind. >> any significance of this coming just two or three weeks before april 15th? a lot of people are going to have to do a lot of accounting. >> i think all the significance in the world. we yes, a lot of people will have to go back and figure out what they did this year with bitcoin. i think this can only be viewed as a positive for it if government could have outlawed it, could have said you can't use legitized it. >> do you think this does anything -- >> mt.gox suddenly finds hundreds of millions of dollars? >> just one wacky exchange. absolutely. a small part of the eco system. >> anything happen to merchants, do you think they will change their game in terms of accepteding? >> i think it's a slow road on the transactions.

i think that this may slow it a bit because now there's this complicated capital gains taxing you need to keep track of. i think this hurts it a little bit. >> all right. thanks. >> jon? thanks, as always. if you're watching the stock market you know it's been a great run for the markets. stocks up about 20% in the last year. why are people still hesitant to jump in? we'll tell you when "squawk on the street" comes right back. co. ...return on investment wall isn't a street... isn't the only return i'm looking forward to... for some, every dollar is earned with sweat, sacrifice, courage. which is why usaa is honored to help our members with everything from investing for retirement to saving for college. our commitment to current and former military members and their families is without equal.

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through mercedes-benz financial services. welcome back. markets in the green today. dow up 28. stocks in the last year are up 20%. but even despite that ride, many people who aren't in the markets see no reason to start jumping in. steve liesman has the newest part of his all america survey. take it away. >> thanks. what we do with this survey, we polled 800 americans around this country. we do this every quarter. we've done it for seven years. one other thing i want to tell you is we follow the attitudes on the stock market. want to do something we haven't done before. we look at how attitudes about the stock market have tracked the market. look at this graphic here. just to show you the math behind it. what we did, we decided what

2007, let me move back here. 2007 was a normal year. we index markets to 100% of 2007. came down sharply in '08. gradually worked our way back up to now we're about 120, 125% of where we were back in 2007. we're up above that level. and now revealing the next line, this orange line, this is sentiment. this is those people saying it's a good time to invest. it came down more slowly than the market but come down it did. it came down, it came down. reached a bottom in 2012. and it's come up but here it is. and watch this gap here. this is what i'm talking about. story here is this. despite this huge market rise, sentiment has really not recovered back to its '07 level. stocks, they did. and then some. sentiment, views about the stock market. maybe we should file this in the once burned department, twice shy department. come over here and you see this sentiment as still not recovered to the level or commensurate to

the recovery t in the stock market. let's look at the demographics in this. we look at people who have portfolios of $50,000 or more in the stock market. this is compared to a year ago. about even. how about those who don't have stocks. they're up a little bit but one worrisome sign is right in here. these are people who have less than $50,000 in the stock market. they have something but it's less than 50. they've come down quite a bit in the past year. this is something to watch. these people are the next these people if all things go well if the market does rise. why their sentiment came off is something that is worth watching. you were talking a bitcoin in the last segment that i want to show you our data on bitcoin. first thing you've got to know, is it ranks. if you can just zoom in on this number here, only 48% of the public has heard anything about it. ranks as one of the least well-known business stories we have. 52% know nothing about it. so we asked them the questions over here. is it a substitute for the dollar? is itsubstitute in the

future? 40% saying it will never be a dollar substitute. 25% say it could be in the future. 4% say it's good now. many, many people unsure. write off bitcoin? not just yet. let me show you some of the demographics here. we tack together these two one here's about sort of positive about bitcoin and we broke it down by demographics. zoom in here. if you're 18-34 you have a better attitude about bitcoin saying it could eventually be a dollar substitute than you do 65 and older. the future might be in bitcoin but, carl, it ain't right now. back to you. >> that's an interesting demographic picture. thank you. >> you can read all about this on cnbc.com all the results of the cnbc all america economic survey. >> very cool. steve liesman at hq. let's send it over to dominic chu. >> i'm not sure about bitcoin but here's another possible currency substitute that's gold continuing to slide downward

moving towards that $1300 an ounce level here. that's pressuring gold mining stocks as well. remember, they're levered to the price of gold much more so than anything else. new mining barrick gold, goldcorp, all of them are falling. down 5% as a group. the etf that tracks them, down 5% just in the last week. again, the gold slide certainly one that investors are paying attention to. back over to you. >> d.c. om, thank you very much for that. we have breaking news regarding ukraine. michelle caruso cabrera. >> ukraine is going to raise natural gas prices for ordinary citizens by 50% starting may 1st. this was going to be one of the conditions likely impose bid the international monetary fund in order to give ukraine a bailout of which they're asking for a lot of money. expected to come in 15 or $20 billion. it was unclear whether or not there would be political will in the country to raise them which was heavily subsidized from the

soviet era days but caused di distortions in the economy. so this was likely going to be one of the preconditions. once again, it appears ukraine agreeing attorney crease natural gas prices to citizens by 50% which would likely be a precursor to the final announcement of a potential imf bailout. back to you. >> michelle, thank you for that. when we come back, as you know, a rough open for king digital on the floor this morning slipping in trading debut. is this an ominous sign for king.

welcome back. candy crush create irking digital is down in the debut. it's the most actively traded stock on both the s&p and nasdaq. but not seeing a good trade today. let's look at factors from social to moebile to make up ho successful gamers are. could the king ipo be a b baromet barometer. what sort of precedent does this set for the sector? >> i think looking back a little bit this company has been around for ten years. it's incredibly profitable.

they've been managing hundreds of games over the last ten years. they've had some incredible breakouts lately. i think it's a great management team. this is the first day of trading. it's like the opening pitch. you can't tell what the game look like at this point in time, i think. >> what do you think are the viable factors behind candy crush? what would give you faith that today would just be an aberration. >> it's creating that new product. i think they need to come up with a way to rep my indicate the success of candy crush over time. >> you know it's interesti. we talk about the pipeline. in the pharmaceutical space you have drugs that go on trial and you can track the drug and what the results are. there's nothing similar in the gaming space. it's just trial and error. so how do you actually judge the health of the pipeline for gaming? >> it's more like the television business so you have networks that produce shows -- >> then you're in real trouble.

>> it's about, you know, you have enduring franchises like "american idol" or " game of thrones" or mitt er hit series e company develops the next generation of products. i think the key for king is to keep candy crush a phenomenon for hundreds of players while they two the next product. >> it's staggering from a financial perspective. almost half a billion dollars worth of bookings just in the last quarter. so there's actually a bit of a ways for it to fall and still be enormously successful. when you look at your business, do you have out performers like that or is it a bit more steady over time across the various titles that you have? >> cabam is a very different type of gaming company. 72% is from smartphone, like king, but no title in our portfolio does 25% of our revenue.

we have five games do over $100 million in lifetime and all of them are going strong today. so the nature of our games, because we focus on a core gaming audience, is that they run for many, many years. our first title which is on facebook called "kingdom of camelot" is strong on facebook 4 1/2 years later. the sequel in that product is all time near revenue highs. 4 1/2 years later we're still sitting high. >> you also said you're way different from king which makes me shrug my shoulders. what does that mean? >> i think every gaming company needs to start off with a -- their core franchise and then build around that. we've been lucky in some ways that we've had multiple hits over time. on the other side, we haven't had a success as big as candy crush over the last four years. it's kind of pros and cons. i think they're doing an enormous amount of profit and cash flow. they have the ability to invest in next generation products. we've done the same thing over time thinking about purposefully

growing our franchises and developing our product lines. >> i have to imagine a day like today does something in the back of your mind about your own plans to go public if that is in the playbook, right? >> that is a serious discussion by the board of the company. i think we've been profitable company for the last two years. this year we're on track to do $600 million on top line. so the company is growing very fast. we grew 103% last year over 2012. we're on track to do a 60 plus percent growth this year. there is just enorm mouous grown this industry. it's an enormous growth industry driven by smartphone, tablet, not just in the u.s. we're talking about globally. >> you don't think today's action means that window closes eye ni sooner than it normally would? >> i think at the end of the day the industry, if the industry grows as much as, you know, people think it's going to grow, we're going to be in -- the whole industry is going to be in great shape. there's going to be a small

number of companies that are able to pros deuce hit after hit and have that over time become the disney or time warner of the industry, you know, for gaming. and that's -- that's where the industry needs to do. >> obviously king was founded in 2003. i think that's a fact that's lost on a lot of people. it has had a long lifespan. we'll see where it goes from here. best of luck to you and your company. we'll certainly be watching this throughout the day. >> thank you for having me. tweet time. facebook buying virtual reality headset maker oculus, we've been asking you when mark zuckerberg puts these things on, what did he see as the future? stamps.com is the best.

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fats book buying oculus vr for $2 billion. they make this the oculus rift. it's a headset originally funded on kick starter. we're asking you when zuckerberg puts these on what does he see as future? zuck sees virtual friends, virtual family, virtual workplace, until we get to virtual oxygen. he puts on oculus and sees where all the lost bitcoin are located. ron writes, mark z sees more

money, which is probably closest to the truth. guys? >> nothing something that i think facebook shareholders would be so mad about. >> busy day for you, jon. scott wapner has a lot to g. >> not every day you get a yankee star on the air and we also have a reaction by carol icahn to larry fink's later today. i just got off the phone with carl and he had very interesting comments that we're going to bring to you guy nsz just a moment. i think everyone is going to find them quite interesting. >> buckle up. >> welcome to the "halftime" show. here's the game plan. zuck's bucks, is facebook's big spending sprooe good tort stock or not? good to be the king as the candy crush maker goes public and drops. what is your best move on the greatest and greatest ipo? new y