tv Closing Bell CNBC April 23, 2014 3:00pm-5:01pm EDT
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way. right? >> he's abnormally tall. >> and you're abnormally short. >> and the dow jones industrial average down 9 points, warren buffett on "closing bell" coming up next. >> sarah thank you, by the way. >> "closing bell" starts right now. >> and funny enough, yes, we do welcome you to "closing bell" at this time of day. i'm bill griffith today at cnbc headquarters. >> i'm michelle caruso-cabrera here at the new york stock exchange where the winning streak in stocks is on the line. right now negative territory. dow jones industrial average is lower by about ten points and the s&p 500 is down roughly four points. >> not a lot of volatility. a lackluster day after yesterday's late selloff, when we pulled back from what could have been an all-time high so we'll see what we can do in the last hour. art cashin feels like if we don't get past those highs soon
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we could see a meaningful selloff. >> wonder if we're not waiting for facebook and apple to kind of give some juice to some areas where people have concerns. >> exactly. >> they will definitely have an impact on the market. plus, we're almost waiting, awaiting billionaire investor warren buffett to sit down live with our becky quick in new york city. this will be his first public comments about activist investor david win theers who has been critical of mr. buffet and coca-cola over executive compensation issues so stay tuned for that first on cnbc interview. it's the end of this luncheon that he hosts every year for charity, and somebody paid $1 million to have lunch with warren buffett today, so i can imagine they are getting their money's worth right now. >> why it's gone longer than ever, right? >> extra special dessert. >> exactly. and after the bell it doesn't get much bigger than this when it comes to market-moving earnings. first facebook and then apple. both will hit about an hour from now. both have huge implications for their stocks, and also the
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overall market, especially when we have all this talk about whether or not there's a bubble in technology. all the numbers and instant analysis. >> meantime, let's show you how the markets have been trading so far today. as we said, not a lot of volatility. pretty narrow range. michelle, you're right. waiting on those earnings tonight from facebook and apple, among others. right now the dow is down ten points. we need a 67-point gain today for the dow to hit a new all-time high. nasdaq down 32 points, abo about .75% at 4128 and the s&p 500 index is trading down three points at 1875. while we wait for warren buffett, let's talk about the market with our "closing bell" exchange panel. abigail doolittle, dennis gartman with us today, founder of the gartman letter and i know people would pay a million bucks to have lunch with jack bouroudjian and rick santelli, to watch those two go at it there and, rick, welcome back from vacation, too, by the way, buddy. >> dennis gartman, you like a
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lot of people have been watching the volatility in this market lately, a few weeks ago, high-profile newsletter you said you were getting out of stocks and now you're getting back into stocks. what's going on here? >> bill, i got back into stocks about a week and a half ago because the market didn't break as far as i thought it might. i did indeed get fearful. no question about it, but when the market broke it took a lot of people out and made them go to the sidelines. the 100-day moving average held. trend lines held and the same fundamentals that were still extent that had gotten me bullish and kept me bullish for a long while made me return to being bullish so i'm pleasantly bullish and i own simple things, aluminum and coal and very simple things that even i can understand. >> yes. jack bouroudjian, how do you feel about this market? what do you think is the explanation for today's flat trade? >> oh, i think, you know, today is more waiting for the numbers to come out. we're right smack dab in the middle of earnings season and i think what's remarkable is the fact that the market is up near
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all-time highs, something that we usually don't see. i think the real hidden story, and one of the things, by the way, you had a great interview today, one. things he talked about during that interview is how bad our tax system is, especially the corporate tax system. we are looking at corporate america making money in spite of what is happening, in the only with our tax system, but with legislators, and i've got to tell you something that in itself is fundamentally bullish. >> you're saying that the earnings season has been good enough and strong enough to justify the run-up that we've seen, even though we got nothing today. >> absolutely. saw the numbers from boeing today, a great example of corporate america making money regardless of how low interest rates are. they are making money. >> i know you would disagree, abigail. >> i have to look at the earnings season in a different way. just a few months ago analysts were looking for 4.3% growth in the bottom line.
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going into earnings season that dropped to negative 1.2%, so companies aren't doing well here. they are not beating. it's analysts playing the game allowing them to appear to be, and i think that dennis, love dennis,'s part of what i'm doing along with what i'm doing today along with art cashin but dennis is brave to get in here, the desprepsy of dow being at all-time highs and the high flyers of the nasdaq composite being towards the bottom or the middle of this year's range. something's got to give. i just cannot believe that smart investors are short selling or taking profits in the momentum names and then reallocating that capital into stock. i think we're seeing the beginning of a rotation out of stocks into bonds and into cash. it is certainly consistent. >> that's a perfect transition to rick santelli who covers the bond market. richter, what do you think of that? >> i think i look at everything so much easier f.people want to own stocks, i get it. january, february, march and most of april, basically stocks are where they were at the end of last year, you see the dow
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and the nasdaq a smidge lower and the s&p lo and behold is up by a whisker. then i look at 5s, 7s, 10s and 30s, the longer the yield, mat tour the, the bigger price appreciation. all yields are lower. they have been a far more profitable trade for 2014, and then i look at how much flatter the curve s.so i come to two conclusions, and the conclusions are simple. the long end of the market believes that 2.5% gdp is about all we're worth right now and the short end is telling me that 0 interest rate policy is flawed. we should have a higher overnight rate. there's your flattening. >> thank you. >> got to stop it at this point. just getting warmed up, but you're being big footed by warren buffett himself, so thanks for joining us with your thoughts on today's market action. lunch apparently is over, michelle. >> finally. so that means we'll see warren buffett and becky quick right after this break. don't move. ♪
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with warren buffett. beck? >> thank you very much. warren buffett has just had lunch with the winners of the annual glide foundation auction. this is an auction that went off last year. this was the 14th annual auction. you have now raised $15.6 million for the glide foundation. i know that the new auction goes up on june 1st. >> right. >> looking for next year. how was lunch this year? >> lunch was great. i always have a good time, and i knew a couple of them from before. they are all going to come to the annual meeting. it's a treat for me. >> they didn't want to be identified, but they snuck out of here despite all the media here this time. >> yeah. >> they weren't looking for publicity, but we had a very good time. >> okay. >> glad to hear t.while you were in there there was a little bit of news happening out here. we've been hearing about the coke shareholders meeting. turns out votes are in. 83% of shareholders voted in favor of coke's plan, the compensation, the equity plan. that means 17% voted no.
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how did you vote your shares? >> we abstained so that would have been 9%, i don't know whether that gets -- whether they took that out before calculating the 83 and 17 but we abstained. >> that was 83% of the votes that were cast. why did you abstain? >> well, we abstained because i didn't want to express any disapproval of management. did you we did disapprove of the plan. the plan compared to past plans was a significant change, and there's already a 9% or so overhang in terms of options outstanding relative to the amount of shares outstanding, 8%
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209%, and there's authorization of another 500 million shares, not all of which would have gone on options. >> that's 11% of the conditions and i thought it was too much, and i thought that my partner thought it was too much so we abstained. >> your math, does it match up with david winters who has been the activist that's vocal about this. he thinks it would be a did i lufgs 16% to existing shareholders that are really there. mukhtar kent has said he thinks like it's 1%. >> closer to the one -- in terms of dilution because they would repurchase -- they would use the proceeds they received on the option to repurchase shares, so they said the breakdown between giving performance shares in terms of what they call option equivalent would be 40% that and
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60% options. if they repurchased the shares, it would not be as low as 1%, but it would be far from the higher numbers. >> david winters was just out with a statement and i guess he jumped the gun a little bit because he criticized you and said we're surprise that had warren buffett had the opportunity to take a stand against excessive management compensation and failed to seize it. why are you telling us now? >> i did not want to be in a position of campaigning for either side. we were going to cast our vote, it would become known how we would cast our vote and i have enormous respect for mukhtar kent. he's man to be running coca-cola. i respect the coke organization. i just don't like the plan. >> did you talk to mukhtar kent about your thoughts on this? >> i did, but it was only after the proxy was out? >> he did not know my views ahead of time.
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>> your son is on the board of coca-cola. >> i've been on boards for 55 years, and 19 public boards, and i've never heard of a vote against a compensation plan brought in by the compensation committee. what happens in a board. some have the mistaken noigs notion of how boards act. >> the compensation committee and comes in and works for a few hours or day and have had conultants and i've never yet heard any of the 19 boards that i was on, anybody in the meeting say they were against it, and i said outside of the meeting, taking on the committee that's reported, and taking them on is a little bit like belching at the dinner table. you can't do it too often. if you do you find the eating in your kitchen. >> did you ever vote for something on a board that you disagreed with? >> sure. i voted for compensation plans i
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haven't agreed with. i've even sort of muttered a yes on some mergers that i didn't think makes any sense. it happens. >> i'm still trying to get my head around this. you went ahead and abstained the votes on this, but did you look at this compensation plan, or did you look at the equity plan before david winters pointed it out? >> i -- i read the full details actually after -- after that. i just hadn't read the material yet, but in 2002 coke had a plan that involved 240 million shares. that lasted six years. they had a plan in 2008, six years later, that was 280 million shares, and that lasted six years, and then this plan when i read about it was for 500 million shares which they would equate to 340 million, but still 340 or 500 and they were going to use, it they said, in four years, and that really struck me as quite excessive, so i -- i
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didn't actually read that when winters wrote the letter, but i would have felt the same way. >> this is a situation now though that the company, again, had 83% of the votes that were cast voting in favor of it. what do you think they will do now? >> well, i -- i don't know the answer to that. they have the stock authorized. they said in the report that they expected it to last four years. i hope it lasts a lot longer than that because i think that that would be excessive to issue that number of shares or options or performance shares or eke lengt -- shares or equivalents. >> you'd be okay with the plan? >> depends on how much you're issuing all of the time, the future upside you're giving away each year, and right now something between 8% and 9% of the upside on the stock is covered by options already issued. that's out there, and they have been issuing options year after year after year. i mean, so, anybody who has
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worked there for ten years has probably got ten years worth of options, that is not like incentives are lacking, but you can give away too much of a company. >> will you sell any shares of coca-cola? have you sold any shares of coca-co coca-cola? >> no intentions of selling shares. i love the company, and i think that the exact -- the right ceo is running it, and i think it's got a fine future. >> you've said in the past that people should buy companies that could be run by a ham sandwich, and you've even said coca-cola is one of those companies that could be run by a ham sandwich. it was a quote from the snowball. >> so al schroeder said that. >> al schroeder said that you've said that on occasion. >> i'm quite sure i've never said that. i think i know who said it, but i'm not going to name him. >> i guess that gets us back to the question. is it important to have a great manager to run the company? >> hugely important, hugely important. >> and actually there's been --
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coca-cola for a while after roberto was not run so left. mukhtar is the right person to be running it and it makes a big difference who is running it. >> let me ask you about another stock that you own, ibm. >> right. >> that company came out with a disappointing earnings report. revenue was down for another quarter and that surprised the street. some people have suggested, and there's rumored floating around, that you have soured on the stock, have you? >> that's not true, no. i've actually bought a few shares this year. >> you've bought stock and ibm. >> i've never sold a share. >> since the earnings report that came out. >> not since the earnings report. >> the earnings report should not have been a surprise. it was actually ruffly what they said in the earnings call. revenues were down 2% i think on a constant currency basis, and i expected, that and i don't think they said anything different. they said earlier they expected to earn about 250. they signaled the charge they were going to make ahead of time for layoffs essentially, so i --
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it did not strike me as a big surprise what they reported. now, maybe a surprise a year from now or two years from now, but i've not been surprised by what they reported. >> would you buy additional shares of ibm? would you continue to buy? >> depends on the price. >> the price today i think is trading right around 191.63 on the last trade. i think your average cost was somewhere closer to $173. i look back and the annual report i think you've seen of about 12%. bought it at around a cost of $11.86 billion, now closer to $13.05 billion. >> we could buy it, but, i mean, i don't announce anything that we're going to buy or sell, but i -- i wouldn't rule it out. i paid that much for the stock. >> okay. >> so earlier this year you actually were buying shares of that. can i ask you also about just
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activist investing in general. david winters, what do you think of david winters because one person this morning actually called him a gadfly? is he evelyn y. davis. >> he's not a gadfly. i think he's owned the stock for many years. incidentally, we heard from many shareholders, that owned large blocks and i don't know how they voted. >> coca-cola shareholders. >> and, i mean, that's an issue that shareholders should vote on and you're expected to cast your vote on the issue. i disagreed. i didn't vote against it. i abstained, but it's a perfectly proper thing. if you're going to give away your part of the company. shareholders should probably vote on it. >> we've seen activist investors take all kinds of new pages and create new play books and valiant to go after allegen. he said he's heard from another
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company to target what they would like him to help out with, too. does any of that strike you as strange? does it seem like fair behavior or front running? >> i don't know the arrangement that he had. >> he and valiant got together. >> valiant put some money into this deal with them. they agreed to go after it together and then they bought the stake of the 9.7%, 9.6%. >> my guess is he had legal advice on it. >> he did. >> robert koizami thought it was fine except valiant can't buy that big of a stake in another maker. there were other limitations down the stock that they could buy. >> i don't know the answer to that. >> does it strike you that activists are getting stronger and stronger? >> the ceos are terrified of activists. i can tell you that. they are all talking to investment bankers and lawyers and saying what do we do about
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this? >> who is in the right, or is it tough to paint all activist investors with one brush? >> i don't think you can generalize about it. i think there are companies where management has not done a good job and i'm not referring to anything specific here, but, i mean, certainly if people want to step up and buy a lot of stock in the company, it's hard to argue with their right to do that. >> there have been major dow components that have been mentioned as potential takeover targets, even in ibm, some people have suggested. do you think that would be to the good of shareholders or to the detriment? >> i think it would be case by case. i'm not looking for anybody to do that in ibm. >> okay. also like to talk to you a little bit about david einhorn. he was just out talking about how he sees a potential tech bubble building once again. he talked about the cool kid stocks and he means companies like a facebook or some of these big internet companies that have soared very rapidly. shorting a basket of these stocks now because he thinks it looks like it did back before
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2001. you were somebody who didn't understand valuations at the technology companies back then. do you see similar characteristics to the technology stocks today? >> i don't think it's like -- the period prior to 2001, i don't. there's a lot of companies whose valuations i don't understand but that's always been true and then you get no a period like right before 2001 where you could almost sell anything and capitalize eyeballs and everything. i don't think it's reached that point and i don't think the general market level has got a bubble under it. >> that's an interesting point. we're not far off of all-time highs, probably less than a percent for the dow and s&p 500. you don't feel like things are getting too frothy? >> no, no, we're in a range. it's a big zone. a big zone always of reasonableness, but stocks ought to be higher every ten years. i mean, there's a clawback of earnings that goes back year after year. stocks will become worth more decade after decade.
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not in any precise manner, but 10 years, 20 years 0, years from now stocks will be worth more than they are today. >> you've gotten concerned about valuations in the past though. what would be a warning signal to you? what would be something that would really start to make you think twice about buying more stocks? >> it would be valuation. i mean, if the numbers got -- if prices got to nosebleed levels compared to earnings for many stocks generally then i would say, you know, we're in one of those periods where stocks got ahead of themselves, but stocks do get worth more over time because companies retain a lot of what they earn. >> is that just pe ratios for forward earnings? is that the best way of measuring it? >> yeah. in the end a stock today is worth all of the cash it can distribute between now and judgment day, and the higher the price goes, if the -- if they can distribute change, at some point it gets ahead of itself. >> let me ask you about the annual meeting coming up. in your annual letter to shareholders you said you'd be
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looking for a bear who can sit and ask questions at the annual meeting. i take it you don't have a bear that's going to be coming this year. i heard it's morningstar, the analyst there. what happened? >> we gave up a week ago from hearing from any credentialed bear that would short the stock so a week ago we were getting close to the annual meeting and we've got a sixth seat down there in terms of questioners, so morningstar had written me previously saying they hoped when a vacancy showed up i wrote them and said come this year. >> there are no bears on berkshire, to understand that no one applied? >> somewhere they probably were and i don't know if we can trace any of those people down. we did not find anybody who had a real bear interest. >> all right. >> probably out there, but maybe they didn't want to surface. >> all right. >> warren, i want to thank you very much for your time today. >> thank you. >> really appreciate it. >> okay, thank you. >> hope to talk to you again soon. >> good, good.
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>> again, warren buffett and bill and michelle, we'll send it back to you, but the news is that warren buffett abstained berkshire shares, the largest share holdner coca-cola, so that's abstaining, something like 9.6% of the shares. >> maybe more like 9.1. we have 1400 million shares. >> 1.1% of the shares outstanding that vote on the equity plan did pass by the votes that were cast by 83%, and i'll send it back to you. >> still he disagreed with the plan. >> that's startling, yeah. >> thank you, becky. >> michelle, i think warren buffett knows he carries a lot of power with what he says, and he's up there with a federal reserve chairman, and i think -- it is odd that he would abstain when he disagrees with it, but i think he feels like he would be sending the wrong message that could be misinterpreted that he was against the management of the company when he was only
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against the compensation of the plan. it's very interesting. >> i don't know. if i'm david winters, i'm wondering that i'm angrier that warren buffett didn't take a stand and that would have changed the compensation plan. what was even more startling, bill, is when he admitted sitting on a board, warren buffett says he has swallowed and improved executive compensation packages that he didn't agree with because it's so difficult to. i mean, if warren buffett can't fight the executive compensation committee, would can? that's going to be tremendous fodder for people who believe that ceos make too much money. >> i agree. >> coca-cola stock hasn't moved much on this news, it's been in a funk for a couple years. sales, as you know, has been lagging especially here in the united states. mukhtar kent has been trying to turn that around, but today it's just a penny right now at $40.72 as they had been holding their annual shareholder's meeting and did get approval for that executive compensation plan of
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500 million shares or thereabouts over the next five years. >> what's it like to be mukhtar kent and to hear warren buffett say to the whole world. >> he got what he was after, but the big boss said he's not happy. >> it will be interesting. >> maybe they will come out and say they are going to adjust to the plan some kind. >> let's move on and get back to the markets. >> the dow down 12 points. we're well off the lows of the day, but we could break a six-day winning streak here if we don't finish positive for this section. >> biogen ceo speaks with us exclusively about what's driving this company raised earnings outlook. boy-techs one of the more volatile groups. a lot to talk about with him right after this break. r this b.
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that corporate trial by fire when every slacker gets his due. and yet, there's someone around the office who hasn't had a performance review in a while. someone whose poor performance is slowing down the entire organization. i'm looking at you phone company dsl. go to comcastbusiness.com/ checkyourspeed. if we can't offer faster speeds or save you money we'll give you $150. comcast business built for business. all right. the dow needs to finish above 16,576, roughly a 67-point gain today to set a new all-time high. the last one was on december 31st, so we still have not seen one this year here, michelle. >> we're waiting. all right. meantime, waiting for seema mody as well. what's moving the markets today? >> we'll begin with boeing
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moving higher after posting better than expected first-quarter earnings. as a result, it raised its earnings forecast for the year. delta also flying high. the carrier reporting better than expected first quarter earnings despite losing about $90 million in lost revenue due to bad weather. on the flip side, netflix getting hit hard, this on news that hbo has agreed to licensed older episodes of its programming library to amson of the deal represents the first time hbo has struck a pact with an on-line video provider and we again with biogen idec. state and federal authorities are investigating their sales and promotional practices and have been issued soybean subpoenas. the company says they are cooperating with the government. >> more an biogen, one of the high flyers in the biotech industry in the last few years. with us now is boy jen's ceo george gingras and our brand new
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tech reporter meg terrell. >> thanks so much for joining us after a great earnings day for you guys, again, driven by your newest pill for multiple sclerosis. let's start off talking about that. you guys are starting to launch it in europe. can you tell us a little bit about how the reimbursement is going among all the pricing pressures happening in europe. >> thanks. we've launched first in germany and we get to price the skrug for a year and do the health price assessment and we'll get the negotiated price after a year. we're negotiating with the governments in other countries in europe, and that's a six-month to 18-month process and generally goes with a little process and it's a work in progress at the moment. >> absolutely. >> let's talk about the pipeline. gotten a lot of cool science. another ms drug that you have in
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phase two, one that would actually potentially reverse some of the damage caused by multiple sclerosis and it's of huge interest to the street and to patients. maybe you can tell us a bit about that program and whether expectations are in line with where they should be and just a bit too high considering it's early stage. >> it is a phase two program. >> look, multiple sclerosis is a disease that results from an immune attack on the myelin, the insulation that surrounds the nerves, and the current drugs on the market reduce that attack, and we are hoping to reduce the drugs and lingo would be the first that can actually repair some of the lesions in multiple sclerosis. it's based on good science. it's based on very compelling pre-clinical data, and we'll get to first human readout of its potential efficacy, you know, towards the end of year. >> this is michelle caruso-cabrera, meg's colleague.
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what did you think when you heard of bill ackman teaming up to buy allegen? >> very interesting. i don't want to comment too much on that. i think allergen is a very good company. i think it would be a shame to dismantle its r & d capabilities. i think that's actually a disservice. >> do you think there but for the grace of god go i or why didn't i think of that? >> no. i certainly -- i think the value in allegen lies a lot in its r & d capabilities. it's a good company. they have done well. you know, as have we. i think the biotechnology industry has delivered a lot of remarkable drugs in the past couple of years. we're continuing to deliver those drugs. we have new launches coming this year. i think allegen has done a good job, and i think anything that dismantles the r & d apparatus that interferes with the development of those drugs in
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the future is a disservice. >> let's focus on r & d, one of the things that's a hallmark of biogen idec is the field of neurology. why when there's so much failure in the alzheimer's research department why are you still going after it? >> there's tens of millions of people affected in the next few years. if we don't do something, if we as an industry don't do something about alzheimer's disease, it will be a societal issue, not just a medical issue. it will be a huge cost burden on the society. we believe that there are very compelling scientific insights into some of the causes of alzheimer's disease and that there are very interesting ways to attack those. there were failures, you know, recently from elon and lily, and take a look at lily's antibody in some of the early patients,
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it seemed to have some benefits. we believe the science has advanced to a point where we have a good chance of being able to do something about the disease. we recently signed a collaboration with asai to get a 50/50 partnership on two of their compounds devoted to alzheimer's disease. we have two of our own coming forward, and so i think right now we have probably one of the most aggressive alzheimer's programs in the industry, and we believe that's well founded and has a reasonable chance of working. it's early. we'll see the clinical data from later this year and will go from here. >> doctor, bill griffith here, and i welcome you as well. in your latest s.e.c. filing you revealed you have received -- you revealed the state and federal government authorities are investigating your sales and promotional practices. what's different in this filing this time is you also mention a subpoena from the federal government for documents relating to your relationship with certain pharmacy benefit
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managers. can you kind of shed light on more of this investigation, where it stands. is this just the cost of doing birks or is there something else going on here? >> well, we've disclosed now for the past couple of quarters that the government has been investigating some of our sales and marketing practices. we did receive a subpoena relating for documents relating to some -- for relationship with pharmacy benefit managers. can't really comment other than to say we're obviously, you know, cooperating with the government on those investigations, and other than that i really can't comment. >> maybe you can tell us a little bit about the pricing environment in the u.s. right now. i know this has been a big topic, but do you think that in some cases in the drug industry prices are too high? are they unsustainable? is this a problem in the u.s. or elsewhere? >> like a $1,000 pill or something. >> yeah, so, look, the -- the focus on price i think has come as a result of sfaldy, gilad
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ehepatitis "c" drug, and i think it's a very complicated issue. my guess, is and i don't know the facts, that if you look at sivaldi over a sufficient period of time that that cost of the pills will be mitigated by the avoidance of cirrhosis and by the avoidance of liver transplant and the consequent cost savings. if you look at it over a year, it probably won't be, so it's not such an easy topic. i think it's, you know, gilad has done a great john over the years, a very responsible company. we've tried to price our drugs not at the top of the market and tried to be reasonable in our pricing. we'll continue to do so. >> at some point do you think there will be enough of a pr backlash that you guys will have to do something about it? we're not picking on you or gilead or anybody else because we hear for years and years the
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price inflation not only in the medical industry but especially in the drug industry, and at some point will there be enough of a backlash that you will have to do something about that pricing and eat into some of your margins? >> yeah, you know, look, let me take a step back and make a couple of comments. i think this gets a lot of play in the press, and, you know, people have to pay for their medicines and some people have a hard time paying for their medicines, i get that, but, you know, focusing on drug crisis i think does a disservice to the bigger problem of focusing on health care costs. drug costs are 10%, 12% of all health care costs and if you wiped out all the profits of the industry you might reduce health care costs by 2%. this is not the issue. the issue is the structure of the reimbursement for those where hospitalizations are covered and patients have big co-pays for their drugs. >> do you think obamacare will help that, sir? >> it's a little early to tell. i think obamacare will put some
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pressure. the payers will consolidate. they will get more negotiating leve leverage, and i don't know if we'll see price declines but maybe a moderation of increases going forward. >> thank you for joining us today. thank it very much. meg, thanks. we'll see you later. a follow-up to the warren buffett interview you saw just a short time ago. coca-cola is now responding to him. sarah has that part of the story. >> i've got a comment from the coca-cola company board of directors saying they respect warren buffett. they respect his philosophical stance on equity-based compensation. as our largest shareholder mr. buffet is an avid supporter of the company and its management team has been a wonderful counsellor through the years. we greatly respect his views and look forward to continuing our productive relationship with him for many years to come. so, i guess, mutual respect here
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on both sides after warren buffett breaks the news here that he has abstained from the coca-cola vote on the 2014 equity plan on management compensation because he doesn't agree with it, abstain from the vote because he wants to support management and the budget director is happy with the vote which they got 83% in favor of their equity plan saying they respect warren buffett and his philosophical plan. >> what is significant is they didn't say they were going to change it? >> right. >> they just got a majority and overwhemg support in favor rite. >> he still has to pick up the phone and call mukhtar kent? pretty quick with the press release. >> 18 minutes left in the trading session, the dow trying to crawl back here to make it seven up days in a row. we'll see if that can happen. we're down seven points right now. >> apple and facebook, two
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technology titans out with earnings within the next hour. a look at what to expect next. some financial guidance od so she could take her dream to the next level. so we talked about her options. her valuable assets were staying. and selling her car wouldn't fly. we helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today...and tomorrow. so let's see what we can do about that... remodel. motorcycle. [ female announcer ] some questions take more than a bank. they take a banker. make a my financial priorities appointment today. because when people talk, great things happen. a short word that's a tall order. up your game. up the ante. and if you stumble, you get back up. up isn't easy, and we ought to know. we're in the business of up. everyday delta flies a quarter of million people while investing billions improving everything from booking to baggage claim. we're raising the bar on flying and tomorrow we will up it yet again.
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fergie. >> look over here. >> of the black eyed peas. >> turn to the right. look over here. look this way. >> she's ringing the closing bell. >> with a publicly traded company that sells shoes. she's signing autographs. everybody here is quite excited. they have had so many big hits, the black eyed peas and lots of celebrities down there. >> there she is, looking at the camera. >> tell her the other will i am says hello. >> brad is angling for that right now. >> there you go. >> the day i take -- by the way, "nightly business report" owes me for that, that i'm not down on the new york stock exchange, i'm on nbr. check your listings on pbs, you're welcome. tech investing is your thing and today is a day you've probably marked on your calendar for a few weeks now, right? >> because apple and facebook, two exteamly popular consumer brands and widely held stocks,
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out with earnings within the hour just after the close. seema mody joins us now with a preview. >> michelle, we begin with ale. the street looking for the tech giant to make $10.18 in its second quarter on revenue of $43.5 billion of the guidance on iphone shipments will be key. apple is currently trading lower by 5%. for facebook it's all about mobile. expected to earn 24 cents in its first quarters of sales of $2.63 billin yo. investors looking to see whether the company can keep up its growth in mobile advertising. facebook down 2.5%. qualcomm out with results after the bell. street looking for earnings of $1.22 a share on revenue of $6.48 billion. it's trading pretty much flat on the day. analysts expecting texas instruments to earn 41 cents on sales of nearly $3 billion, and we end on zynga which is expected to lose a penny on sales of $147 million. lots of earnings to report after the bell, and we'll have all of
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it for you on the "closing bell." back for you. >> can't way. going to be exciting. about 13 minutes before the closing bell. dow jones industrial average coming off the lows, down only about seven points at this hour. >> by the way, a smart viewer pointed out i said we didn't have an all-time high. on a closing basis. we had a new intraday high but failed to close above the high. so we're both right. >> our viewers are so smart. >> s&p in danger of snapping its six-day win streak. final moments are coming up so stay tuned. [ male announcer ] this is the age of knowing what you're made of.
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much of the fact that the earnings really aren't all that great for the first quarter, but you're pointing out expectations weren't that high to begin with? >> that's right. expectations were guided down so low that this was going to be an easy quarter to beat no matter what happened, so the earnings might be ugly, but they will look pretty relative, but that doesn't necessarily -- that isn't necessarily painting a good picture so we'll have to see how the markets swallow a lot what have they are hearing. >> doesn't sound like it justifies the dow approaching highs. >> stuck in a cycle since the first of the year. read an interesting stat. somebody said the s&p has crossed unchanged 16 times this year, so it's really poverty same. somebody made a joke earlier today like a foghorn leghorn cartoon, go round and round in circles and don't get anywhere. we probably need a few more weeks to see how earnings pan out and particularly revenue growth is the key this time around, and then i think we probably get out of neutral, so to speak. >> forward guidance will
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obviously be very big. a couple of big heavyweights, apple reporting tonight. do you follow them? what are your expectations there? >> i think the market is expecting $43.5 billion. a lot of pent-up concern or expectation around the launch of the iphone 6. >> right. >> and i think, you know, the question this is going to have a bigger screen, is that going to really drive sales? apple really has -- they have their work cut out for them at this point. this is not the same market as it was five years ago. they are a lot more competitors, and they are, you know, losing ipod shares. they still haven't launched their new tablet, so they have issues that they have to deal with, so, you know, i'm curious to see what happens as well. >> i'm surprised about something that i read in the notes that you sent over. that your clients are really fixed on rising interest rates and how to hedge their fixed income portfolios. we've been waiting a very, very long time to see those interest rates rise. what are you telling them to do here when every time it looks like we'll finally see yields rise and they don't?
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>> it's a theme actually playing out inside our shareholder base. keep in mind professional investors, advisers and money managers using atf's to build polls of for their clients. a theme that's played out for a couple of years. rates rose last year in a very quiet fashion. rates have actually come down this year but the theme remains. the fact of the matter is people have been used fixed income in their monked risk in their portfolio for multiple deck adds. it's shifting, regime has shifted. i'm not saying rates are going up next day, next week but we're in the environment and that's the theme that's playing out. >> got it. >> more coming up next hour. >> getting ready for all the monster tech earnings coming out, apple, facebook.
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we're waiting for the earnings that will be coming out. a flood of important numbers. apple, they are looking for earnings of $10.18 and the guys at whisper.com sent me the numbers and i lost them, john, and i don't know whether they were above or below but you saw the stock is down 1.2%. facebook, they are looking for earnings of 24 cents a share and qualcomm, the estimate is $1.22 and zynga looking for a loss of a penny while that stock trades down almost 3% at this hour. back with our guests. geena i know you know what the estimates are for apple, and what are you expecting? still waiting for tim cook to come up with some revolutionary moment, aren't they? >> there's absolutely -- i think there's a little bit of downside and everybody is definitely managing these expectations and that goes without saying, and we still haven't are that next big
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new thing, and apple needs a new driver. >> steve sacs, do you like technology? >> leading the charge here and sideways markets, and definitely the nasdaq and especially biotech has done very well. what do you like. do you like this sector. >> i certainly do, bill, and particularly for the long term, i think ultimately over the next couple of minutes, there's a couple of things playing out. biotech in particular. high momentum and high beta and high growth stocks, got hurt first part of the year, first quarter. year. think there's a bounceback and at the end of the day some of the valuations have gotten compressed enough that we'll see money flow back into that. seen that from the etf industry perspective and flows back and long-term tech from a valuation perfective and from a growth perfespective is where we'll se some outperformance for the years. >> thanks for joining us with the thoughts on your market as we get ready for the evening, here.
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>> going out as the markets are going a little bit lower. the dow down about 12 points as we head towards the close of trade. stand by though for the big flood of earnings from apple and facebook and qualcomm and zynga among many others as we go through the second hour of "closing bell" with michelle caruso-cabrera and company. i'll see you tomorrow. welcome to "closing bell." big crowd for fergie, the lead singer of the black eyed peas. i'm michelle caruso-cabrera in for kelly evans. facebook earnings expected at any moment. in the meantime let's show you how the averages have finished the day. the dow jones industrial average lower by 11 points and the nasdaq lower by 34 and the s&p 500 down by 34. pretty tight trading range as we await apple and facebook. >> john steinberg, kayla tausche and also with us with more on
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today's markets is "fast money" trader tim seymour. steinberg, let me start with you. facebook and apple, will they bring it? >> facebook can move in either direction. mobile users over daily active users and apple, looking for anything above flat. >> dominic, considering the near bloodbath we saw in a lot of momentum names a few weeks back, how crucial is the performance of these companies' earnings? >> facebook in particular because it has become one of the poster children of that momentum trade. now with facebook we're looking for a little bit of just the 24 cents and 2.36 billion in terms of sales. got to see what happens in terms of growth and daily active users. see growth in terms of advertising specifically. one thyme type only and that's mobile. more than half of it comes from mobile ad revenues right now, and with these stocks, apple doesn't trade well and hasn't for the past two years.
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with facebook it could be a more volatile trade. and it could be a plus or 9% move in facebook. >> tim seymour, how are you trading it considering what the options market is doing? >> i think apple's volatility is underpriced in these numbers. >> we've got the stock moving. got numbers coming out revenues coming in at 2.5 versus an estimate of 2.36 billion, the q1 revenues. haven't seen the eps numbers. as we wait for that and morgan gets us ready to give us some of the details. go ahead. >> what i was saying with apple you've got a story where the expectations were very different in this quarter than they have been in other quarters and volatility was cheap. weakness in apple is going to come from the second quarter. i think that this is something ultimately you really have to perform differently. facebook into numbers, the china numbers, out of apple or something. nothing in the first quarter, but watch through the second and third quarters. >> kayla, am i making too much
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of this? dependant on getting good numbers out of facebook and apple m. >> one side the market is looking for solid data and on the other more solid valuation on the data front. didn't have strong numbers out of housing sector this morning. that sort of set the market tumbling from the get-go and now the question is valuation. sort of a two-pronged market. facebook and apple certainly play into that and facebook is a poverty child for the momentum trade. if they don't look like they justify that valuation the market will move quickly. >> so desperately want to call bert what. are you thinking about the two stocks? >> these two stocks are starting to show what microsoft showed. start out you're hot. there was a day, remember a day when you couldn't imagine life without a pc and control and how it solved all of your computer problems and apple had its day and apple had the utility and now there's facebook and facebook is dependant on my
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glasses because as we get more near sighted and as the fobes don't get bigger fast enough we'll be going, wait a minute, oh, gee whiz. these have become utilities. even at 101 times earnings, facebook is -- >> we've got interesting numbers for facebook, reporting nongapped earnings per share of 34 cents, that beats the street which is calling for 24 cents per share. revenues 2.5 billion. the street had wanted their 2.36 billion so beating the street. now, interestsing revenues, $2.27 billion. of that 59% is mobile ad revenues. that's a fast growing division 4 facebook. last number, daily active users. use $802 million on average. up more piece of news for you. the cfo is announcing he'll be stepping down from facebook at the end of the year.
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we'll be bringing you more as we go through this report. >> hold on. let's bring in david garrity, what did you think of that number from morgan referencing the executive changes. >> any time you see a cfo, one that's only been public for a couple of years now, change and not have a designated successor in place, it does raise questions as to what's actually going on with the numbers. bear in mind, facebook has been fairly generous in using their stock for acquisitions of late, having put out $21 billion, so cfo leaving here is a fly as far as earnings qualities are concerned. >> did you hear anything about a cfo leader? >> i'm surprised but the mobile number is through the roof. looking for 56%, sort of the high at 53% where it had been the prior order and on the revenue, there's almost no seasonality in this. you see a slight drop-off in q-1. no drop-off in q1 relative to q4 so those numbers are very
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impressive. >> daily active users, by the way, looking for $790 million. >> steve garrity, is that as good as it sound? >> street looking for basically 59% in terms of mobile as a percentage of revenue and jonathan's 56% was definitely below consensus in that regard. the daily active user numbers, certainly good that it game out slightly positive and trading where the beats need to be bigger, and i obviously want to go back and find out what management is going to say that the cfo is leaving the company basically at a time when they are shelling out all the acquisition. >> they do say david renner who joined facebook in 2012, previously the cfo of zynga, he'll take that role. the question is why now? why is he stepping down? he led the company from not an enacted ipo but successful turnaround after a botched ipo
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introduced the mobile platform and helped them right size their balance sheet. >> maybe they are exhausted. >> i'm sorry, mark, you brought what, some goggles, and what are we going to do with the goggles. >> wonderful, mark. >> not as high a profile cfo, always has the ipo egg on his face. not really responsible for the big move to mobile and that's another team and unless something comes out on the call it's a nonstory. >> what does it do to the markets tomorrow? >> also in a place of high multiple stocks as has been talked about. facebook at 85 times current and 45 times next year i think needed to do better than this, but i have to say go back to the mobile add as talked about. it was 23% as a percentage of revenues a year ago. at this point with that kind of a move people should feel like this is a company that continues to grow and the other part of the story for facebook, really, now a technology company.
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no longer a social media company. that's what they have done in the last quarter. three month ago we wouldn't have been talking that way and i think it's very bullish. >> also haven't talked about facebook as a payments company. the only payment revenue comes from zynga, so interesting they are picking from that pool to pick a new cfo, someone who could t-mobile look at them and move in that direction. good numbers, but i wonder if it wouldn't trade higher about where there's a question mark of where the cfo is going. >> stock rallying into the print today. look back over the last five games and the beat was already built into this number. obviously the market was looking for something more. otherwise, as you say, it would be going higher. no aspersions on him and zynga was not a great company or great stock. >> so take that. >> waiting for zynga as well. >> one other point is that they broke a million monthly mobile active users.
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everybody knew that that would happen. i thought the market might be so wowed to see that in print. even though they have a billion people on mobile, the market seems kind of nonpleased with that. >> what's the first thing you asked on the call? >> basically i wanted to go into why the cfo is stepping down at this point in time. >> after that, did they tell you it was for family reasons and he want to spend more time with the kids, then what? >> i'm looking into payment, what they are doing beyond the zynga platform and going into other areas given the fact that they have over a billion monthly active users on the platform. there's a real potential for the company to step up and accelerate their revenue growth further. >> i would also say if this stocked dropped $1.67 during the regular trade, 1.60 in the after hours. >> so when you add it all up. >> getting back to even basically by the time it was done going back to yesterday. >> be sure to remember the environment that the stock is now trading n.s&ps are 18 and
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18.5 times earnings. there is a little bit of head wind coming and hear a lot of people say at some point we need to take a breathe willing, sell and go away, and at some point this condition does live without an environment. >> what about what einhorn said yesterday, shorting a double basket? >> a lot of these companies have within disappointing, and when we see top line growth, that's important that earnings are very, very important here. the fact that companies are giving a pass and cool kids are using the product, we need to think long and hard about that. is facebook is in that public basket? >> as a valuation it still needs to grow into and even though i talked in laudatory terms in terms of mobile ads. this is a company worried a lot
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more about tomorrow than today. >> and another thing on facebook, a story just hit that said hebertsman is likely to go back to health care space. he was former ceo at genentech and apparently he wants to go back into health care and not be in social media anymore. >> a pretty hot sector. >> take a look at what's happened. >> morgan, you got more? morgan? >> okay. so we're digging into this report right now a little further and ecusta fibresman is stepping down. we've heard from sources that health care is his primary passion. he was at genentech before he came to facebook and successor was at zynga. those numbers for you as well so there's a little tease for you. >> so he's not leaving to spend more time with his family. got it. so much more when it comes to earnings. everybody, stick around. don't forget you can catch tim seymour and the rest of the
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"fast money" crew coming up tonight at 5:00 p.m. eastern time. much more on facebook's results straight ahead and a check on the other big names reporting, including qualcomm, the aforementioned zynga that everybody has been zing and the one we've all been waiting for, apple. earnings due out any community now. you're watching cnbc because we are first in business worldwide. . they're who we protect. they're why we make life less complicated. it's about people. we are volvo of sweden. [ banker ] sydney needed some financial guidance so she could take her dream to the next level. so we talked about her options. her valuable assets were staying.
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the earnings coming out fast and furious. morgan now with the results. >> we're just going to keep it going here. zynga non-gapped a loss of a penny per share, in line with the street. bookings of 161 million, so beating on analyst top line expectations of 147 million there. bookings down 30% year over year and also zynga seeing skwential increase. i spoke to the ceo who took over ten months ago. he said expect sequential growth.
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zynga is reiterating a full-year guidance of 1% to 3%, above consensus guidance and making three new additions to his creative team and founder mark pincus is stepping down from daily operations as chief product officers but he is going to be staying on as chairman of the board, so better than expected quarter for zynga but still a long way to go compared to a year ago. >> what was the data point you were watching? >> we were looking for sequential increase in users and paying users, any incremental move up would be a positive for the stock as well, so i expect some of the bottom line metrics is what's moving the stock up now. >> let's give back to facebook. bring in a new guest. david garrity and now we're adding the co-portfolio manager of the jacob internet fund to the mix. >> what do you make of the results. >> i'm surprised the stock isn't up more. the cfo resonation is driving
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some of the food and i don't think that's really a big story. why is that? >> because we have an explanation for where he's going. was it originally, wow, why is this guy leaving and there's a concern about what could be the motivation? >> they brought in the guy from zing ark. he's been around for a while and i think it's going to be a smooth transition. not leaving until september. it's a little bit concerning because some of the large acquisitions they have done in the past couple of month, but, again, the numbers here are blockbuster so i'm not too concerned about it. >> david garrity, do you feel they are block buster? >> came in, bottom line very much a big surprise relative to street expectations, decent top line number as well. the key metric i was looking at was mobile as a percentage of total revenues which is 59% came bang in line with the street. we've seen facebook as a company and as a stock outperform in terms of the mobile percentage going back to the june quarter last year on a pretty consistent basis so we're getting to a point right now where it seems
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that the street in effect is now on top of what facebook is actually doing in terms of the shift towards mobile. to the extent that the street catches up with the stock at any point in time, specifically a high momentum name like a facebook, obviously you have to start wondering what more can they do to surprise expectations going forward? >> yeah, completely agree. that's exactly right. the stock is so expensive. i have it trading at 32 times on 2015. if you look at daily actives over monthly actives, 802 over 1.28 billion, a move from 61% to 63%. that's impressive, but in a stock this expensive wasn't quite enough. happy that stock wasn't up slightly and down on anything that underperformed on the heightened expectations. dock nick? >> talking about a company that trades at this ridiculous multiple, may be bubblish or may not be and for investors like david and darren, this is the real issue. talk about mobile all the time and shelled out $16 billion for
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mobile driven and 16 billion for oculus. are you looking for what they are expecting out of shelling out some $it 1 billion for acquisitions over the course of the past few months? >> it's a good question. vision is very important here, but what i rather facebook do which is what apple is doing, sitting with the cash in their hand and not really innovating or looking towards the future. look, these could be big capital destroyers, this what's at acquisition and thinking forward and thinking ahead. look, wall street isn't giving them much value for the cash on the balance sheet so i would rather the company look towards future and do something innovative than perhaps not do anything and wait two years to come out with a tv product like apple has done. >> david, my favorite newed a jek type learning about what's up and oculus, pre-revenue assets. how do you feel about the same
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question we've been talking about, spending money on pre-revenue, not preprofit a.m., pre-revenue assets. david? >> i go back and remember the first internet bubble a couple years back and people in those days were paying for eyeballs. some were saying look at technology companies over history. start out with very high multiples. zuckerberg in this case isn't really any different. he realizes he has a high multiple currency, his stock. he's got a win dove opportunity to use it, and guess what? he's putting his chips on the table and putting them down hard which is basically telling you if you're an investor, if the ceo and founder of the company obviously is being fairly cavalier in terms of how he's using your stock, do you really want to be buying it aggressively up here? >> good question. >> on the other hand, he's not steve jobs, not hoarding his money. can't sit around and say, look, he's got billions. >> that's true. >> steve jobs, give him credit for that. everyone is saying the stock is
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overvalued. if it's overvalued then he should be doing these kinds of things and spending the money on big, big bets which could move the needle in the future. >> obviously not hurting the balance sheet either because when you look at their cash position, it actually went up from the end of the year, even though they have spent billions of dollars on these acquisitions, so you could argue that they are financially prudent, even though they are pre-revenue assets. >> what did you say, 32 times 2015? >> exactly. >> it looks darn cheap, doesn't it? >> everyone is talking about, you know, the expensive stock. it's expensive, but what other company do you know that's doing annualized revenue of over $10 billion, operating margins of over 55% and accelerating the revenue growth, 71% year over year in this quarter. just can't find that kind of asset on the market right now. it's expensive and deservedly so. >> what's holding them back, a bad movie when the guy first got
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started and everybody goes that's spoiled red. i'm not a fan of zuckerberg's but he's doing great. >> doing well. >> a lot of fun guys, but there's even more to come because they are waiting for apple earnings and due out any minute, instant results. find out if apple needs a completely new innovation to get the stock surging again. back in a moment. ck in a moment.
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all right. got a barrage of earnings. after the bell earnings are hitting the street. seema mody with a roundup of what was there so far. >> facebook posting better than expected earnings of 34 cents a share, ten cents above the consensus, this on better than expected revenues of 2.5 billion. mobile now makes up 59% of total ad revenue. the ceo will step down later this year to be succeeded by david winner, the stock currently trading up 2.6% after hours. qualcomm affording a better than expected second quarter earnings of $1.31 a share but its revenue game in a bit shy of 6.73 billion. the company guiding q3 to the low side of consensus estimate. it also disclosed a receipt of notice under s.e.c. regarding bribery allegations associated with chinese state-owned companies. the stock currently trading down after hours by 3.8%.
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zynga, now into zynga, matching street estimates with a loss of a penny a share and revenues coming in better than expected. the chief product officer will step down and will remain as chairman. and f-5 network posting better than expected second quarter earnings on better than expected sales and stock up 1% after hours. waiting for apple to report its second quarter result. the street expecting earnings of $10.18 on sales of $43.5 billion. michelle. >> yeah. we are waiting. buckle up your seat belts. >> apple's earnings are due out any result right there. we have the numbers coming up next. don't move. don't move. $175. our clients need a lot of attention. there's unlimited talk and text. we're working deals all day. you get 10 gigabytes of data to share. what about expansion potential? add a line anytime for 15 bucks a month. low dues... great terms... let's close.
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apple out with earnings any minute now. let get a quick preview from piper jaffrey. what are you watching for? what's the most important thing? >> the iphone number once again, somewhere between 37 million, 38 million, 39 million, somewhere in that range and the guidance and expectations at the high end slightly above the street for june. all about products in the back half. these are more setup quarters going into the back half of the
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year. >> shouldn't wait to hear about products in the back half of the year. >> well, we've got to kind of read the tea leaves and what they say in the conference call so there is -- that's very important. i think that there's clearly some value in looking at just how the health of the iphone franchise and the iphone number is probably the most important number and gross margin is something that people have been very focused on as well that should be right around 38%. >> how important is this earnings season for apple considering what we've seen the stock do lately? >> it's very important. i think that investors' confidence is exceptionally low. most investors that i talked to are underweight so they really want to have some confidence that this story can start to grow again. i don't think that this quarter of the june guide is necessarily a set up to answer that question, but i think it's critically important that they hold things together before some of these new product categories come out in the back half of the year, and so it's very
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important. >> all right. we've got to go to josh lipton standing by with a revenue number for a. josh? >> got it. hey, it's josh lipton in cupertino, california. just finished to speaking to the apple ceo tim cook. let's go through the numbers and what apple reported. apple reporting and beating both the top and bottom line. 1162 on 45.6 billion. as you go through the product segment, iphone, a healthy beat the street. looking for 85.5 million units. apple reports 43.7 million, cook telling me there was broad-based strength, 5s and 5c and very pleased with trying mobile. there's been some concern on the street about lackluster demand. cook saying that was not true. he was pleased with the results he saw from china mobile. on ipad, the street was looking for about 19.8 million units. apple has 16.4 million, cook telling me there was some supply/demand issues that he did
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not think the street was taking into account. remains pleased with the results and continues to believe that tablets will overtake pcs in the next few years and apple is well positioned in that market. as for guidance, revenue, 136 to 38 billion. the street was looking for $38 billion. also, apple announcing $130 billion capital return program. cook telling me, listen, we realized we have more money than we need. asked the important question which all investors, analyst and traders are wondering about, new approximate and services, cook telling me on the call there won't be any more clarity delivered at this time on the new products but they are working hard on them, and he's excited about what's in apple's pipeline? guys, back to you. >> great rundown of all the things we've really been waiting to hear. did i hear you correctly, josh, on the iphone, 43.7 million. >> correct, 43.7 million, verse expectations of about 38.5 million, a healthy beat there for apple.
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>> thanks, josh. gene, what do you think? >> surprisingly good numbers, especially on the iphone. goes without saying. got to take a little bit in the context of the negative surprise there on the ipad, but the iphone is more important. i think it's a big part of their business and a bigger part of the growth story long term so i think investors should feel a sigh of relief on these numbers, especially -- >> what about the tablet numbers that were not as good? >> it's a disappointment, but i think if you take it in the contefblgts iphone number and ipad and put those two together it's still a net positive. >> let's bring in max wolfe, you've been hearing this and what do you think of the numbers? >> better than people thought. takes a lot of pressure off the company on the innovation story which is the story of the day and talks more about performance. performance has always been an area of strength, lately innovation less so it shifts the dialogue back in the direction that's quite advantageous to the company. >> let's go back to josh, josh
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has more. josh? >> yeah, guys. another point that we want to make clear here. the board of directors of apple also announcing a 7 for 1 stock split. >> whoa. >> each apple shareholder, close on june 2nd, will receive an additional six shares and cook telling me, listen, we want to make this stock as accessible as our products. he realized where the stock is now, a lot of retail investors might not have the ability to bay it, so apple announcing this news today, guys. >> hey, ho, here we go. adds no value to the underlying stock but people love it. >> who also loved it are the traders who trade for commission cents. now you'll make a heck of a lot more for trading apple shock because you can buy every one share for much less than you could before and apple always thought this would keep the stock price high and not to promote liquidity and make sure the right price was in there. very surprising to see a company like apple go through a seven for one stock split on the heels
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of google and basically all these stocks have become not per se evaluation cheaper but more accessible to certain types of investors. >> stock hasn't moved for some time. been up 1.4%. >> it's halted. >> can't actually see what the real effect of both of the expanded capital and return program will be and it's interesting to see so much financial engineering for a company previously against that. so much capital return and splitting the stock. you have to think steve jobs they ever would have done that. >> so true. >> we're ten minutes away from the open of apple, it will reopen at 445. >> i think the stock split is a look at hey, look over here type of thing. could be. i think the ipad is such a big miss. over 20 million ipad, a skwengsal year over year decline in the number of ipads. iphone is clearly a beat but it will be really interesting to see if they have the capital engineering. >> what do you think, capital
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return and those are often i don't want to say tools, but motivate investors in a different way. >> will appeal to a large number of dividends, here's one, that will keep you for another quarter and what can i do to re-engineer the stock and what i like about the iphone is this button ultimately is going to be the bank. i think the play for the financial services industry. i don't think they are competing with facebook. i think they will wind up changing themselves to a financial services company. get all the transactions. you talk to consumer products manufacturers, they will tell you this is where 40% of america gets all of their access to the internet including their shopping. i think it will be first national bank of steve jobs. >> haven't heard from you as we talk about all of these big pieces of news, what do you think? >> i think the financial services gateway will be important. i think that the most valuable -- >> what do you think about the
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stock split and the $130 billion capital plan. >> look, it's a company trying to please wall street. didn't used to have and now it does. a huge milestone and throwing some meat on that. i don't know how transformative it is, but i would also remind you the more phones they sell the more phones they pull into an ecosystem and make more money on in-store app purchases. controlling mobile customers around the world for the ad network will be a way to keep the margins on the street. >> will they be able to join the dow? >> hey, what are the chances that the apple joins the dow because their stock price is now accommodative towards a price weighting type system. >> ah, interesting. >> all those index purchases that come with that if you make that move. >> part of the dow? >> blue chip company. >> gene, what do you think about all of this? >> got about five good things and one negative thing so the negative is definitely a positive surprise here and talked about doing a lot of
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engineering here. we'll take it and what's more important is they are selling a lot of iphones and ultimately new product categories coming. given us enough to at least feed on here until the new products come out. >> look over here to get away from the bad tablet number. >> well, it's a disappoint president. i think you have to look in the context of everything that they are saying today and yes, it's a disappointment. >> you say all those other things so you don't notice the tablet numbers so bad. >> yeah. >> i mean, they -- probably some of that that goes on and the reality is they are throwing a lot of stuff on the table and the reality is there's more important things to look at than the ipad number. >> tablet the secondary device. the phone is going to be most dependant and that's the gateway to your wallet. >> a primary device. >> remember, these two are bigger on saying the pc business is running over and don't want it to fall in that environment. >> absolutely.
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>> and china mobile gives it a pop and don't know if it he curse on the phone. doesn't give you a pop. looking to see if carl icahn had tweeted about this yet. he has not. banging the drum for quite some time. >> wonder what role he played in this and especially the capital program. >> capital program which he had been pushing for 150 billion and pulled back some of his expectations and tim cook saying we had more money than we thought we needed so we'll get a little bit more and also a person on twitter telling us to look at the cues which apparently are moving in the after hours and that's an indication. >> guys, did you hear that, brings in the cues after hour and see what it's doing? >> tied in the over quarter no matter what. i think they will get the innovative products out and the fact that they are throwing this on the table, i think it's a very smart move, very good leadership for tim cook. >> articles the past few days. >> and here are the cues, this
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will give you an indication perhaps of what apple will do. >> the battle for the living room, where are they when hbo and amazon and netflix? >> that's next quarter. >> that's what they are hoping they will do. >> all right, guys. don't most move. more to could. they were once innovators and now what are they? we're going to discuss more. apple led the tech field but it's been a while since the product came out of technology house. what else is at stake for the company right after this. t afte.
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welcome back. we were talking all about a. our earnings editor sends this data point. remember, everybody is always complaining apple has too much cash on the balance sheet. guess what. it fell for the first time since at least 2011, down from 159 billion last quarter to 151 billion. so much to talk about with apple. 7-1 stock split, another buyback. assistant professor of finance at columbia business school saying apple has lost its mojo. welcome back. >> hi, michelle, thanks for having me. let's just take a step back. i read the numbers differently. apple used to be what pharrell thought was happy. the level was so high the market couldn't go down. we did have serious concerns about apple being managed by a genius, micromanaged by a genius ceo obsessed with product, what would the company look like after steve jobs?
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what apple has to do now is pivot, and it has to sustain the belief that tim cook is able to produce the type of apple that we've seen before. when you have a lot of cash for years that's way too long, apple had very long lived options. the options have expired or are expiring with investors, and what we want to see is you using your cash, and by the way, take a lesson from facebook when you make acquisitions and use cash, bolster your primary currency which is your stock price which in apple's case was very, very high. in my mind not making acquisitions or spending money or not buying anything is limited foresight and limited foresight is something very concerning when you move forward. >> when you see a 7 for 1 stock split, the capital program. >> exactly. >> does this mean they are out of ideas in. >> this is just a different company, right? >> apple was able to keep its cards close to the chest and you new something big and amazing was coming. now you need something big and amazing to be coming and need an
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amazing ceo that rivals apple's steve jobs in order to do it and new product categories like wearables, wearables is not an easy product category. i played around with google glass and google glass is hard to wear and i wore it a couple of times and after many wacko people walk up to me and ask if i can see through their clothing, this is a product category that interacts with fashion. we know people are going to back around with blackberry attachments. >> got to show everybody, look at your screen. apple has just resumed trading, higher by 7%, a gain of 36, almost $37, and you look at the intraday chart, the after hours move is pretty sharp, a gain of more than 7%. nate, what the professor is talking about here, i said we would talk about next quarter, going to talk about next lot. you were talking about the battle for the living, where are
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they when it comes to new products? >> won't be the television n.america you replace your television once every seven years, probably with your car, the only difference you is don't need a long-term loan. i look to see where they are. watch what amazon does and look at hbo, wonder what netflix will do and apple tv, i look at it and it comes with a dvr player and what are they really going to do to grab the hearts and minds in the living room? going to be a battle in the living room and hand grenades and all kinds of stuff taking place. just don't see they are ready to play ball. >> michelle, here's my point. they could have battled and captured our living room and could have been very strategic in making acquisitions and exploring and experimenting in that space and to own that space. apple tv has not been a major innovation in a long time. i've had an apple tv and have had it for years. don't see a major innovation. a rush towards streaming content. apple could have gotten into that space. if they want to get into that
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space, it's harder game and losing ability in the new leadership. >> stock is trading higher by 8%. is that what you expected or did you expect more? >> iphone numbers are better than we expected and in terms of the innovation, i think the sky is not falling. it has been falling but doesn't necessarily mean that it's not quite come out and tripled their r & d spending over the last couple of years. no products. one or two things will happen in the next six to nine month. product categories that people will care about or the return on r & d has gone through the floor. i think it's the former, that they will come out with now products. this whole question of innovation and tim cook's legacy, we need to hold off on really deciding what that's going to be for the end of six months and see what they come out with. >> innovation is not hardware. we need to be careful. operating system is the dominant
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place. they sold 43 million miniature telephones because people like ios. ios is also the platform on which a lot of entertainment will be delivered in the living room and the study and the bus and the car and they haven't fully dropped out. not much innovation in the mobile operating system, less than the hardware and doesn't necessarily mean we've seen that company walk away from innovation. software and not hardware. >> wonder where the stock is trading. 565 right now, that's actually where it was heading into last weeks before and disappointing and dropped $50 overnight. where it was when it disappointed last quart er. >> i agree there may be new products, but the behavior over the past two, three years is concerning for me. major spaces that apple could have entered. for example, talk that apple would buy facebook. that has a reality a few years ago and possibility. people were super excited about
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what apple would do with its cash. can you think of a product synergy between the fastest growing social networking company and most innovative company in the world with a huge consumer base, i can, so why has there not been any strategic foresight in terms of behavior over the past few years? that to me is very concerning. >> let's get to josh lipton who spoke with tim cook earlier in the year. >> was there any discussion about what we're talking about here about whether or not the company still has the mojo when it comes to new product? >> yeah, listen, michelle. that's certainly the question that investors and traders and analysts are asking, new products, new services, you know, as to whether there are new products on the way. tim cook just told me minutes ago there are products in the pipeline he's excited about. i think there's an important cultural difference that you have to make here. apple does not telegraph its products in the same way that some of its rivals do when they talk about self-driving cars and robots and balloons. that's just not apple's pedigree. there are pet products on the way. the fact that they are not
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loudly telegraphing them doesn't mean they are not in the pipeline >> you know, guys, if you would have said before we went to the closing bell apple's earnings would have more of a stock splash than facebook's earnings we would have the options market is saying this. it turns out apple has made a decent move here. facebook, we were talking about that, is up maybe 2%. but apple is starting to trump the action here. >> you're right. i expect there'll be a 10% move in facebook. the earnings calls on facebook, this stock moves. our friend made the comment about engagement from teens being down. let's look on the call. sandberg may talk about marketing studies showing roi effectiveness. just about anything is possible on their call. >> particularly facebook has been eventful.
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professor we're going to give you the last word. >> i'm always emphatic. i think -- i love apple and have always loved apple. i think it's the most interesting company. i have every single apple product. it's an amazing story. facebook you don't see major innovations happening in-house but you see a keen eye on the markets with deep pockets buying up all different synergistic businesses. apple has been quiet for a long time. maybe adjusting its screen size or flattening out a phone. but we just are not -- it's very hard to maintain the enthusiasm and even though apple is a huge company, you need that enthusiasm for these new categories moving forward. >> guys, thank you so much. >> let me make one point. acquisition, the criticisms they are not making acquisitions. they have actually made a series
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we have gotten a flood of earnings after the bell. >> let's start with apple. posting better than expected. iphone shipments beat expectations. here's what investors are focused on. it raised its stock back to $90 billion to $60 billion and approved a 7-1 stock split. increased it's quarterly dividend by 8%. first decline since 2011. shares of apple up better than 7%. revenue of $2.5 billion, facebook, thanks to a jump in advertising sales. ceo will step down. currently trading higher. and we end with texas instruments reporting first quarter earnings of 44 cents a
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share. revenue came in at $2.98 billion in line with estimates. stock up about 3.3%. michelle. >> thank you so much. apple, facebook, what an afternoon. we're going to recap, and look ahead to tomorrow. tune into tomorrow when the ceo of dunkin' donuts joins us. what menu items mean for the food chain. at&t can help simplify how you manage it. so you can focus on what you love most. when everyone and everything works together, business just sings. but i didn't always watch out for myself. with so much noise about health care, i tuned it all out.
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(slurp) the more you know. apple saying he agrees completely with apple's buy back and pleased with the results. he'll also be happy when they see new products. there's the tweet. finally got it on screen. what do you think overall? >> tim cook is the new producer of closing bell. rather than having us talk about iphones being strong and ipads being week, we couldn't talk about the weak ipad number. >> over the market report says yes, if you do a 7-1 split it puts the price for a possible dow inclusion. >> so we might see apple go into the dow as a result of this.
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melissa lee, that's what we have been talking about. the conference calls coming up. >> yeah. michelle, we are following all the headlines. josh limpton had a talk with someone over at apple. we'll get his take. i like that theory, dom. >> interesting for sure, melissa. >> "fast money" starts right now. the two biggest tech items on the street, apple and facebook out with earnings on the same night. both conference calls underway. we have got top analysts on the street and bob peck of sun trust covering the calls brings us the headlines from both tim cook and mark zuckerberg. but we start out with apple. boosting its buyback plan to $90 billion and announcing splitting stock 7-1.
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