that's been done. >> that works. >> and then invite your dad to the oscars. >> yeah. >> because -- yeah. who invited you? you going to come clean on that? >> never tell. >> thank you scott, blake, kimmy, natalie, thank you, and our fifth kid here austin. you still are young like a kid, energy of a kid. >> i appreciate it. >> join us tomorrow. "squawk on the street" is next. good thursday morning. welcome to "squawk on the street." i'm carl quintanilla, jim cramer, david faber at the stock exchange. hope you are ready for a wild ride. busiest day from caterpillar, gm, 3 m and verizon. taking futures higher. ten-year 2.72p. durable goods a beat, cap ex a

bead beat. europe in the green as draghi continues to talk down the euro. a shareholder friendly quarter for apple. a beat on the top and bottom line. increased buyback, stock split calling it the i-split. >> two-faced quarter for facebook. profits blew away the estimates but company warning there might be a new normal of slower revenue growth. >> another beat and victory for cost cuts, caterpillar raising its outlook. sees improvements in the building industry. >> 'tis the season to make a health care deal. zimmer buys rival more than $13 billion is the purchase price. the industry ripe for more consolidation? >> apple coming off the company's best nonholedy quarter ever. results did beat expectations as almost 44 million iphones were sold in the period. apple announcing the seven for one stock split, 8% different hike and increase in the share buyback program. ceo tim cook on last night's

conference call. take a listen. >> we decided to continue to allocate the vast majority of the incremental capital return to share repurchases because we believe our current stock price does not reflect the full value of the company. the size of the share back increased the signal of the board and the management team's strong confidence in the future of apple. >> so many interesting things about this quarter. first increase in income since december 2012. the cash hoard coming down for the first time since 2011. jim, your thoughts? >> i think this is a victory for the apple shareholders, including [ inaudible ]. i'm going to say that. this is the quarter where they took back the leadership from samsung. i'm looking at the countries that they did great in. greater china. if you remember a year ago people thought that china wasn't that good, brazil, indonesia, talking about tremendous -- tremendous love worldwide for apple and it they don't mention samsung.

they have the great aside, tim cook has a great aside, about microsoft, welcome to the app store, microsoft. i love this quarter because yesterday i said it looked like my charitable trust owns apple. why? it's cheap. one of the great lines, very understated on this call, but they do just say, point blank, this is about the company being undervalued. that's what this shareholder -- i wholeheartedly -- there's a couple lines in the conference call that literally just define what we've been looking for as shareholders. more -- why do a seven for one split. we want to be more acceptable -- accessible to large number investors. why do a big buyback. frankly because the current price does not reflect the full value of the company. these are all the things, kind of the classic things you haven't heard from apple you're getting today. >> apple has not participated in this famous rotation at this point. out of growth into value in the sense that other companies that perhaps are less valuable have benefited. better iphone numbers, better

guidance. does the multiple expand and does it now become the value play that it seemed to be missing out on during this rotation? >> i'm going to say yes to that because you really do have some income growth here that people have been looking for. you know, i have been expecting something about new products. it wasn't even talked about. instead we're talking about 800 million itune credit cards, a payment situation. we're talking ability how this is one of those instances where we see a reacceleration of cell phones. qualcomm did not see that. this is about these guys taking share back, growing, growing the company. we didn't have growth. earnings per share close to double digits. how can you not have value going to these people. >> it's going to open near 570. 52-week highs 575 and with the split people say are they positioning themselves to get added to the dow which is only 10% tech as opposed to 20% for the s&p.

>> i think not a lot of money index to the dow. what's important here is that they're giving you the money back and they don't -- it does not hurt -- there were people talking earlier on "squawk" is it going to hurt r and d. they had the static pool of money and they can raise debt. >> of course. they have to raise the debt they can't take so much of the money back because of our screwed up tax system here which we get into when we talk about the tax inversions. back top a -- to apple, the larger screen, because of the guidance are you looking at when the larger screen starts to hit that's going to be helpful as well and we get there without any hiccups. >> yeah. i think so. this is a 30% u.s. story. there's a moment in the conference call where they discuss the subsidies. i know you know at&t and verizon well. tim cook said listen, we're an international story, don't worry about it. the flaws, ipad, i thought tim cook, ipad wasn't that good but they had an inventory stocking issue. and basically what they were

saying was, welcome back ecosystem. samsung no ecosystem. we have ecosystem. ecosystem alive and well and that was a growth story that had stopped being talked about. this was one of those where the company was no longer on the defensive on the conference call. and that is what emboldens me to think the stock is not done. >> with the significant capital returns being a part of that. >> the buyback is like the united states should buy back this many treasuries. >> one cautionary note for the long term that i picked up this morning which is these new plans for financing your handset purchase which can extend about two years and then they drop off and your bill comes down, some wondering whether you're going to see handset life get stretched. >> look, in u.s. -- >> because of this in the u.s. and therefore, people going look, my bill came down, i'm not going to get pmy new phone now. >> the u.s. has different payment plans for the rest of the world and what happens is that u.s. -- u.s. shrinks as a factor if that's the case. at the same time, they like the

phone. i mean, i -- i come back to the samsung issues. to me, samsung peaked last quarter. okay. i thought they had this great 5.1 divide. the larger device. wasn't talked about. who knows what apple has up its sleeve. this was the first quarter where they answered every single objection of the ap list. by the way, can we state point blank i am through with analysts trying to figure out the handset. every one of you i'm coming after you. every single one. coming after you for doing shotty work, making statements that have no -- >> one of the secretive companies we have out there second to amazon. >> throw your hands up. enough is enough. don't try to say listen, i got a factory source. tim cook, i know you watch the show. you know, i'm grateful for what you did which is basically, will you stop trying to guess what we have. it's a fool's errand. it is. some of these analysts they're -- i would like their -- instead of just buy price target ra ratios, say i'm sorry.

>> we don't know. >> like i throw my hands up. >> so many names to get to. facebook this morning, profits nearly tripled from the year-ago period. revenues up 72%. mobile ads 59% of overall ad revenue from 30% a year ago. on the call mark zuckerberg spoke about how the company's recent deals are positioning it for the future. >> agreement to acquire whatsapp and technologies to expend access around the world. these are important efforts that we believe will help us making progress towards our mission over the long term. >> facebook announcing david ebersman stepping down going back to health care succeeded by david wenner who once served as the cfo of zynga. now says stock is not going to go straight up anymore. tougher comps, big acquisitions. new cfo. >> i like the fact that stevele nailed it at the low and sometimes you want to declare

victory. that was a declare victory piece. i obviously love jordan. he's great. i come back to what jordan is saying, earnings per share story. you plant the flag by cutting your price target. everyone else raises the price target. i heard david what you said, the pressure is there a second story. first they had no seasonality versus google a company i like very much. here's what i like about facebook. i'm using a 250 number for 2016. >> okay. >> that's not 250 rev. >> right. >> not 250 eyeball. >> 250 earnings per share. the things monster accelerated growth they have not begun to monetize -- not begun to monetize instagram. instagram had 2 million users when they bought it, now has 20 million. >> they weren't talking about monetizing it soon. those worry about the comps coming up, we talked about this yesterday, being tougher and you have slowing growth. there's nothing you can do about that. >> well -- >> conceivably. i mean incredible growth. >> i know. >> 72% revenue growth. >> i know it's incredible.

instagram montization come lower than people thought, and the video. >> sandberg made the point we're not monetizing video yet. obviously throughout this not monetizing instagram. zuckerberg throws in whatsapp cash generation. it was one of the things that jordan, what stooefle didn't like. i started thinking wait a second, maybe whatsapp is a trojan horse. if he's saying it's cash generational ready and giving you growth numbers even in the last month, and look, let's not forget what sandberg is saying. sandberg is saying people -- this is the huge crossover quarter, tv versus facebook. people are watching facebook. one of the things zuckerberg prodded himself in, six out of seven days, people -- more than 50%. >> pretty crazy in his words. >> i love that comment, pretty crazy. what this is saying, ought to

play video, guys were loving it, high five, but what's going on here with facebook, is you're watching tv, going to facebook, you're reading the news feeds ads which are successful, buying things, you're 18 to 24, you're worldwide, you're 1.3 billion. if i'm listening to this conference call and i'm coalgate i am calling my guys saying i want you to take x amount from print and tv and just throw it at sheryl sandberg as levi strauss did and had good numbers. >> yeah. basically one of the lines in the journal today, no longer an experimental ad buy. every ad buyer has a social lin who's bigger than facebook. >> nobody. we still know the ad share as opposed to the eyeball share is nowhere near commence rate. >> they don't have to spend a lot of money. the cap x stayed the same. one of the problems with google they keep spending. facebook is not really spending. >> oh, facebook is spending. >> no, i mean accelerated

spending. >> you don't consider whatsapp and -- >> i consider that kind of cap x. >> acquisitions yes. but i just felt like that if you're really worried about the acquisitions this made you feel better because what they're trying do is say listen, we got people worldwide. whatsapp is a world wide thing. >> it is. >> is it really direct -- is it brand? is it direct? sandberg says it's everything. i think if you're an ad agency you sit down and say, you know what we're going to get our butts kicked if we don't start recommending more facebook. >> and cfo departure not a concern for you? >> it's funny because -- >> sold a lot of stock. >> seems like a nice man. not the right quarter to do it. there's no right quarter for a cfo to ever leave. tim cook was active on the call. and zynga, thank heavens, zynga by the way has one third of its market cap in cash and raised ebitda number, but zynga is no longer a laughing stock.

when i read that, he comes from zynga. zynga was undermanaged and wasn't the cfo's fault. it's not like he's coming from web van. all right. he's not coming from sock puppet.com. >> no. no. it's not e-toys. >> thank you. >> i know. don'n't ok es cans. >> i will look es cans. >> gm has breaking news. hey, phil. >> carl, take a look at shares of general motors premarket, up more than 3% and the reason for that pop is because there's a bit of confusion when gm's first quarter earnings came out, the company saying listen, excluding charges, it was 6 cents a share, 2 cents better than the street expecting, but really when you look at the number, it's 29 cents a share is what general motors earned in the first quarter on an apples to apples basis, especially when you include the recall and restructuring charges but exclude charges related to a change in the foreign exchange rate relative to venezuela. so that's a big swing there. it's 29 cents a share, what

general motors earned for the first quarter, not 6 cents a share, 25 cents better than the consensus which was 4 cents a share and clearly we're seeing the sentiment from a number of analysts already, carl, very positive. especially when you look at the pricing power gm is getting in north america reflected in the first quarter earnings. back to you. >> yeah. >> key distinction, thank you very much. >> incentives went down in the month of march. heard from phil's great interview. down. wasn't march a headline risk month. >> yes. >> europe is almost in the black. i think it will be later on. $2 billion in automobile cash flow. now, of course, the cfo was asked, are we through with the headline risk and he wasn't going to go there. this is a cash machine. >> this has become a cash machine. >> mary barra added to the time 100 and bezos and jack and a bunch of business lum naries. >> let's see how many get on the cnbc 25. >> that is a tougher list. >> yes, it is. >> the size of 100 to begin. >> and 25 years. 25 years.

>> so much more to get to this morning. >> including zimmer, caterpillar, ups, everything we need to know as we get ready for a day of trading. jet blue's ceo, dave barger, how will that unionize pilot thing affect the company's future. s&p going for its second week of gains. haven't done that since the end of february, beginning of march. "squawk on the street" is back in a minute. .

welcome back. caterpillar reporting first-quarter profits $1.61 a share, ahead of street forecasts despite a slow down in its mining equipment business. the dow component raising full year guidance. the cat ceo spoke on "squawk box" about how the company is faring in china. >> the good news, the u.s. is a little better and i think the bright news for us with all the risk we see and the possibilities of other risks coming in china, our business is building in china and all of our products and services are doing well over there. our dealers are investing, expanding our dealer model throughout the geography of china. in china our sales first quarter this year over last year were up 30% and again it's across all of our businesses. >> so we got that going for us. >> can i -- hey, doug, let me tell the story. let me tell the story. the story is very different. i love doug. nice man. this is a story about u.s., not

china. it's a story about u.s. construction, whether it be in pipelines, whether it be in non-residential construction. that's the story. it's very difficult to come in here and say listen, here's how we crushed the number but we fired 8,000 people. >> cap ex cut in half. the huge decline in raw costs to make equipment, kind of interesting, i see steel ticking up here. u.s. inventories had gone down. yesterday there was a piece, small item about caterpillar. this is a construction story and a productivity story and the swing in the united states is so -- $552 million, stop talking about china. doug. it will take care of itself. >> just a little memo to doug. >> talk about beau cyrus. >> didn't go very well. >> but -- you know, the face is actually pretty good. a little acne, but the face is good. don't focus on the acne. >> okay.

>> touch it up. this is a cler ra sell story. >> mining, whenever the comeback happens, not a 2014 story. >> doesn't need it. here's the way i would have said it if i were doug. joe, becky, goolsbee, university of chicago, here's the story. the u.s. is back. it's back big. construction coming back. people are using our equipment all over. we don't even have government infrastructure and it's amazing. instead of like being defensive about china, doug's got to -- he's got to take back the story. >> yeah. >> even though the comments about u.s. were tempered he said there's room for improvement, despite optimism in the states and needs to be more infrastructure in this country. >> we've always been waiting for the elusive $10 earnings per share. we didn't get that. i think the story is about the return of the u.s. capital spend. we heard it with united technologies. it's for real. we heard it with general electric. >> and the core capex putting

the bears on their heels. >> bears and cats are going to tell you they covered -- no, they're disciplined. but they're in a cave -- they're in a den right now, and it's claustrophobic. >> we'll get cramer's mad dash as we count down to the opening bell. futures looking pretty good here. "squawk on the street" is back after a break. at delta we're investing billions of dollars, improving everything from booking to baggage claim. we're raising the bar on flying and tomorrow we'll raise it yet again. in a we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities

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opening bell. on a thursday we're going to talk transport in the mad dash. >> right. transports have been the leader here. i keep waiting for the dow jones to confirm. hasn't happened. one of the reasons the transports are so on fire. i want to talk about american airlines. the stock did the thunder was stolen from this quarter up very nicely yesterday. david, get this, this is american airlines we're talking about. $10 billion in cash, $17 billion market cap. buying back shares left and right. i'm using -- here's my number for two years from now, $6 power. this is -- >> incredible. i talked about it one of the greatest recovery values we saw for a bankrupt equity. if you had bought the equity of this company when bankrupt, the returns were astronomical. >> e-trade upgraded today because the retail investor is back. these are why the retail investors are back. this is a quarter, $480 million profit, i'm talking about an airline. delta's numbers were great. do you know how bad the weather was? do you know what kind of numbers they can do --

>> to your point you made many times when you get by the doj with a big merger you're about to do it and go to buy the stock. >> when the anti-trust department -- it was a democrat anti-trust department. this was the ridiculously blessed deal in history. you saw it coming and i didn't. i was looking at the fact there was great competition all over the country. now there's not. they've carved up the country as if it's a railroad. we're in railroad mode for the airlines. >> doug parker like vanderbilt. >> is he great. he came on the show and basically was like kind of cackling. a lot of talk about that this was a back room deal to let this happen to get that deal. >> i don't know about that. >> i don't know either. >> didn't have as strong a case as they originally appeared to. >> spirit air comes on and says listen, typically we would go in against these guys but we're not going to compete against the behemoths and american airlines, what did she go to, 60 bucks?

>> all right. >> ten times earnings. >> ten times earnings so bad. ups by the way another transport, number looked horrible. blame it on the weather. nobody sells it. that's typical of this market. >> all right. we got a lot more -- man we have so many things to talk about. >> we didn't get to biotech. >> biomet, $13.35 billion by zimmer. stock up strongly. we'll talk a little ge. i got a little story for you as well. >> qualcomm. >> verizon. we got so much. let's go to the break so we can get back and talk about it all. and the opening bell. >> i'm not there yet. what will finance look like in 25 years. credit card, shopping, banking. how will your money move in a

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♪ 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. you're watching cnbc, "squawk on the street," live from the financial capital of the world. we're going to get the opening bell in a moment here. apple and facebook are the ones to watch. in fact, just to put apple's premarket action into some perspective. the biggest one-day gain in the history of the stock was $49.72. the eagle eyed kevin kings bury pointed this out. it's up 45 in the premarket. going to make a run at that. >> tim cook, it was a charm offensive by tim cook.

he basically said listen, china, china, china, china and then don't forget china. this was the quarter -- by the way, qualcomm not great in china. this was the quarter you basically said you know what we're beginning to scratch the surface, starting to put up retail stores, 40,000. they can double the number of contact points they have in china, 40,000 right now. this is the great china story for 2015. >> so caterpillar is a non-china story. >> doug should have told america and correctly listen to what tim has to say. like i'm on a first name basis with these guys. there is just -- there's a great ecosystem. can i say i love this line. i wholeheartedly welcome microsoft to the app store. i mean, tim's having fun. >> if they had done it earlier it would have been better for them. that was the nice aside. >> here's what tim has to do. he has to do what our buddy reed did. i want to see a skype whatever. no, that's microsoft. i would like to see some sort of

video here. i can see him sitting back and saying, oh, you want in china. i gave you china. you wanted buyback. you wanted seven for one, two for one. i gave you seven for one. >> all right. >> the master. >> give me a new product that i can really get excited about. >> i'll give you a few product. how about new knees, new hips. >> we'll talk about that, yes, we will. >> that's zimmer. >> that's a tease. it's a slow build. >> slow build. >> you mentioned american in the telestrator, ups does miss, 98 cents versus 1.08. in the title of their release, weather impacts q1 results, lost $200 million due to weather. >> fedex i think is better storied. i like ups. they had some issues. nothing insurmountable. they'll come back. i'm not worried about that. >> verizon and time warner cable both out this morning.

usually i would be all over them given everything else, it's -- well time warner cable -- there's verizon. the numbers were okay. a little concern, though, jim that you're starting to see some impact, post-paid handsets not as great as people had hoped in terms of growth. is there competition from t-mobile? is it starting to eat away a little bit here at verizon? you can see the stock not doing much. >> pick-up of $1.4 billion free cash flow. i like the operating margin wireless going from 32 to 35. how about the fact that one out of every three people in america use verizon. i thought that, again, memo -- these are how you tell these stories. how come the guys can't tell the stories. i feel like don draper without the sauce problem. i can tell the story. no canadian club here. >> he's got a lot of -- yeah. was not a quarter, though, that investors are getting excited

about verizon. >> david, i started with verizon. i started verizon when it came out. ten minutes later i realized all right, let's -- let me go back to gm. >> you went back. >> these are so hard. the acquisition. but at&t is not -- this is not going to duplicate at&t. >> comes off day when at&t was not a happy story for those. time warner cable, yes, it's getting bought by our parent company, all stock transaction, you know the story. but the numbers from time warner cable are kind of good, surprisingly good for some people, worth noting for some people. the stock is up, i would assume comcast is up as well. they added 370,000 tsus. >> how is that possible? how does verizon -- >> most residential adds in seven years. >> what were people doing, rabbit ears? >> no. >> it's not churn. >> but they're coming off of a spillover effect to the cbs dispute which hurt numbers and maybe people coming back. >> right. good point. >> but they didn't see it as much on the actual profit side

of things. but that is being seized on certainly as a positive. they're going out on a high note. >> they are. >> keep our eye on the misses. you mentioned 3m today. they keep the year guidance intact. lily, sales plunging on generic competition. one of the leading losers today. >> i was waiting for that to happen. finally happened. lily has been doing so much to bring out value. by the way, 3m, i always look at that and say, wait a second, everyone says miss miss miss. they had 11.2% growth here. earnings per share. you have up margin. organic local currency of 4.6%. committed to r and d. you sell 3m what's it going to, 34. 3m reported 108 to 104 and then the company just stabilized and next thing you know it's 125. two years ago this quarter. it can happen again. >> aetna is doing okay. 198, beats 155. they raised their forecast.

they were a handful of raises today. under armor, aetna among them. >> aetna was interesting. united health went the other way. aetna does more corporate. the biggest gainer happens to be on "mad money." land research. double digit order growth. some stocks trading on order growth, some trading on earnings per share, some stocks trading on revenues. the order growth at lamb, thlam semiconductor equipment company is incredible fast. go back to intel. circle back to intel. i know it's boring. >> not necessarily. >> qualcomm by the way, the wells note, almost got in the way of the beat which was by nine cents. >> they'll solve that. foreign corrupt practices. seemans and alcoa and halliburton showed you can get those behind you. qualcomm was not an issue of demand. it was an issue of transition. the analysts stick by qualcomm. they would stick by qualcomm if qualcomm said we don't know how to make anything. this is the most loved stock in the semiconductor segment.

it will be back in three days, maybe two days. >> you said about the markets you don't like up opens. >> no. >> are you leery of a reversal in facebook or apple this morning? >> i keep thinking about what david said and what sandberg talked about. they throw cold water on it. someone says wait a second, jordan rolan liked it in the 50s, suddenly it's at 62. i come back to the fact it's an earnings per share story. my travel trust owns it. do i wish it were up three. we're not going to get that kind of market. everything is muted. even if you take a look at what -- the lead story in the new york times for business section, pressure grows apple. people who think that facebook is -- you know what's happened? people are so burned on tech, they find negatives even where there are no negatives. the boogie man is in the closet for tech. it's like wow, i know something is going to go wrong. they've been so crushed for being too optimistic. warren buffet yesterday in the amazing interview with becky quick, saying no bubble. everyone else says a bubble. listen, where's the enthusiasm. i sit here and say as i told

doug how to do his call, lowell, the enthusiasm both from the ceos and from the analysts is really muted. so it makes it really hard for people at home to say -- >> talk about being crushed. facebook is up 14% this year. it had great year last year. i'm not quite following. >> you can't have accelerated -- >> the last 20 minutes? >> accelerated revenue growth. i want to take that stock big. i want to pay 20 -- i want to pay market multiple on -- i would like to take a market multiple on 2016 earnings and takes the stock up another seven -- >> david is saying the revenue beats aren't what they used to be when it was at 18 and 25 and 35 and 45. >> a tiny little company that didn't have big numbers. i mean -- >> pretty big then. >> can i say mobile -- >> say anything you want and you will say anything you want. >> yes, i will because you know what, i'm one third of this show. >> is that all? >> really? >> tell you what, we'll give you 34. >> i don't want that. i -- i am looking at the idea that they can monetize media,

going to be coming up. i love this news feed. i just think that -- look improving relevance, how about the fact that zuckerberg comes on and says they like our ads. what is his primary concern? i want good ads. this is not myspace. remember the bad ads. >> >> i do. >> i know we want to get to bob. quickly on a deal related topic. mmk, mathey raised their pill. only for one shareholder paulson and company which apparently wants to go up. they're the largest shareholder in mall len crowd. that would help them with the vote. >> i mean this stuff is ridiculous. >> i can't say how many have stopped and wanted to talk about ackman and allergan. >> how is that allowed? >> you have the sec head of enforcement blessing it. >> could he have said i want to

pass on that? >> how could you pass? it's risk-free money. everybody is jealous that he was smart enough to figure out a way to do it. >> loophole in the law. >> put up $3 billion, take nothing risk, making a bid, i'm part of the partnership, it's completely legal, talking allergan. >> a great loophole and he exploited it, good for him. >> mary joe white, come join us. we would love to have you talk about it. >> member of the top 100 today. >> mary joe white. let's hope mary jo white says maybe this shouldn't be allowed. we want a level playing field. arthur -- level playing field. >> at this moment apple has blown through its 50-day, facebook has come off of it. bob pisani, picked a heck of a day to come back. >> thank you. few days off. r and r in the caribbean does wonders for the mental health. you're right, this is the busiest day of the year so far in terms of earnings. leading the way, take a look at the major sectors, tech stocks, apple moving, all the tech

stocks to the upside, strength and consumer discretionary, strength in the financials and home builders doing well. get to that in a minute. the biggest earnings day of the quarter. 64 s&p 500 companies reporting today. we've got 200 so far. it does include everyone that has reported but about 40%. earnings meager, up 0.7%. the numbers on revenues, that should be up 3% overall. the important thing here is if this trend continues, we'll be up about 3% on earnings for the quarter. not great, but a little better than where we started so far. take a look at sectors here. the transport, you heard about ups. they missed on the bottom line blaming weather. i want to know atlantic equities, interesting number estimate, you back out the weather, it was about in line with expectations. it was $200 million headwind for ups. southwest earnings slightly above expectations. lower fuel costs. united continental is down but they had a smaller loss than

expected. the autos, a number of the companies, smaller companies did very well. group one did okay. delphi beat as well. o'reilly beat as well. trading to the downside. gm had a good number as well. home builders what i want to concentrate on. looks like a mixed picture but a little better. pulte and riland. pulte beat. good sales in texas. orders decent but not amazing. up 9% for d.r. horton, 6% for riland, 6% for pulte. the companies that are reporting better numbers than we're seeing on the new home sales numbers. prices are still going up. offsetted by somewhat weaker orders. the prices are going up and that's helping the margins overall. that's what really matters. companies are moving to the upside for the most part as you see. m mer

merry tank had decent numbers. e-trade is the latest one to come out and report a surge in customer trading followed on similar reports, schwab had numbers, ameritrade had decent numbers. small investors have been watching the markets and trading a bit more. on the industrial front, we talked about caterpillar. the story there. but i want to mention stanley black and decker, terrific smms fr numbers from them. the do it yourself business, diy, strong. organic sales there were up 7%. the do it yourselfers, home improvement, construction, continuing to do well. 3 m missed on the top and bottom want to show you something. they were up about 30% last year. the stock. and look at this organic growth for a company that's multinational and working in many different sectors. health care up 6%, industrial up almost 5%. consumer up almost 3%. bottom line here that's an excellent sales number overall for organic growth, david, considering the global pattern and the global situation.

back to you. >> we opened too high. >> want to get to a little news here on bob evans. remember last fall talking about bob evans, little over a billion dollar company. i'm going to be seeing it again when goy to maryland for a baseball tournament, spending some time at the bob evans. >> the ripken complex. i mentioned it this morning we're going to have news as well. proxy fight of great significance for that board. tom sandell, they own about 6.8% of the company's stock, going after eight board seats. they've been pressuring the company to get it together and unlock what they say is instrinsic value that approaches as much as $90 a share at this point. they say it's been materially undervalued for a long time. that being bob evans. they are going to basically fight to take over more or less the entire board of directors, nominating a slate of eight directors for that company's

board, trying to get it to no longer have this discount in its stock price that they say they do. they, in fact, also want to unlock the value of its real estate saying that could be as worth as much as $900 million. talk more about this with the man tom sandell who will be waging that proxy fight. a big deal this morning we've barely been able to mention. there's a look at tom, coming up with me next hour. zimmer, take a look at zmh. the stock price, the stock is up 17%. zimmer after announcing its intent to acquire biomet, it was a club deal. $11.4 billion purchase price back then. now being sold for $13.35 billion today. $10.35 billion of that is cash. remainder is stock. $3 billion in stock that will be delivered to the private equity owners of biomet. they will end up owning 16% of the combined company.

it's an interesting deal for a variety of reasons. it makes this company number two after the johnson & johnson unit that it competes with in this area. it also diversifies a way from hips and knees, 70% of their business right now and they're talking about significant synergies, of course, as you might imagine to the tune of what are we talking, $270 million by the third year following closing, about a half of that anticipated in the first year, $135 million. and they're going to lever up. it's a theme we've talked about so often here, of course. why not borrow an incredibly generous markets right now. the junk market perhaps, maybe a sign of froth, but it will give you money. it will stay investment grade, will lever the balance sheet to 3.7 times ebitda. debt will equal 3.7 times yearly ebitda. generate a lot of cash. $8 billion revenue company now, jim, competing in this area. shareholders clearly enthusiastic as we have seen so many times, although it does

appear deal making is increasing in frequency. >> that's a great baby boom play. i mean obviously this is another one of these situations where you take out competition. these are like the american airlines. and look it's a great deal and they -- they didn't pay that much for it, frankly, and they've been able to tell a good story while we've been on. i do want to comment that's one of the few stocks that continues to go higher. carl, you said earlier, you know, do i hate up openings. look at this. we have sellers coming in everywhere. facebook, you're winning on that one. >> seeing more red. >> some of these biotechs and they are rolling over once again. the software is a service play, rolling over once again. anything high multiple is going down. and, you know, they open them all up and we just don't do not have that kind of market to sustain the market opening high. it can settle. >> zimmer by the way, not a big acquirer. last big deal they did was

center pulse in 2003. >> that's a big deal for zimmer, this one. >> it is a big deal. in fact a very significant deal. doubling, almost doubling the size of the company. sports med, traumas, extremities. a lot of people put off the surgeries because they are elective but things have come back a bit. average selling prices have stabilized. to rick santelli now. change things up a bit here and check on the bond market. take it away, rick. >> david, this morning, everybody saw the better than expected durables and i would concentrate on the areas, of course, capital goods, orders and shipments, nondefense, aircraft, give you an idea regarding capex. and that was good. the jobless claims, you know, the correlations between that and creating jobs is a bit tenuous, but it did move in the opposite direction. the intraday 10. says it all. we thought here we go, we're going to test 2 3/4, back down. not only back down, but now not

under 2.70, under 2.69. continues to be an area that can asustain aggressive sell-offs. year to date of the ten-year, you see what's going on, sideways, 2.60 to 2.80. any settlements under 2.57, a boat load of buying going on. if we look at what's going on in tens to twos, it's important, but first look at year to date of twos. here we are at 44, 45 basis points. this is the shortest end of the curve. this thing is ready to break out to the upside. look at tens to twos, see that it's hard to flatten this trade but it is starting to flatten. look at fives to tens and fives to 30s, new lows in terms of tightness. august of 2012 on fives to tens, looking at september of 2009 on fives to 30s, and i do understand that we had a five-year auction yesterday, so part of the influence is new guy/old guy relationship. real quickly two-day of the

dollar/yen is revealing not a lot of upseed. the year to date correlation of tens is totally stellar. back to you. >> thank you very much, rick santelli. number of airlines out with earnings, of course, including jetblue which has really lagged the pack in general. we'll talk to the ceo later on about the pilots, and a lot more after a rough winter for that industry. dow is down 33 as jim said. can't hold that up open. "squawk on the street" is back in a minute. ute. predibut, manufacturings a prettin the united states do. means advanced technology. we learned that technology allows us to be craft oriented. no one's losing their job. there's no beer robot that has suddenly chased them out. the technology is actually creating new jobs.

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frequent heartburn medicine for 8 straight years. i hate when my computer gets grouchy. it's probably due to lack of sleep. set your computers to hibernate after 30 minutes. the rest will do it some good, and save energy. the more you know. . cramer last night on "mad money" taking a pie, slicing it into seven pieces as apple did with the announcement of its search for one split, something tim cook was asked about, said doesn't add any value. >> same pie just a lot of slices. says it makes it more accessible. this is a treacherous market. maybe as a long day. but apple, the value stock, does shine today but anything at high

multiple is falling apart as if there are heat seeking missiles going after anything that reported good revenues. there's obviously a very big sell program going on right now the market opening up was exactly the opposite of what people wanted. biotech is giving it up. >> the lingering shadow of the ukraine, putin making remarks that an attack on russian citizens in the ukraine in ukraine is an attack on russia itself. >> yep. look at under armour being one of the best examples. going to invest, stock being killed because they said they're going to invest. people are reacting very negatively to a lot of really good earnings. >> yes. we'll get stop trading with jim after a short break. don't go away. ♪

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what are you waiting for? you could literally be done with the test by now. now you could have done it twice. this is awkward. 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. . it is time for cramer an stop trading. >> gee, my travel trust owns it, talk about the good ones, gm. this is all about the fact that sales weren't as strong. that's their number one drug. they affirmed the forecast that they didn't bump up the forecast. stock selling at 18 times earnings. you're talking about a multiple equivalent to big cap, pharma, without the dividend. if they had a dividend the stock would be higher. be aware this is emblematic of

what's going on right now in the market. gilead giving things up. this is emblematic of what i regard as people will not pay up if it's biotech or if it's software as a service. they don't want it. just horrendous selling. >> a close here would be the lowest close of the year for cellgene. >> i think the stock is cheap. doesn't matter. cheap doesn't matter. they're spending for earnings. same as under armour spending for earnings. look what happens when you're spending for earnings. they're killing you. killing you. >> "mad money" tonight? >> okay. here's ap example. service now. blow the doors off the billings. billings, no one cares about blings today. they want earnings, gm. we have lamb research. that's a semiconductor equipment stock up because of orders. future orders will be good. avnet. that's a low multiple stock

getting killed. i have all three. this is a confusing market because a lot of people are going to say i have to panic out of here. don't panic. a big sell program going on. and people hate high multiple. >> yes. >> they hate it. >> see you tonight. jim cramer. simon hobbs to tell us what's going on. >> we'll look at how high apple can go now that tim cook returned it to serious growth. caterpillar, cost cuts, another bad year for mining and gary will be here to pick up the point jim made. behind the momentum stocks according to gary, vice chairman of morgan stanley next on cnbc. [ male announcer ] this is the age of knowing what you're made of.

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straight to your door. viagra home delivery. get started at viagra.com. ♪ welcome back to "squawk on the street." our road map will start with earnings. apple a big beat, a buyback and a stock split. pushing the stock higher, but should we be buying as the market turns? >> caterpillar showing the power of cost cutting, raising its profit outlook. the global bellwether sees improvements in the building industry. >> facebook profits blowing away estimates reporting big mobile ad revenues. could there be trouble ahead? >> big news, apple reporting stronger than expected second quarter earnings.

the company has approved another $30 billion share buyback and announced, of course, a seven for one stock split with wwdc coming up this summer, what can we expect from tech giant? alex is an analyst with jmp securities. good morning. >> good morning. >> this is big news here. tim cook's returned them to serious growth. net income up 7%, the gross margin is above 39%. and they've sold 5.5 million more iphones than the market expected. are you impressed? >> oh, yes. very strong quarter out of apple. and the real good news for them is that it's coming even ahead of the iphone 6 refresh that we're going to be getting in the back half of the year. >> okay. so what do you think on the financial engineering front? obviously carl icahn agrees completely, he says, with the bigger buyback. the fact that they've gone from now returning $100 billion to $130 billion by the end of next year, do you think that the likes of icahn are off their

back? does tim cook have a clear path here? >> the good news about the share buyback and increased dividend, apple proving itself to be shareholder friendly. in fact very shareholder friendly. should eliminate some of the noise that could prove a distraction for the name. >> i'm curious about the 7 for 1 stock split. a little unusual. it certainly caught people by surprise. the rationale here, clearly tim cook will say they want to attract perhaps a new kind of investor, the retail investor, with the cheaper stock price. is this about getting in the dow jones industrial average? >> i think that's a part of it too. absolutely. so the combination of both factors makes this a very sensible move. the only question is and like on the innovation for their products why didn't this happen sooner, that's the only real question about apple right now. can they come up with the kind of innovation to keep this story going next year. >> i guess they've -- seven for one is an odd number, takes them down to what is it, $75 a share, thereabouts. i mean clearly this is quite carefully thought through as to

what would impress the committee to get in the dow. such an odd number, alex, that must be what they're driving for. if they get into the dow what is the tracking consequences of that? do many more people have to buy the stock or is that too old fashioned? >> i think many people will have to buy this stock but at the end of the day what's really going to matter is forward looking financial performance. this is a good quarter as you pointed out. returned themselves to growth. i'll point out that some of their key suppliers, like skyworks, for example, or their manufacturing partner are outgrowing them right now so it shows the competition is doing well also. >> he's adamant there will be new product categories this year. i mean that's clearly what he said in a number of interviews. i think his definition of a product category might differ from our definition of a product category is. can it get back to $700 a share? is that possible from the margin or multiple expand? >> i think certainly could get back well above 600.

whether it could get back to its peak will depend on the innovation we get in the second half. we're expecting a larger iphone, expecting an iwatch, we're expecting something with apple tv. the unfortunate part is they're not first movers in these areas. they're becoming increasingly fast followers and that has some implications. >> hang on. he's never said that they should be the first mover. they weren't the first mover on the mp3 player, but the ipad, the i -- >> what was the mp3 player called? ipod. >> rings a bell. >> they were the first movers in terms of getting that equation right. you put your finger on it. itunes really was the revolution and then it was followed by something that really was a first mover device in the iphone and then the ipad again. they really did transform those industries. right now when they go to a larger iphone, those are tens of millions of units they left on the table not being in that market sooner. >> just to bottom line it, we're trading at 156, where do you

think it goes over the next few weeks? >> i think it keeps moving higher ahead of a well-anticipated iphone 6 launch. how far will depend on what we get from apple. unfortunately we've been disappointed in the past. that's why j and p securities recommend buying their partners more diversified play, buy arms, skyworks, that's what they think is the safer play. >> alex guana joining us there. >> the other mover of the morning, caterpillar shares up, more than 2.5% after the heavy equipment maker beat estimates by 20 cents with quarterly profit of $1.61 per share. cost cuts, no question, helping caterpillar boost profits despite a continuing slowdown in that mining equipment business. with us now, u.s. machinery analyst with jpmorgan. ann, i know you were cautious going into these earnings along with some other analysts. did you underestimate the power of cost cuts in corporate america here? >> i think we underestimated

that volume is a wonderful thing when it comes to deep cyclical machinery names and you can -- we saw on the construction business, they generated what we call incremental profits of 54%. so again, highlighting that volume is just a wonderful thing, despite the slowdown in the mining business. >> what about capex? some of the numbers were disappointing. lower. the number of employees at caterpillar is going down. are we going to be in this sort of large-scale cost-cutting mode when it comes to caterpillar for a long time for the rest of the year? >> well, i think that's an interesting question if you look at the outlook, they took down their outlook for the mining business and that's where most of the cost cuts are occurring. they now expect mining to be down 20% this year. and actually if you look at that at an absolute basis, revenues in the mining side would be about $10 billion this year. that's down from $21 billion at the peak of the cycle a few years ago. we'll probably see continued cost cutting in that business as

we go through the year and i think the bold case for caterpillar then is that's the bottom and gets better from there. >> they would hope. china another big theme when it comes to caterpillar. doug oberhelman talked about winning in china. he has a lot of folks on the ground there, i think 15,000. how is caterpillar doing in terms of taking market share from some of the local competition and growing its business in china? >> yeah. you know, another good question because the skeptics would say you're a day late and dollar short in china. it's now becoming a key focus of the company and growing 30% year over year this quarter. whereas competitors like the engine side have been there many decades. caterpillar would argue they've been there many decades but now becoming a key focus of the company. you know this is really a play on u.s. construction. it's a play on the global economy not getting any worse. i think one of the key questions

going into the call the company raised guidance only 25%, versus beat the first quarter by 39 cents. is there a lack of confidence from the ceo and the global gdp or lack of confidence on the cost side and that they can retain these kind of cost cuts they did in the first quarter. >> it does -- >> sorry. >> you look through the release and some of the comments and it's rife with xepts comments about political uncertainty in china and around the world. how does that compare to past calls and quarters? trying to hedge more than they usually do regarding political uncertainty some. >> well, they didn't change their outlook for global gdp. i think they're trying to flag what could cause global gdp to be worse than they expect. one of the key regions that we expected them to talk about actually in the press release that they didn't, is south america. south america was down roughly 15% in revenue in the quarter across many of its divisions and we think that that region could

get worse before it gets better and could end up being the biggest head wind going forward for the rest of 2014. >> i know you've got a neutral rating on the stock. i guess they didn't say anything or show anything to change your mind today, ann? >> we'll see what they say as we go through the conference call. the other big question is, their inventories at their dealers grew 700 million versus their dealers reported revenues to their customers down 12% yesterday. you know, the bulls and the bears will have it out today i think. >> well, certainly a bottom line beat and investors rewarding the shares. thank you for joining us from jpmorgan on caterpillar. >> when we come back look who's here. gary ka min ski, our friend, morgan stanley's vice chairman of wealth management. we'll talk about what gary sees the market going when he joins us live at post nine in a moment. later on, it was a blowout quarter at facebook thanks to the mobile ad revenue. should we be buying today as the stock was way up in the premarket, now in the red, when we come right back. ♪

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welcome back to "squawk on the street." check out shares of aetna the health insurer posting record first-quarter results helped by a surge in profits by its commercial business and adding new customers and raised its forecast for the year. investors taking notice the shares up 5% toward session highs and in a programming note, chairman and ceo mark bert toe linney will be a guest on

"closing bell" on cnbc. we'll all be paying close attention to that interview today. back over to you. >> thank you very much. stocks this morning are mixed. dow, nasdaq and s&p are lower at the moment. our next guest thinks the markets are acting normal and rationa rationale. gary kaminsky joins us at post nine. getting jokes about his lloyd beard, you argue you had it first. >> i did. lloyd clearly wears it better so if i can be half of the look with it, then i've done a good job. >> what do you make of the action today? >> severe reversal here and in europe as well. >> i would rather not reference today. i would think about what's happened since january and while the headline may be the s&p's flat, the s&p -- a lot of people think the stock market is down because those high momentum or high valuation stocks, which really 12 stocks have counted for the entire decline in the nasdaq in march, you take that out, what i thought would happen in january is what's happening. the markets are rationale.

look at the utility, mlp sector, real estate sector reit sector and high yield market it's what you would think given what's happened with interest rates and the concern still to this day of what earnings will look like at the end of the year. if i could tell you right now what the s&p earnings would be at the end of 2014, i could tell you where the stock market would be. the market doesn't know and that's right and normal. >> given what we have so far in earnings, do we have a lot of work to do? three quarters are beating? >> no. if you actually take what we've seen through for the s&p, i reference here, we're going to hit the s&p target numbers. if you believe that the s&p return 7 to 9% of 2014, part from dividends and distribution returns and capital gains through earnings you're there. you hit the targets for the first part of earnings season. >> what doesn't feel normal or expected is what's happening in the bond market with treasuries. how much is this move, lower yields, it's caught a lot of

folks by surprise and especially the primary dealer comments we had is that everyone went the wrong way on this trade? >> well this is -- we've seen that movie before. we've seen this movie before and everybody came in positioned in january for higher interest rates. but, as david knows, the bond market is a lot smarter than the stock market. this year the stock market got the interest rate trade right faster than the bond market did. if you look at the interest rate sensitive stocks, mlps, reits and utility they predicted at a time when the bond market wasn't sure. look at what's happening in the high yield market the best predictor of stocks look at the ten-year and it does make a lot of sense. >> something important is happening on world markets as you're speaking. i'm not sure if you're aware of it. sorry to throw it to you in left field. the european markets have reversed dramatically. gold moving higher because we have out of moscow that the russian defense minister said russian troops will start

military exercises on the border with ukraine at a time when the ukrainian government is moving in on the pro-russian forces within its country an act putin says is criminal. i'm not asking you to be a geopolitically aware of all of that detail but what is interesting is at the same time, the dow does not fall out of bed here. the markets in this country are not moving to the downside. if anything they've just cut their losses. are we immune from that tension whereas europe is not? >> well, simon, the one question or the one thing that most people have worried about if you've got to find something to worry about to counter the impact of quantitative easing and impact of forcing individuals and institutions is the geopolitical concerns. i'm not going to sit here and tell you i can give any great wisdom or advice. what i can say is that people that make very, very large bets on various asset classes are concerned, concerned, about what is happening in russia but it

relates not to just what's happening in russia. people are concerned about the united states stance on what they did in syria and perhaps as a result of that, many of the actions that you're seeing right now, are a counter reactionship to that. i'm not going to tell you what i know. what i tell you is that the federal reserve bank in this country and the central bank of europe are going to be very, very aware as they've been for the last several years that these tensions create the instability you'll see some stability out of them. >> if the european central bank because of this goes into qe, which it may well do. >> correct. >> will that boost the asset markets here or just hold them. >> do you remember the day that you and i sat here on this set together when draggy came out and said -- >> i'll do whatever. >> i do remember. >> and you and i looked at each other and both looked up the at tape that day and said that's a pivotal change. >> they were disappointed, only days later. >> the euro moved. >> two days later. >> as we wrap up here, i only have one question, you've been at morgan stanley now a little over a year, right? >> yep. >> the company's had great success during that time.

>> it has. >> last quarter or last week reported a strong quarter. so my question is, is that 100% due to you? >> a little less. >> okay. well, you know, my colleagues are all watching and the answer is absolutely not, david, but it is a belief and many of the things that i thought about when i joined the firm a year ago, which is that we are proving out, we are really proving out. i can say this because the numbers say it, the combined entity of having an investment bank with a world class wealth management and delivering it to clients. you say barons this past weekend, the top 100 advisors, that list around for 25 years. for the first time i believe in the history of that list the five top spots on that list were all morgan stanley advisors. number one, two, three, four, five. >> seeing traction between investment banking and global wealth management both having success but not necessarily helping each other? >> that's not true at all. we are working closely together. i work every single day helping deliver the firm to the clients and i wouldn't come on cnbc and

look at the camera and i wouldn't tell you our relationship goes back 30 years, that it's not happening if it wasn't happening. it's happening every day and i believe that's why the results are showing what they are. >> as i like to say, congratulations on the world's longest winning streak. >> thank you. >> great to see you all. i am privileged and honored to be with this all-star package. i feel lucky. thanks for having me in the 10:00 hour. >> good to have you back. >> the on-line school that teaches you to code is helping you get a job. aiming to be a one-stop shop for education. code academy's new career initiative. we'll talk to the ceo next. today is thursday

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mfs. because there is no expertise without collaboration. today we're bringing back code academy. today they're back with some news. the co-founder and ceo of code academy. getting into more of the jobs market with your code. what's the fuse? >> the focus we're building something that helps anyone learn the skills on-line to find a job all for free. >> still a free service? >> it is still a free service

and there are more than 24 million people that have taken our courses. >> 24 million yet not making money off of them. >> not yet. >> is this at least a step in that direction connecting with the job market toward a sort of mature code academy that will eventually be a business? >> definitely. i think what we see is having a lot of people with skills that eventually will end up in jobs and monetizing those skills is definitely a good way for us to make money. >> coming off the heels of the facebook earnings, sort of reminds me of the mark zuckerberg philosophy, add the users, get the scale, branch out and worry about profits later? >> i think so. i think we're focused on building a way to monetize that gets people the skills they need and then we can make money when they're successful. >> if i take this course will i have a better chance at getting a job? i mean is this dealing with the skills we keep hearing about in this economy? >> we work backwards from jobs to building the skills you need. so we look at the job openings and then build curriculum around that. take courses and get a job for sure shoe i wonder how much of a

void is out there? how many people need these kind of skills to get the jobs open today. >> 2020 there will be more than a million jobs in computer, science and programming. >> some of the statistics argue public schools at least in this country are actually going in the wrong direction when it comes to keeping up with global work force in terms of coding and math and science in general. why are we still slipping backward, do you think? >> it's hard for the education system to change as quickly as it does in other countries and not as much of an impetus to do so. the uk teaches programming in middle schools and high schools and here it's a state by state battle. >> you think that's better than a federal push when we've seen no child left behind, is it still best to let the states handle this. >> a federal push would be great, something that's going to take a few years. >> don't put this country down. i'm not sure it's my experience that everybody is taught programming in the schools that you mentioned in the uk, for example. >> it starts in september this year. >> fair enough.

i'm too old for the game. >> some of the numbers here, 24 million users, 100,000 courses built through the course creator. who specifically are these people that you're attracting to your free courses? >> pretty much all over the world. users in every country. 70% outside the u.s. people looking to connect with skills to make them better at their jobs. >> just in computer programming? >> for the moment just in computer programming. >> is anybody else doing this? >> other people teaching programming. >> none offering it for free i would imagine. >> yeah. that's great. >> breakdown of girls versus boys? >> we're around double the rate of female computer science graduates from college programs, around 36% of our users are female. >> why? >> i think we built something approachable and really easy to start on. levels the playing field. >> carl's daughters are in a moment and maybe can give it a whirl. >> how early. >> for a group that has been largely underrepresented by females for a long, long time going back to the ibm days. >> starting early is great. anything, you know, middle school level, high school level and anyone can really do it.

>> how hard are the classes? >> we start super simple. we aim to help anyone in middle school even get started in that same proficiency level required for adults. >> thanks for coming on and talking about the new wave of code academy, zach sims the co-founder and ceo, codecadamy. >> after a quarter filled with some quite shocking acquisitions totalling more than $20 billion, mark zuckerberg is putting the spotlight on facebook's business and ad revenue. does it mean long-term success, though, now that stock is trading down?

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comcast business built for business. welcome back to "squawk on the street." shares of johnson & johnson are coming off their session lows here. the dow component is increasing its quarterly dividend by 6% to 70 cents a share. that stock is currently down about half a percent. still another shareholder friendly move on this day after apple increases its dividend and buyback program. back to you. >> thanks very much, dom. we want to go to bertha coombs at the nymex. >> the number a little bearish we saw an injection of 49 billion cubic feet. a lot of traders here in the options pit were saying a number in the 30s would be bullish. we have seen lower than expected injections this time of year because we continue to see cold weather. we're seeing a little bit of a pullback slightly but we're more or less unchanged.

overall, nat gas continues to be somewhat bullish for this time of year because of the fact that we continue to see cool temperatures. so we're not seeing that move into the warm temperature and the shoulder season injection just yet. hope springs eternal one of these days it will be open toe shoe weather. back to you. >> it is coming. shares of facebook all over the place, reported first-quarter profits nearly tripled from a year ago. here's mark zuckerberg on the conference call. >> we reached agreement to acquire whatsapp and oculus and announced new connectivity lab focused on developing technologies to expand internet access around the world. these are important efforts that we believe will help us continue making progress forward our mission over the long term. >> joining us with analysis, senior research analyst with stern ag, scott kessler with us, senior equity analyst, welcome to the program. >> thanks, simon.

>> i want to kick off -- i think it's important to note the phenomenon that facebook now is. by my calculations one in five of the world's population are using them on a monthly basis. more than the population of india and they're close to the population of china. scott, if you look at the financial metrics which is our job on this show, advertising revenue up 82%, 59% of that is coming from mobile, why does the stock not do better on the session? >> that's the key question you ask, simon. when you think about it, i think folks are concerned about three things. one is the long-time cfo david ebersman with the company five years, stepping aside. number two, i think people are one kerg if this is as good as it gets for facebook in terms of revenue growth, what you referenced. then i think third is really the overall climate where it seems like a lot of folks on your air and elsewhere, are talking about a bubble, whether it's across technology more broadly or in

the social media area. i think those things are contributing to what's going on here with facebook. >> what is your take? given what scott has said about that concern about a bubble, when you see, for example, zuckerberg saying that they could do more in the area of private content or communications, isn't he talking abs a whole new world -- about a whole new world for that company and product category that a tim cook were to come out with it would send the stock substant l substantially higher? >> if you look at the addressable market for this company that is much larger than what it was say even a couple years ago with thewhatsapp. what you were talking about earlier, the cfo stepping down and whether or not this is as good as the gets and the tech bubble, those are all valid concerns but i think that they are mostly short-term concerns. i think for investors who are looking out the next three to five years, what facebook is putting together is a collection of platforms that's incredibly

powerful and when you think about what they haven't monetized, instagram and whatsapp and doing with facebook today, i think the runway for this company is very long and i think this stock should be a core holding for long-term investors. >> the big story has been mobile for investors. it continued to grow. it's been super impressive just in the last year or so. what facebook has done with monetizing the mobile ads. i'm curious how much market share they're taking from google still the dominant player in the space? >> significant market share. this was a quarter where the street was expecting their mobile advertising revenue to be down a couple percent. given this is seasonally quarter. they put up 8% growth. impressive growth. market share gain going on for them. the other thing people aren't focused on and they should is the incremental ebitda markets they generated.

80% flow through. tells you the significant operating leverage there is in the platform and gives us more confidence in the out year numbers that we have. >> aren't you concerned that they warned that there will be not for investors to not expect material revenue consideration from instagram, advertising revenue? that is substantial? >> we were not expecting much from instagram yet. we know they're going to take their time, the goal near term is to grow the user base. there was an issue with the core facebook platform not growing. i think we could worry about the other platforms. but really, they are looking out the next five to ten years when they think about things like instagram and whatsapp. whatsapp i think personally has the opportunity to be just as large as facebook in the long run. >> scott, let me come back to the cfo's departure. david ebbersman who did so much to push the company through the ipo to double the stock price. all the problems and the court cases that there are.

how important are these senior figures in the company? i'm really referencing the idea that sheryl sandberg might at some point go. i mean is that a game changer to you or having zuckerberg at the center, i mean does everything hang together and he just recruits better people? or as good people? >> well, i think simon, the way we look at it, is look, david ebersman is important to the company. his departure is noteworthy. we don't think it's going to have a material impact on facebook or the stock over the longer term. i think you're right that mark zuckerberg is clearly the key but i think a lot of folks closely are watching sheryl sandberg. we saw her on the "today" show a couple weeks ago indicating that she's happy at facebook, she's going to stay there. but that could, of course, change and people are wondering if that's going to change and if so, when it could change, that definitely is a risk we see over the next couple of years. >> hey, thanks for the analysis. scott kessler and arman thank you for your time.

>> thank you. >> thanks a lot. >> okay. we've got a recovery on world stock markets. europe is coming back. the dow has just turned positive. a lot of focus on what is happening in russia and the ukraine. quite clearly. michele caruso-cabrera our international correspondent is back at hq. >> hey, simon. we did see a flutter in the markets you guys absolutely talked about. saw the ten-year yield drop below 2.7%. some chatter see the russian stock market towards the close of its session today. there was some chatter that maybe it's related to events happening in eastern ukraine. we wanted to bring our viewers up to date. vladimir putin held a news conference a few hours ago saying any kind of military force from the ukrainian government in eastern ukraine, quote, will have consequences and said that the situation in crimea which they've, of course, taken over now, would have been a lot worse if russia had not stepped in and that if kiev uses its army against its own citizens that's going to be a serious crime. all of this sounds like a potential precursor to an open russian intervention possibly in

eastern ukraine as opposed to what many argue has been a syrup tissues or false one with pro-russian separatists that are ukrainians. you point out the market started to come back so it's unclear if this is the situation but we are keeping an eye on it and certainly seeing the russian markets and the ruble particularly against the dollar moving. guys, back to you. >> yeah. bid for gold and the japanese yen as well. thanks for the update. michele caruso-cabrera. up next an activist investor entering a proxy fight with restaurant chain bob evans. we'll talk to tom sandell about his plan for the company right after the break.

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because the future belongs to those who challenge the present. . shargs of bob evans trading up 4% on news that sandell asset management has nominated a slate of eight independent directors to the board of that company. joining me now to discuss his plan is bob sandell, founder, chairman and ceo owns about 6.8%

of the shares. you've been fighting this battle for a while now. ratcheted up obviously. why should shareholders of bob evans give you at sandell asset management essentially control of the board of directors of this company? >> we have been a shareholder quite a while at bob evans seen value in the company and tried to engage to the management on a cordial basis but they've ignored us completely. what we've done here we're nominating eight independent directors. nobody from sandell asset management is going on the board. eight highly qualified industry experts, the ex-chief executive of arby's and o charlie's, michael weinstein who bought snapple was a home run, the leading corporate governments experts in this company, charles elson of delaware, the leader in corporate governance. the problem with bob evans there is no corporate governance.

the board is a social club of country club cronies basically from ohio. so one example is, the board adopted a plan to move their headquarters from ohio to new albany and ohio, columbus, ohio, was willing to give them a huge tax break if they stayed. instead they spent $50 million of shareholders capital building a kingdom, a castle in new albany. they think new albany is a great place to invest in real estate? >> i don't know about the opportunities but consider to the arguments you've been making have more to do with the restaurant business, the real estate embedded in that and the food business they sale from stores and the like. >> right. >> now, they say we have a long-term growth rate, plan to generate as much as 10 to 12%, a balanced approach to capital

allocation. you know, just give us a break, sandell, and we're going to implement this plan and create a lot more value. >> unfortunately, david, it's too late. the company has underperformed their peers by 130% in the equity market over the past five years. they have a culture of corporate waste. their operating margins are 500 basis pointses lower than the peer group, than the average peer. 40% below. it's frankly disappointing. the stock price trading at $47 right now. we feel there is $90 in value in the real estate is 37 by itself. >> i know. 90 now. at the end of last year i was reading one of your position papers. you were at 80. apparently moved up by $10 your analysis. why is that? >> yes. our plan right now, contemplates operational change. i mean, revenues, for example, the company has not capitalized on their bob evans brand name.

they need to do that to drive traffic and same-store sales. bloated overhead. 500 people in the headquarter. i don't know what all these 500 people are doing. they're not driving shareholder value. >> on real estate you refer to being approached by potential buyers of their real estate. you refer to that. >> right. >> as well and say as you just said, worth 36 or $37 a share. who have you been approached by? are they potential buyers? how would that work by the way as a traps action to recognize that value? >> we have received four unsolicited expressions of interest by two major multibillion dollar listed reits wanting to take on the bob evans real estate in addition to two private real estate investment companies. four parties wanting to take on the real estate and the sales transaction at a value of $900 million. >> tom -- >> we could monetize this today. >> the battle has yet to come.

the annual meeting. >> august. >> tom sandell, you've been at this activism thing a long time, but i think first time you've joined me. thank you. >> thank you for having me. >> tom sandell from sandell asset management. >> among the avalanche of earnings, jetblue has disappointed primarily on the cost basis. its ceo david barger will join us live in the show. marge: you know, there's a more enjoyable way to get your fiber. try phillips fiber good gummies. they're delicious, and an excellent source of fiber to help support regularity. wife: mmmm husband: these are good! marge: the tasty side of fiber. from phillips.

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>> tom sandell, you've been at cost basis. the performance review. 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. . welcome back to "squawk on the street." on this gorgeous day in new york city. shares of netflix continuing its fall. yesterday amazon announced licensing deal with hbo which many see as a serious threat to companies like netflix. the stock is off session lows down about 3% on the day. overall, and remember, this is another big deal, just the idea that momentum stocks, sara, could still be falling in this environment. back over to you. >> we're watching those. meantime the dollar is weaker and treasury yields are lower. over to the cme group, rick

santelli with the santelli exchange. gom, rick. >> good morning, sara, good morning to my main man what's going on with the yield curve and interest rates overseas how it all could come together. andy, in your writing this morning, you andy, in your writing this morning, you picked up on highlights regarding the fed's ownership and how it isn't exactly equal along the entire yield curve. why don't you share that with our viewers and listeners? >> rick, while the treasury continues to buy in, even though they are still tapering, they own about 19.6% of all treasuries. but what is little known is the fact that they own 45.6% of all issues 20 years and longer, which means they really have a bias of flattening the yield curve, and that is what we've been seeing. as they continue to buy, even in the face of tapering, it flattens the yield curve even more. >> so, i mean, it really does auger for the 5s to 30s, the curve is flattening, it would

auger less considering your area, your folcrum is longer. when we see what's going on the short end, 3s and 5s, really showing up most of the selling, what are your thoughts on that? will this be a lehman moment where short rates really obliterate long rates and it will prove to be a problem, or am i making too big a deal of the flattening curve based on proactive short rates moving up? >> rick, what i think is going to happen is you -- as the tapering ends towards the end of this year, people will look around and say, who will buy the long end now? and at 3.40 long bonds, 2.70 10 years, where we are, i think they'll look around and say who's the next bid, and i don't think we'll find one for a while. at that point, things start to steepen up. the fed still believes they need to keep short rates low for a long period of time. i personally don't see the need. you know what?

it doesn't look like they're listening to me. >> all right, listen, you're a smart guy. what's the credit with regard to spain, just summarize it. basically, we know what the u.s. credit is. what is spain's credit if you had to give a one-sentence answer? >> spain's credit is so much weaker than the u.s., it's unbelievable that their five years are trading through u.s. treasury five years. >> yeah, 1.69 versus our 1.74. their 10 year at 3.08 versus 2 .70 for our 10 year. listen, andy, doesn't this auger for the notion it will be very hard to see u.s. rates rise when such a better credit, rates are already higher than some of the southern european kind of rigged sovereign securities markets. >> absolutely. but the difference is the ecb is getting ready to do quantitative easing. look at the draghi speech from this morning. it will happen in the second half of the year. the fed's going the other way, so we'll be like that even

though it makes absolutely no sense on a value basis. >> well, i'm giving myself the last word. all stimulus is functionable. it will have an impact keeping rates low in the u.s. that's what i think. andy, thanks for your thoughts today. carl, back to you. >> thank you very much, rick santelli. when we come back, if someone writes all over your astin martin, you're usually pretty upset, except in the case of this astin martin. we'll find out why this car is worth more than $1 million when we come right back. predicting the future is a pretty difficult thing to do. but, manufacturing in the united states means advanced technology. we learned that technology allows us to be craft oriented. no one's losing their job. there's no beer robot that has suddenly chased them out. the technology is actually creating new jobs. siemens designed and built the right tools and resources to get the job done.

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investing in cars can be a tricky business, but can some nba superstars make a car worth 500% more? robert frank will explain in today's " million-dollar minute." robert? >> if you own a six-figure car, you probably don't want it all marked up. unless it's been marked up by the world's best basketball players. >> the car is signed by all 50 hall of famers who were in attendance at the induction ceremony of michael jordan, david robinson, and john stockton. it is designed specifically to be the most expensive

memorabilia item ever produced. >> typically, when someone writes all over your car, it goes down in value, but this supercar is now worth seven figures thanks to those hancocks. >> the appraisal on the car is $1.25 million. >> meet jeff. >> when i bought the car, i paid approximately $200,000. >> and now, with all that ink, this astin martin's value has gone up a whopping 525%. this car-collecting hobby could turn into a big payday. >> pay a lot of money for picassos and stand and look at it on the wall, and that's the beautiful thing about the cars here. that's my artwork. >> yeah, i'll say, robert frank now joins us from cnbc hq. how did you find this guy, robert? >> yeah, it would be interesting to see where this actually trades, because it's a crossover collectible. it's not really sports m memorabil memorabilia.

it's not really a collectible car. it's a car that's become sports memorabilia. they're saying it could fetch over $1 million. i'm not really sure. the bidding will really heat up on friday, so we'll see. this is really going to be a big test of what the collectibles market now, whether people see this, again, as a sports memorabilia, which is normally someone signing a basketball or a winning jersey, something like that, or a collectible car. normally, the car by itself would sell for less than $200,000. >> it's 50 signatures in all, isn't it? >> yeah, yeah, and all written on with a sharpie pen, so you have to keep it in a garage away from sunlight and probably not wash it too much. it can't be driven around like a regular car. it has to be shown somewhere. >> what about rain? what happens if it rains? >> yeah, that could be a problem. >> you can't drive it in the rain, i guess. >> it's not meant to be -- that's another point here is a lot of collectible cars, even old ferraris, are meant to be driven. this is just meant for display. where do you display it? not in the living room. it will be in your garage. it will be interesting to see where it trades. >> yeah, art, not function.

>> exactly. >> robert frank. >> thanks, guys. >> always finding the fun ones for us. thanks. we're looking at the markets now. the dow jones industrials average is down. the s&p is up. i'll send it back to you for the 11:00, carl. >> see you later on. in the meantime, if you're just joining us this morning, here's what you missed -- >> announcer: welcome to "squawk on the street." here's what's happened so far. >> why do a 7-for-1 split? because we want to be more accessible to a large number of investors. why do a big buyback? well, frankly, because the current price does not reflect the full value of the company. these are all the things -- kind of the plastic things you haven't heard from apple that you're really getting today. [ bell sounds ] >> when you think about what they haven't monetized -- instagram and whaesapp -- i think the run rate for this company is still very long. >> our plan contemplates

operational change. revenues, for example, the company has not capitalized on their bob evans brand name. they need to do that to drive traffic in same-store sales. welcome back. 11:00 a.m. on the east coast, 8:00 a.m. out west. a big day for tech and the markets, and then net neutrality, the principle that all internet content should be treated equally. but those days may be over thanks to the fcc. the big question for consumers is will you pay more to surf the internet faster? >> both, facebook and apple making moves to the upside. how should you play both companies going forward? major changes coming to the e-cigarette market. the fda announcing it will regulate e-cigarettes, a move that has consequences for e-cigarette companies across the country. and a debit card for your bitcoins? yes, it's real and backed by a legitimate name, that being

mastercard. the company behind it joins us later this hour. joining us once again, lucky to have john steinberg, buzzfeed's coo, and cnbc contributor. first up, the fcc set to announce new rules on internet access that could change the web. it would allow companies like google and netflix to pay internet service providers for special, faster lanes to send content to customers. the changes would change what is known as open internet, the idea that all users should have equal access to see any content they want to use. what does it mean? >> it's a fine distinction. i'm not sure i buy it. let me explain it. the idea is there will be a fast lane that certain companies can pay to be in. this would make service for voice services, video services. this is what apple was reportedly in talks with comcast to actually buy access to, and companies would have to have the right to buy it on a reasonably commercial basis. not clear what that is. >> it's a new lane, essentially? >> it is a new lane on top of it. it allows the cable companies to

go into advanced services, more bandwidth, and the normal layer, everybody should be on equal footing. >> is it right to call it a reversal of the net neutrality stance we've been looking at for the past year or two? >> i think it's always been under debate. this is an additive element to the conversation, i think. >> you know, it's interesting, because you look at some of the big companies. you have to think even though it's a new lane, they will want to pay for access to it. >> yes. >> do you think that then makes it easier or more enticing for companies like vimio or college humor, some of the start-ups that do stream a lot of video, to become part of a larger company so they can afford it? >> from the buzzfeed standpoint, this is not thrilling to me. the idea other companies can pay to be in a fast lane. we deliver video, images, long posts, and i don't know what commercially reasonable is. i look forward to hearing it, to see if we can afford it. >> so you would argue it's a net negative for content companies and net positive for providers?

>> i would say anytime anyone can buy something that's better for them that not everybody can afford, it's better for the seller than potential buyers. >> commercially reasonable has to apply to consumers. you have to think that netflix, verizon, disney could choose to pass on that cost to the consumer, which ultimately will be something that the fcc would frown upon. how do you define commercially reasonable for the consumer? >> i also think that the koc consumers will have the ability to push back. with the wireless ceos on the show, talking about enhanced video services and things like that. if consumers in the normal layer start getting new up-and-coming services like a buzzfeed before -- you know, not like google or whatever, they will push back and say, why is everything being slowed down other than google or netflix? >> the chairman of the fcc did defend the move. he said there are reports that the fcc is gutting the open internet rule. they're flat out wrong. netflix, outspoken on the topic, responded the proposed approach is the fastest lane to punish

consumers and internet innovators. i know you haven't seen pricing, obviously, but would you guess you'd be a buyer on this service? >> i would say if we can afford to do it, to be in a faster lane, to service customers better -- and that's how the playing field is created -- of course. i would be irresponsible not to. >> how do you think this will shake out? obviously, there will be comments coming in from a lot of companies. i'm sure buzzfeed will weigh in, as welch the fcc, if you listen to tom wheeler, he says this is not really a change. there is no really substantial change in what we're proposing here. but what do you think companies will want to say? what do you think they'll want to make clear? >> let me give the other side of the coin. i think it is fair. i do understand the perspective of the cable companies. they have large cap ex expenditures, even though they have a video buyer, the trend for standard television is in decline rather than over-the-top services. they have to have the ability to compete. >> moving on to apple, the stock

is soaring and actually hanging in there relatively speaking after strong earnings and revenue after the bell last night. apple said it sold 43.7 million iphones, up 17%, way above expectations, boosted the buyback to $90 billion, upped the dividend 8%, said it would split 7-to-1 in june. here's tim cook explaining that move. >> we decided to continue to allocate the vast majority of the incremental capital return to share repurchases, because we believe our current stock price does not reflect the full value of the company. the size of the share back increase is a signal of the board and the management team strong confidence in the future of apple. >> critics didn't have a lot to work with, but one of them would be the ipad slowdown. >> yes, and the ipad slowdown, when you read the conference call and hear the explanation, it's not nearly as bad as the 16% year-over-year decline. there were lots of ipads sitting in the stores. the prior quarter, they sent more into the channel, but they

sold only 3% less to actual human beings this quarter. it's not nearly as much of a decline. >> when you listen to the call, though, there is one detail that you picked out that you don't think the market is paying enough attention to. >> yes. he said that there will be some acquisitions, some of which we'll try to keep quiet and some of which seem to be impossible to keep quiet. >> square, dropbox? >> it could be so many things. what kind of acquisitions could be impossible to keep quiet? it won't be a data-compression company. it won't be an image recognition -- it will be something that people notice. i'm surprised people aren't picking up more on that comment. >> "the journal" tries to frame it as balance sheet maneuvers that will tide you over to new products in the fall. >> yes. >> is that how you see it? >> yes. whether or not -- it's irrelevant whether or not the quarter was good orpt. $30 billion incremental stock buyback. 7-for-1 stocks, they'll make it to june. >> and in june, cfo peter oppenheimer will start his

transition. is this the swan song? is it something the company was reluctant to do? >> i don't know. i think they were delayed. i can't understand why they would be this late in putting out a new set of products and have to do the radical capital steps. it seems like as an executive, he made a lot of comments on the call about how we're not first, we're always best, right? he said, you know, i'll do amazing capital things with the cash. >> he told josh lipton, look, we don't front-run our products like competitors do. they talk about their self-driving cars and wearables. we don't do that until something is ready for market. what did you make of that comment? >> i thought josh lipton's comments were amazing. all the things he reported back that cook said to him were amazing. we have exciting things coming. i think people will be surprised. it seems like tim cook said, i don't show my hand, but then showed his hand to lipton, and trying to tide everybody over a little bit. >> you mean, there's so many things about the quarter, as you mentioned the balance sheet maneuvers. the decline in liquid assets down in almost three years or so. will that continue?

>> i'm not an expert. i do know when you have so many assets, it's spending down a little bit of them. it's like increasing the buyback by 30%, keeping it on the same time line so it's completed by december 2015. that's sort of going above and beyond to try to pacify everybody. >> we'll see what the fall brings, and now, of course, the discussion of do they get added to the dow, which is the new parlor game regarding apple. and facebook is soaring a of first quarter profits nearly triple year over year. mobile ads, of course, strong. accounting for 59% of total ad revenue. according to the company, more than 1 billion members use mobile devices as of march 31. here's zuckerberg on the call last night. >> for the next set of apps like messenger, instagram, and hopefully soon whatsapp, we believe the apps have a lot of room to grow and will start to be important businesses in the future, but monetization isn't our near-term priority here. >> you told us on this show

yesterday, watch daily active users, which still, unbelievable to zuckerberg, has not slowed down. >> yes, absolutely. all of the numbers at an all-time high, in north america it's at 74%, up from 71%. that means 74% of people who access facebook monthly access it daily. that's sort of insane. now, the nugget that's most exciting to me, the only one that likes conference call transcripts more than me is cramer, the ads have higher engagements, click rates are high every, and making up for the fewer ads because they no longer have the light rail. and zuckerberg reiterates that. we're seeing total raw number of impressions decreasing but the actual amount of value going up. this is the point i made yesterday. everybody worries about the dials. it doesn't matter about the dials. it matters what comes out the end of the machine. what's coming out is a lot of revenue growth, a lot of user engagement. and both of the guys are trying to say to wall street, don't worry about the dials. >> he also says they're early in their journey to build that platform.

that makes you wonder how much could be ahead for the formula behind the way they place those ads. >> absolutely. they're going to continue to innovate. when you're in this business, you have to reinvent your ad product every 12 months. >> the critics argue they have difficult comps, two big acquisitions to absorb, cfo is leaving, selling stock by the boatload. what's wrong with the arguments? >> the stock is expensive. we said that yesterday. the fact the stock didn't move up that much shows how much they have to achieve to keep it at that level. i don't think him leaving is a big deal. sheryl sandberg preempted it by saying i'm staying. >> do you think it was choreographed? >> i do. these are smart people. if we were going to do that, we would. they're much smarter than us. >> we try not to get to the stock valuation part with you. they do argue people will have to start thinking about the sustainable, long-term growth rate. jordan brings in his price target two bucks to 80, and there is that feeling -- it did

come off the high this morning in the premarket. >> there's two options. first is they already said the strong comps are coming up. the big move to newsfeed, to apple, will anniversary in the next quarter. the only room for upside is the credit suisse analysis we talked about earlier in the week. >> they got in front -- >> they have to get 20% upside to revenue, and now, it's fully priced, even with spectacular performance. >> just today you mentioned the newsfeed earlier, they're announcing newswire, powered by story full. do you think there's that much more the facebook platform itself can expand to do? it seems like they're branching in other disparate apps. >> this is something personal to us. we have this insight that social would be more than baby pictures, and updating friends. it would be how people got the news. this is the war that they're in. you can only consume so many baby pictures. ultimately, if you're going there 74% of your days, going to facebook, you have to get your news there. it sounds to me like this

effort, which i haven't researched the then, sounds like getting your news there. >> if i filtered for no buzzfeed quizes, there wouldn't be that much left. >> you'd still have baby pictures and people picturing -- >> we're still waiting for the what cnbc anchor are you. that's coming. >> carl quintanilla, show me your selfie. >> you've earned your keep. >> good to be here. up next, what would major regulations do to the $2 billion e-cigarette market? we're about to find out. the fda is proposing a host of new rules aimed at regulating the tobacco products. the president of blue e-cigarettes, owned by lorillard, will tell us what it means. first, rick, you have your eye on cap ex and deals. what do you think of all of this? >> it's very fascinating. i think we had a recent headline come out that puts it all together. global announced m&a is going to top $1 trillion. what does that really mean?

let's discuss in about ten minutes the notion of fast money in a casino setting versus hard-core, back-breaking economic horsepower. what we have, what we need, and how can we get it? all after the break. [ applause ] 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. ameriprise asked people a simple question: can you keep your lifestyle in retirement? i don't want to think about the alternative. i don't even know how to answer that. i mean, no one knows how long their money is going to last. i try not to worry, but you worry.

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welcome back. big news for the e-cigarette market. the fda is proposing regulations. the agency has called for stricter relations on e-cigarettes, proposing rules

that range from age limits to health warnings. we have the president of e-significants, and thank you for joining us, jason. >> thanks for having me. >> this was an industry that we expected at some point would see regulation coming from washington. when you look at the rules so far from what we have, you have no vending machines, no one under 18 can buy these, and you have to get all of your products reviewed. how do you handicap what you've seen so far? >> well, i think the very -- the positive aspect is that it appears to be a very science-based discussion and proposal from the fda, and i think that overall is positive. when it comes to age restrictions and keeping the product out of the hands of minors, we've always supported that. so i think the firmer we can make that, the better. but the fact that it's a very science-based proposal, i think, is the positive aspect. >> and it does seem like it's a clear laundry list of items that the fda is proposing here.

including no free samples. i'm wondering, when you look at those line items and apply them to the business of blue, do you expect they would have a material impact, say, not to be able to sell these in vending machines or not to sell to minors or not give out free samples? >> at the moment, we don't sell in vending machines and we don't obviously supply or sell to minors. that's not going to have any effect. as long as the rules are universal, which they will be, then i see no detriment to the business. i think overwhelmingly for the consumer and public health, if we keep this science-based discussion, i think it will be positive. >> jason, there's been some discussion, at least at the city and state level, some of the measures have been draconian in the words of some. i wonder now that we're getting federal oversight if those outright bans in some cases are going to be harder to justify? >> well, i think a lot of the state and local bans were a reaction to a lack of regulation

at a federal level. so i think we may see those move or slow down as we go through this federal process and of science-based discussion. i think it will have a positive effect all around. >> jason, you were bought by lorillard a couple of years ago. one benefit of being part of a larger company with such deep experience in regulated industry is the advice and counsel that, i'm sure, executives are giving you. what discussions have taken place between blu and lorillard, and what sort of counsel have they given blu even in the face of impending regulation? >> i think they bring the resources to the party. if you look at blu's history, and definitely since the purchase by lorillard, we've always taken a very proactive and what we feel is a responsible stance. to the marketing of our products and the sale of our products. so not a lot will change. we'll just have a framework that everyone else will fit under, as well. but the resources and the expertise of past regulations is definitely helpful and calming

for us to know we have that support and knowledge by our side. >> jason, you seem awfully calm going up against a regulator that some argue sometimes can be a little heavy-handed. i mean, it's just a blueprint, and a lot of concerns about how these will be implemented over the next year, or whatever. why are you so chill? >> well, i think, you know, the last two years we've seen more conjecture and theory thrown at the industry than science. and as i said earlier, i think the proposal by the fda shows a very strong science-based stance as opposed to theory and conjecture. so i think it's very positive. and, also, we've also -- we've always welcomed regulations, because i think as a whole -- as an industry, we've needed it. and we've particularly pushed for science-based regulations, and i think we're seeing the start of that. >> jason, there's a 75-day comment period, so i know as the debate crystallizes, we'll hear more from blu and some of your competitors, as well.

thank you for joining us on an important day for the industry. >> appreciate it, thank you. it is a really rough day for jet blue. the stock slipping. the company blaming some on the weather. it didn't seem to hurt delta all that much. we'll talk to the ceo david barger in a moment, about the pilots unionizing, and a lot more. ♪ ♪ no matter what kind of business you own, at&t business experts can help keep it running... seamlessly. so you can get back to what you love. when everyone and everything works together, business just sings. those little cialis tadalafil for daily use helps you be ready anytime the moment is right. cialis is also the only daily ed tablet

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welcome back to "squawk on the street." rick santelli with the thursday edition of the "santelli exchange." we had decent news today, ex-aircraft, a category in the durable goods number. well, here we are, 2.2. that's nice. because we're coming off minus 1.1. but as you go back in time, i really want you to look at some of the numbers, and granted they're always very volatile. but if we go back one year ago, it was 8.9, which was followed

by minus 4.8, and you see the red mixed in with the black. what's the point i'm getting at? it's not enough. it's definitely moving in the right direction. there's a lot of aspects of the economy that are moving in the right direction. there's a lot of aspects the u.s. economy moving in the right direction. but moving in the right direction, well, a snail could move in the right direction, but don't hold your breath on its arrival, okay? now, when i look at some of the news of the day, here's what we were welcomed with. global announced m&a tops $1 trillion. so it gets to join the $1 trillion club, like student loans. that's the 1 trillion club, and maybe thinking about those two things will give us an idea why we have nonsustainability with regard to our economic horsepower. it isn't that we don't have periodic bouts of good numbers, like 8.9, or gdp numbers over 4%. but we don't have a continuity there. my rationale is, whether it's leveraged, buyouts, whether it's m&a, that what we are seeing is kind of a financial casino, and

nothing wrong with that. but i'd rather see hard, back-breaking economic work going on. that's why we don't have the sustainability. just consider, yesterday france, numera cable, the largest junk deal ever, close to 11 billion, i think the number was 10. not that there's anything wrong with it, but if you look at junk deals with weak covenants or corporate deals with weak covenants, the world is awash with risk takers, because the fed wants risk takers. in the end, what we'd rather see is an average middle class in this country and around the globe that has more demand. why don't they have more demand? because in this kind of daisy chain of creating what looks like growth -- or caterpillar today firing how many thousand people? -- what we really need is more deleveraging. the average middle-class consumer needs more money in their pockets. we still are postponing the inevitable. they need to get down to a place they feel comfortable to be

consumers again. back to you, carl. >> well said, rick. and something we have to consider even as we talk about growth or the lack of it. rick santelli in chicago. let's get to dominic chu for a "market flash." watching gold today, dom. >> absolutely, carl. gold prices are moving higher as investors keep a close eye on the situation in ukraine and russia. russian president vladimir putin said the use of military force against ukrainian civilians would have consequences for the leadership in kiev, the capital of ukraine. he did not elaborate. earlier this week, gold had hit a two and a half month low. now trading up on the day .5%. >> thanks so much, dom. up next, this chart tells you all you need to know about jetblue earnings. the stock down big after meeting analysts' estimates, down nearly 4%. what can the company do to turn things around the rest of the year? we'll ask ceo dave barger in a "cnbc exclusive" up next. the bells are about to sound across europe. a few minutes left in the trading day.

we'll have that close and the impact on the u.s. market here as the dow is up 28. all of that when "squawk on the street" comes back. e financial noise financial noise financial noise

financial noise

european markets will close in a few moments. we want to bring in simon hobbs to get the nuances for us. >> europe has been buffetted all over the place by the news that not only is russia going to have military exercises on the border

with the ukraine, but also that threat from putin that if they move against -- or if the kiev government moves against the pro-russian forces within the country, will have consequences, as he put it. the data actually today is good. german confidence is quite strong. and the data from the bank of spain, according to jpmorgan, if you pare it down, spain is moving more forcefully into expansive territory, growing 1.6%. the big news is the m&a in the report overnight. that potentially general electric, ge, might buy the tvg train and turbine maker in france. we're getting a recalibration from a french newspaper suggesting that melt might be interested in the energy assets. the stock is currently up about 12. there are other plays in this week, owns 29%, he had saved it effectively and people continue to buffett him with the cash

calls it has. we may get news from them. up almost 5%, as you can see. one of the big questions is whether or not the french government would okay jeffrey emult taking over one of the commanding heights of the french industrial landscape. for that, bernard shaw, told our colleagues in europe he thinks paris will say oui. >> i think this government will be smart enough to think about the long-term interests of this industry, and i think that despite the political statement, the economic decisions will be smart. this is what i wish. i don't think there is any reason -- specific reasons to block something that could be of best interests for the industry and for this company. >> two other piecing of m&a. a mexican billionaire has taken

control of telecom austria. it has to be okayed by the austrian government. the stock is up 6.5%. and also it looks like vw, volkswagen, is likely to take over the heavy truck maker stanya. it's, as you can see, up 9%. for my money, guys, i think they will say yes to jeffrey, because the french love him. about ten years ago, i was presenting a conference, and he came to be presented with the le jeune diner. they were worried that squawk box would get a hold of the tape, and i had to hide it so they would not go against emult. >> well, they watch. >> they're certainly watching now. >> simon, interesting anecdote. thanks a lot. no comment from ge. there's jetblue, down nearly

4% after the airline reported a nearly 70% drop in first quarter profits due in part to the weather in the northeast. joining us exclusively this morning is the jetblue ceo david barger, who joins us on the phone. david, good to talk to you again. >> carl, always a pleasure. thank you. >> i was thinking about the winter. we know it hits all the airlines, but is there something about your route structure that may have hit you especially hard? >> there's no doubt about it. in the first quarter, the weather we had on our route network, if you can believe this, 4,100 flights cancelled. put that in perspective, we cancelled nearly twice as many flights in the first quarter as we cancelled in all of 2013. >> wow. >> so, carl, a tough quarter. >> razm up just a fraction. load factor down. do those numbers turn in the next quarter? >> well, they absolutely do. when you start to normalize for the first quarter -- by the way, there's always noise, easter, passover, where the holidays fall. when you look at the strength

into the month of april, and what we're seeing was strength into may and the summertime, we're enthused by what we're seeing going into the summer. >> we saw costs rise, operating expenses up, human-related capital up 18%. what do you say to the critics who say this is not a sustainable cost structure for a stand-alone company in the future? >> you know, kayla, i think to the critics, first of all, when people look inside the first quarter, there's so much noise. if you normalize for those cancellations, we actually had our profit sharing costs up 2.3%, and then we had all this noise because we just didn't fly a lot of flights. and so, there's a lot of asms available, seat miles we didn't fly. to the critics, i would suggest what we're doing -- in fact, the bulk -- the increase we're seeing in terms of the cost per available seat mile is tied to salaries, benefits, and wages, and the bulk of that is into pilot compensation. so this is the right then to do for our business.

it's something we can absolutely accommodate into our pricing structure, our revenue environment with our cost structure. >> it does bring to mind, of course, the story of the pilots unionizing. a sign of a maturing carrier, i guess, david. but are you worried that down the line you'll run into some contention dealing with the union? >> well, i tell you, very disappointed regarding our pilots electing the airlines pilot association, carl. we're now in our 15th year. i still believe in a contrarian model, and we have many other work groups that are not represented. and i believe that, listen, all 16,000 of us will continue to progress and move jetblue forward. but still, very disappointed. when you start to look like the other models, that's a challenge. and i think this is a challenge to our culture. still very enthused about our company. >> david, in the next quarter, you guys will be rolling out some new offerings for business travelers, including from our local airport here at jfk, some premium classes to l.a.x. and sfo. i'm wondering what the rollout

will look like, and how soon you expect that to actually hit your bottom line? >> kayla, i tell you, the experience june 15, when we fly from new york to los angeles, and close in early on 2015, also san francisco, the bay area -- by the way, interesting to note, those are two routes that actually customers pay to sit in the premium cabin as opposed to being upgraded. and so, our experience -- we've got to get some of the airplanes really into the network before it's really accretive, but moving into 2015, absolutely accretive in terms of our earnings. very excited about the experience. >> kayla mentioned operating costs. we've been watching crude. we touched 104 earlier in the week, david. are you worried -- i mean, is that starting to give you a little pain in your stomach what the summer may bring? >> well, i mean, it's close to 40% of our cost structure, carl, when you get inside our airline with the cost of oil. and so, it's always a concern. and we've kept in place the same

hedging strategy program that we have to basically just thin out the volatility. but i think where people may not realize is the fact that we have the youngest fleet of any major carrier operating in the united states. and when i think about young fleets, aircraft coming across with -- they're called sharklets at the end of the wing, that improves fuel efficiency, i feel well positioned, whether oil stays here, moves north, and certainly if it moves south, as well. hey, listen, at the end of the day, it's always a concern. >> and as for all of the aviation geeks out there, you mentioned the winglets, what's the best number you canput on in terms of efficiency improvement because of those? >> well, when you start to take that new york to -- new york to los angeles, the sharklet, the airbus product, 3%, 4%, fuel-burn savings what we're seeing. when you start to run math, it looks like 750 gallons per hour, or 775 gallons per hour on an airbus a-320, and take off 3%,

4% of the fuel burn times six hours, just going out there and back, carl, it's a big number. >> they keep getting bigger, too. >> they keep getting bigger, which means it's harder to park the aircraft at these gates. it's amazing. the winglet is almost as large as the -- literally the horizontal stabilizer, in terms of the engineering. >> the height of a human being. >> exactly right. >> good to talk to you. i look forward to the next quart other, too. thanks for the time. >> always a pleasure to be on cnbc. thanks so much. all right. when we come back, it's the 25th anniversary of cnbc this year, but we want to look ahead, what will cyber security look like 25 years from now? for starters, you may not ever have to remember a password again. we'll explain why when "squawk on the street" comes back.

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viagra home delivery. get started at viagra.com. coming up at the top of the hour, a wild ride for the first half of the trading day. where will the market go next? we're trabing all of the big movers behind the big swings and earnings reports today. one of them is, of course, apple. did the company deliver or just change the conversation? the stock is having its best day in two years. and paul hickey is digging through all of the releases to find out which stocks could be the stars of the second quarter. it is all straight ahead on "the half." kayla, we'll see you in about 20. >> thank you so much, scott. in 1929, the s&p 500 was less than 500 points, 30-year

mortgage was 11% rate. that hasn't been the case for sometime. as more and more financial information happens in the cloud and on devices, protecting your money will become a task for more cyber experts. as more information and commerce happens in the cloud and on devices, protecting your money will become a task for the cyber experts. banks today see upwards of 100,000 attempted hacks on their websites each day. experts say the threats could move beyond clogging servers or skimming credit cards, as traditionalal industries go online. >> malicious actors are showing increased ability to move up the threat spectrum, and we're certainly very worried about the ability of those adversaries to be able to carry out attacks on the infrastructure. >> as hacks get smarter, though, both companies and consumers will change the way they secure their data. in other words, the password will become a thing of the past. >> we will look at things like the device that's being used to make the payment. how many payments were made in the recent period of time?

where are the geo location of the person making that payment? >> if that's not comforting enough, companies have begun insuring against third-party cyber attack. >> they will look at buying policies to help them manage that risk, just as they buy policies against catastrophic weather events. and there will eventually emerge a thriving insurance market in that space. >> so who will be backing up wall street's financial data and our money in 25 years? joining us is gary owen, president at prommentory financial group. he led groups at citigroup and goldman. i believe your title was head of threat management. >> that's correct. >> it sounds ominous. you've seen it all. you've seen what types of threats in the present day. how will the threats evolve as more of our money goes online? >> one thing we can be sure of is that threats aren't going to go away. 25 years from now we'll still have bad guys. we're still going to have the need to secure, the need to manage our money, manage our information, manage our eye

don'ty. i think what will change, as part of the opening, is how we do it. and part of that is do we use part of our biometric? it's not what you know, your password. it will be who you are. >> how does that get verified? i know visa in india, you're using your fingerprint to make a payment. people are saying maybe a retina scan, or a tattoo. >> think 25 years from now, you now have -- if you look back a little bit, you now have a camera on the phone, a fingerprint reader, and maybe soon a biometric that reads the sweat. you need two or three pieces like that to authenticate you, and it may not be authenticate when you make a payment, it may be verifying that it was you that made it. so you're tied to that device far more tomorrow than you are today. >> it's interesting, because you come from a background of financial services, goldman sachs, citigroup, we've seen companies announcing the cyber budgets are ratcheting up, sometimes tripled in a given

year. how much money will flow into this space, and who will be the beneficiary of that? >> step back a tiny bit and say pretty soon this will be -- if not -- not pretty soon, but today -- this is a board room issue. the i.t. guys in the back room used to be the guys who took care of technology for you. pretty soon, this will ab front-end issue, a front business issue. in terms of who will be the beneficiaries, i think there'll be a split between the traditional managed security companies we're used to today, the microsoft, and i think you'll see a lot more emerging technologies get developed and come into the marketplace with new stuff. >> it's funny, when we see failure, we later see companies trotted before congress, there are hearings, politicians yell. is the public sector going to take a lead on any of this? >> i think regulation and guidance has been helpful in spots. often it's gone a little too

far. and at some point, when people get pulled up to congress, you're sort of kicking the guy when they're down. they got breached. you're going to yell at them for getting breached, the bad guy approached them and took advantage of them. i think regulation may help. but i wouldn't want to rely on that. i think firms are going to be on their own to some degree to drive security. >> one of the interesting facets of my conversation with michael daniel, who's one of the white house's top officials on cyber security, was he basically said, look, it is not inconceivable that consumers could take out cyber insurance, because the fdic doesn't really do this, there's not a whole lot of markets for it if your money gets taken, in a cyber attack, who actually restores that for you? right now, the onus is on the private sector. but will consumers take out insurance against some of the risks? >> i can certainly see that. today, we have corporations that buy cyber insurance that might be worth $100 million. and the tables around what that costs, maybe advantageous for

firms. but as individuals, i could see an escrow service, again, validates your payments, says, i want to protect this information at this dollar amount for this period of time, and anything above that, i need someone else to validate for me. >> finally, every time we talk about cyber security, it seems to be in the form of accessing your data, credit cards at a retailer, and others still argue the biggest threat will be some attack on the grid, or something that cripples the country at large. is that a realistic fear? >> realistic, yes. what's the financial motivation for it? really, what's the benefit? cyber security, like anything, is a risk management decision. and do we need to protect the grid? absolutely, from things. is it from an adversary or its own complexity, its own size? >> warren buffett has said that will lead to the next financial crisis, a massive cyber attack on a global scale. do you think that the public doesn't really understand the threat and the panic that could ensue? >> it's a hard question to answer. and i'm not going to take a stab

at it really. >> all right. >> -- tough to find out. >> yes, of course, talking 25 years in the future, so these are big-scale, and highly futuristic conversations we're having in light of our anniversary. gary, thank you for putting some of it in the perspective. >> thank you. let's go to dominic chu with a "market flash." >> check out stanley black & decker, posting better-than-expected first quarter profits in gains and acquisitions and raised 2014 earnings outlook. the stock is currently off session highs, still up by over 3%, carl. back over to you. >> dom, thanks. when we come back, warren buffett with characteristic blunt statements, this time on coca-cola. find out why he's criticizing coke's management. and, of course, on valuations, does the oracle of omaha see valuation? and under the most demanding circumstances.

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warren buffett has surprising comments on coca-cola. of course, they've been facing criticism for the executive compensation plan. buffett is coke's largest shareholder. he had remained silent until yesterday after coca-cola's annual shareholder meeting, where coke won the vote. here's warren buffett speaking to our own becky quick. >> we abstained, because we didn't agree with the plan. we thought it was excessive. and i love coke. i love the management. i love the directors. so i didn't want to vote no. kind of un-american to vote no at a coke meeting.

i didn't want to express any disapproval of management, but we did disapprove of the plan. >> interesting. a lot of people who are buffett critics today, kayla, taking aim at him for abstaining on something that he should have taken a stand on. >> especially when he is such a large shareholder in some of the companies that has the power to sway a vote sometimes. >> becky also asked buffett about some of the tech valuations. here's buffett on whether we are in a bubble. >> i don't think it's like -- the period prior to 2001. i don't -- there are a lot of companies whose valuations i don't understand. that's always been true. and then, you get into a period like right before 2001 where you can almost sell anything and capitalize eyeballs and all that. i don't think it's reached that point, and certainly i don't think the general market level has got a bubble up on it. >> on that note, joning us to talk about markets, art cashin, over at ubs.

good morning to you. >> good morning. >> in the near term, dealing with today, you said that 1,885 was like pushing the rock up the hill, couldn't do it. >> yeah, it keeps going back the other way. just a remark on buffett by abstaining, i guess he is now the leader of the inactivist investor. [ laughter ] >> passive school of investing. >> we'll have to see how carl icahn feels about it. earlier in the week, we talked about some resistance in the s&p right up around 1,885. on tuesday, they just about hit that mark, failed, reversed, gave up over one-third of their gains. yesterday's struggle with that failed attempt to break out. this morning, in a very apple centric opening, they spiked right back up above 1,884 again, stopped and reversed very sharply. now, they got a little bit of help from some geopolitical rumors that the russians were doing maneuvers on the border. that perked up gold and hurt

stocks. but it didn't really move much into treasuries. and that's what i was look for for confirmation. >> in the equity markets, you say watch for either a higher high or lower low to set momentum. that's pretty funny. how long can we wait for this indecisiveness to figure out -- >> well, that was in reference to yesterday where we had a series of declining highs and higher lows. and so, to get out of that narrowing band, you needed to move one of those things to change the trend. what they did, unfortunately, yesterday, was move to a slightly lower low, which led us to close on the downside and give up those seven days in a row. >> we keep hearing from technicians who argue that we can still set some minor new highs given the pattern over the past few days. does that make sense to you? >> sure, anything is possible. i think that i wrote in my comments this morning that if they are successful in punching through the 1,885, there's a lot

of new baby bears, new shorts in the market. and those baby bears would then probably panic a little bit and set us on the road for a possible run to 1,900, retest all of the former highs. so the game's still pretty much on the table. but i think it's very clear the viewers want to watch the area around 1,885, and then secondarily, they want to keep going back and watching your old friendly 10-year yield, and that will tell you how serious any geopolitical rumor you hear is. >> meanwhile, the biggest earnings day of the quarter. is there anything in particular in the earnings coffer that you think investors should be watching for? >> no, the earnings themselves come in reasonably well. again, it looks like financial engineering is doing graduate work here. stocks are up, and earnings are up. and they're really linked. for everyone who says it's all a fad and whatnot, earnings have

actually moved in just about the same proportion that stocks have. but the profit margins are at all-time record highs. i said this the last quarter. there is at some point going to be the absolute realization that they can't continue to grow by cutting. >> yeah. >> and things will change. >> art, we'll talk to you soon. >> my pleasure. >> art cashin joining us here. when we come back, another morning, another amazon announcement. yesterday, about hbo raising the stakes of netflix. today, taking on the costcos and walmarts of the world. ♪

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here's a new perk for prime numbers. e-commerce giant amazon announcing the company will launch a new service called prime pantry. they can fill up large boxes with basic household goods, up to 45 pounds, and for a flat fee of $6. the new service will ship to 48 states as opposed to the three areas, amazon's other service, amazon fresh currently covers. is there nothing these guys can't do? >> when we debate the merits of a price increase, they start little by little increasing the offerings. they are going into the pantry. they have the remote wand where you can scan the goods.

pretty much taking over everything. >> of course, earnings tonight, along with microsoft, the first under nadella, we'll get visa, pandora. >> and we will not sleep tonight. >> no, cramer will be reading conference calls until very late. as will scott wapner. >> hey, carl, thank you so much. plenty of earnings reports to go over. we're talking about the big reversal on the street today, now we're positive. welcome to the "halftime" show. here's the playbook. substance or smoke screen? did apple really deliver or just change the conversation? saving face. after a superstrong quarter for zuk & company, can it reverse the bubble sell-off? under assault, why is wall street darling underarmour getting sacked? we'll debate that stock's next move. pete, josh, murph are on the desk as is sheila damrajan. we begin with the stocks