an inspiration. so these men and women and their families are the best that our country has to offer. they've done their duty, and they ask nothing more than that this country does ours, that we uphold our sacred trust to all who have served. so when i hear allegations of misconduct, any misconduct, whether it's allegations of v.a. staff covering up long wait times or cooking the books, i will not stand for it. not as commander in chief but also not as an american. none of us should. so if these allegations prove to be true, it is dishonorable, it is disgraceful, and i will not tolerate it, period. here's what i discussed with secretary shinseki this morning.

first, anybody found to have manipulated or falsified records at v.a. facilities has to be held accountable. the inspector general at the v.a. has launched investigations into the phoenix v.a. and other facilities, and some individuals have already been put on administrative leave. i know that people are angry and want swift reckoning. i sympathize with that. but we have to let the investigators do their job and get to the bottom of what happened. our veterans deserve to know the facts, their families deserve to know the facts. once we know the facts, i assure you if there is misconduct, it will be punished. second, i want to know the full scope of this problem, and that's why i ordered secretary shinseki to investigate. today, he updated me on his review, which is looking not just at the phoenix facility but also v.a. facilities across the nation, and i expect preliminary

results from that review next week. third, i've directed rob nabors to conduct a broader review of the veterans health administration, the part of the v.a. that delivers health care to our veterans, and rob's going to phoenix today. keep in mind, though, even if we had not heard reports out of this phoenix facility or other facilities, we all know that it often takes too long for veterans to get the care that they need. that's not a new development. it's been a problem for decades and it's been compounded by more than a decade of war. that's why when he came into office i said we would systematically work to fix these problems, and we have been working really hard to address them. my attitude is for folks who've been fighting on the battlefield, they should not have a fight a bureaucracy at

home to get the care that they've earned. so the presumption has always been we've got to do better, and rob's review will be a comprehensive look at the veterans health administration's approach currently to access to care. i want to know what's working. i want to know what is not working. and i want specific recommendations on how v.a. can up their game. and i expect that full report from rob next month. number four, i said that i expect everyone involved to work with congress, which has an important oversight role to play. and i welcome congress as a partner in our efforts. not just to address the current controversies but to make sure we're doing right by our veterans across the board. i served on the veterans affairs committee when i was in the senate, and it was one of the proudest pieces of business that i did in the legislature. and i know the folks over there care deeply about our veterans. it is important that our veterans don't become another

political football, especially when so many of them are receiving care right now. this is an area where democrats and republicans should always be working together. which brings me to my final point. even as we get to the bottom of what happened at phoenix and other facilities, all of us, whether here in washington or all across the country, have to stay focused on the larger mission, which is upholding our psy sacred trust to all of our veterans, bringing the v.a. system into the 21st century, which is not an easy task. we have made progress over the last five years. we've made historic investments in our veterans. we've boosted v.a. funding to record levels, and we created consistency through advanced appropriations so that veterans' organizations knew their money would be there regardless of political wrangling in washington.

we made v.a. benefits available to 2 million veterans who did not have it before, delivering disability pay to more vietnam vets e s exposed to agent orang making it easier for veterans with proftroeft traumatic stresd improving benefits for women's veterans. because of these steps and the influx ever new veterans requiring services added in many cases to wait times we law enforcemented an all-out war on the disability claims backlog. and in just the past year alone, we've slashed that backlog by half. of course, we're not going to let up, because it's still too high. we're going to keep at it until we eliminate the backlog once and for all. meanwhile, we're also reducing homelessness among our veterans. we're helping veterans and their families, more than a million so far, pursue their education under the post-9/11 gi bill. we're stepping up our efforts to

help our newest veterans get the skills and training to find jobs when they come home. and along with michelle and joe biden and joining forces we've helped hundreds of veterans find a job. more veterans are finding work and veterans unemployment, although still way too high, is coming down. the point is caring for our veterans is not an issue that popped up in recent weeks. some of the problems with respect to how veterans are able to access the benefits that they've earned, that's not a new issue. that's an issue i was working on when i was running for the united states senate. taking care of our veterans and their families has been one of the causes of my presidency, and it is something that all of us have to be involved with and have to be paying attention to. we ended the war in iraq, and as our war in afghanistan ends and

as our newest veterans are coming home, the demands on the v.a. are going to grow. so we're going to have to redouble our efforts to get it right as a nation, and we have to be honest that there are and will continue to be areas where we've got to do a lot better. so today i want every veteran to know we are going to fix whatever is wrong, and so long as i have the privilege of serving as commander in chief, i'm going to keep on fighting to deliver the care and the benefits and the opportunities that your families deserve. now and for decades to come. that is a commitment to which i feel a sacred duty to maintain. so with that, i'm going to take two questions. i'm going to take jim kunin at a.p. first of all. >> thank you, mr. president. as you said, this is a cause of the presidency.

you ran on this issue. you mention it. why was it allowed to get to this stage where you actually had potentially 40 veterans who died while waiting for treatment? that's an extreme circumstance. why did it get to that? >> well, we have to find out first of all what exactly happened. and i don't want to get ahead of the i.g. report or the other investigations that are being done. and i think it is important to recognize that the wait times generally, what the i.g. indicated so far at least, is the wait times were for folks who may have had chronic conditions were seeking their next appointment, but may have already received service. it was not necessarily a situation where they were calling for emergency services. and the i.g. indicated he did not see a link between the wait and them actually dying. that does not excuse the fact that the wait times in general

are too long in some facilities. and so, what we have to do is find out what exactly happened. we have to find out how can we realistically cut some of these wait times. there has been a large influx of new vet he ran veterans coming. we have a population of veterans aging as part of the baby boom population, and we've got to make sure that the scheduling system, the access to the sys m system, that all those things are in sync. there are parts of the v.a. health care system that have performed well. and what we've seen is, for example, satisfaction rates in many facilities with respect to many providers has been high. but what you -- what we're seeing is that in terms of how folks get scheduled, how they get in the system, there are still too many problems. i'm going to get a complete

report. it is not as a consequence of people not caring about the problem. but there are 85 million appointments scheduled among veterans during the course of a year. that's a lot of appointments. and that means that we've got to have a system that is built in order to be able to take those folks in in a smooth fashion, that they know what to expect, that it's reliable, and it means that the v.a.'s got to set standards that it can meet. and if it can't meet them right now, then it's going to have to set realistic goals about how they improve the system overall. >> -- some responsibility ultimately rests with general shinseki? >> you know, the responsibility for things always rests ultimately with me as the president, commander in chief. rick shinseki has been a great soldier. he himself is a disabled veteran.

and nobody cares more about our veterans than rick shinseki. so, you know, if you ask me, you know, how do i think rick shinseki has performed overall, i would say that on homelessness, on 9/11 gi bill, on working with us to reduce the backlog across the board, he has put his heart and soul into this then and he has taken it very seriously. but i have said to rick, and i said it to him today, i want to see, you know, what the results of these reports are, and there is going to be accountability. and i'm going to expect even before the reports are done that we are seeing significant improvement in terms of how the admissions process takes place in all of our v.a. health care facilities. so i know he cares about it deeply. and, you know, he has been a great public servant and a great warrior on behalf of the united

states of america. we're going to work with him to solve the problem. but i am going to make sure that there is accountability throughout the system after i get the full report. steve from reuters. >> thank you, sir. has secretary shinseki offered to resign in if he's not to blame, who is? were you caught by surprise by these allegations? >> you know, rick shinseki, i think, serves this country because he cares deeply about veterans, and he cares deeply about the mission. and i know that rick's attitude is, if he does not think he can do a good job on this, and if he thinks he's let our veterans down, then i'm sure that he is not going to be interested in continuing to serve. at this stage, rick is committed to solving the problem and working with us to do it, and i am going to do everything in my power using the resources of the white house to help that process

of getting to the bottom of what happened and fixing it. but i'm also going to be waiting to see what the results of all this review process yields. i don't yet know how systemic this is. i don't yet know, are there a lot of other facilities that have been cooking the books? or is this just an episodic problem? we know that, you know, essentially wait times have been a problem for decades in all kinds of circumstances with respect to the v.a., getting benefits, getting health care, et cetera. some facilities do better than others. a couple of years ago, the veterans affairs set a goal of

14 days for wait times. what's not yet clear to me is whether enough tools were given to make sure that those goals were actually met. and i won't know until the full report is put forward as to whether there was enough management follow-up to ensure that those folks on the front lines who were doing scheduling had the capacity to meet those goals, if they were being evaluated for meeting goals unrealistic and they couldn't meet because either there weren't enough doctors or the systems weren't in place, what have you. we need to find out who is responsible for, you know, setting up those guidelines. so there will be a lot of questions that we have to answer. in the meantime, what i said to rick today is let's not wait for the report retrospectively, to reach out immediately to veterans who are currently waiting for appointments to make sure they are getting better service.

that's something we can initiate right now. we don't have to wait to find out if there was misconduct to dig in and make sure that we're upping our game in all of our various facilities. you know, i do think it is important not just with respect to rick shinseki but with respect to the v.a. generally to say that every single day there are people working in the v.a. who do outstanding work and put everything they've got into making sure that our veterans get the care, benefits, and services that they need. and so, i do want to close by sending a message out there that there are millions of veterans who are getting really good service from the v.a., who are getting really good treatment from the v.a. i know, because i get letters from veterans sometimes asking me to write letters of

commendation or praise to a doctor or a nurse or a facility that couldn't have given them better treatment. and so, this is a big system with a lot of really good people in it who care about our veterans deeply. we have seen the improvements on a whole range of issues like homelessness, like starting to clear the backlog up, like making sure that folks who previously weren't even eligible for disability because it was a mental health issue, or because it was an agent orange issue, are finally able to get those services. i don't want us to lose sight of the fact there are a lot of folks in the v.a. doing a really good job and working really hard at it. that does not, on the other hand, excuse the possibility that, number one, we weren't just -- we were not doing a good enough job in terms of providing access to folks who need

unemployment for chronic conditions. number two, it never excuses the possibility that somebody was trying to manipulate the data in order to look better, or make their facility look better. it is critical to make sure that we have good information in order to make good decisions. i want people on the front lines, if there's a problem, to tell me or tell rick shinseki, or tell whoever's their superior, that this is a problem. don't cover up a problem. do not pretend the problem doesn't exist. if you can't get wait times down to 14 days right now, i want you to let folks up the chain know to solve the problem. do we need more doctors? do we need a new system in order to make sure that scheduling and coordination is more effective and more smooth? is there more follow-up? and that's -- that's the thing

that right now most disturbs me about the report. the possibility that folks intentionally withheld information that would have helped us fix a problem. because there's not a problem out there that's not fixable. it can't always be fixed as quickly as everybody would like. but typically, we can chip away at these problems. we've seen this with the backlog. we've seen it with veterans homelessness. we've seen it with the post-9/11 gi bill. initially there were problems with it. they got fixed. and now it's operating fairly smoothly. so problems can be fixed. but folks have to let the people that do the reporting to know that there is a problem in order for us to fix it. all right? >> -- expand -- >> we're going to find out. my attitude is, listen, if somebody's mismanaged or engaged in misconduct, not only do i not want them getting bonuses, i want them punished. so that's what we're going to hopefully find out from the ig

report as well as the audits that are taking place. all right? thank you very much, everybody. thank you. >> that is the president speaking about the veterans affairs scandal in which veterans, it's now known, died waiting for care. v.a. workers may have misrepresented treatment information. he said there will be accountability. and john harwood had praise for general shinseki, in his words, at this stage. >> reporter: exactly. you saw a president there, carl, with three different goals. one, to defend himself. two, to neutralize partisan opposition. and, three, to buy time for further action. defending himself by saying that from the beginning of the administration, he's understood there have been problems at the v.a. wait times are too long. said he's been working hard at it from the beginning but overwhelmed by the volume of cases from soldiers returning from iraq and afghanistan. neutralize partisan opposition

by saying this shouldn't be a political football, republicans and democrats ought to work together on this. and buying himself time by saying we have this review going on. rob nabors, deputy chief of staff, is going to phoenix today, and said he did not deny or dispute the idea that shinseki may have offered his resignation, but would remain on the job pending results of this review and trying to get everybody on task to figure out exactly what happened, and then try to get more resources to solve it, and it's pretty clear from the magnitude of attention this problem is receiving that once they make that pivot to laying out an assessment and then seeking resources and galvanizing political action, he'll get some support from both sides of the aisle, i think. >> john, thanks for that commentary. after the president's remarks, we'll get back to you later on. meantime, the market hasn't

moved off of the levels. dow up 140. s&p up 11 or so, coming off the three-week low for the dow, led by high-end retailers. a pretty good quarter out of tiffany this morning. it's past 8:00 a.m. at google headquarters in mountain view, california, 11:20 on the east coast, and "squawk alley" is live. ♪ joining this morning as always is kayla tausche, jon fortt, john of buzzfeed. google stashing a lot of cash overseas, considering a foreign shopping spree that could cost up to $30 billion. that's coming a december letter to the s.e.c. that google just released. also in that letter, apparently google passed on a $4 billion to

$5 billion deal for an unnamed foreign company late last year, and then more google news. the company de-throning apple, taking the top ranking in terms of brand value, but everybody is watching the s.e.c. letter, trying to figure out what it could mean. >> i love this letter. it's like a parent reprimanding a child. like the government saying, google, why do you have this money overseas? and they're saying, i made need it to do an acquisition. they're, like, google? okay, i need it for cloud infrastructure. i have all of the reasons i need this cash. it's a little bit -- they're responding to the s.e.c., which is being tough with them on this. >> i have the same take on it. it's been a long time, five months since this was sent. we haven't seen any blockbuster deals. we do hear tech companies have this cash overseas. cisco being one, saying, hey, look, we're looking to invest more over there. that's the reason why we're not bringing it back and paying the taxes. >> it's 35% cheaper, too. you hear this all the time from companies. we're buying a company overseas, it's cheaper.

not to get "squawk box" macro, it's a huge investment. >> it's tough being a reporter and having to talk about these things, because i have a hunch of what open of the companies is, and hopefully we can have it here and break it on "squawk alley," when i get a second source on this. here's a hint. when it bought skype in it does the bulk of the operations here in the u.s., just happened to have a corporate headquarters in luxembourg, so this is a company we're familiar with and is integral to the way the u.s. media and infrastructure works but happens to have a headquarters elsewhere. >> so now we're doing inversion, too. there's an inversion element. >> this is really tough to be quiet. >> yeah, that would be interesting. carl levin bringing up an anti-inversion bill this week. no one thinks that will go anywhere on the hill unless you couple it with something much bigger, which will be impossible to do ahead of the midterms. >> i can't imagine there's a bill saying you can't move your company overseas. >> exactly. >> i think a tax holiday alone

sounds like a limited solution. we want our companies to invest here, we don't want it to be 35% cheaper overseas. >> you think google has too much cash, jon, and not enough ideas what to do with it? >> i think google is constantly showing us what their ideas are. that gets heat off of them. the stock price off its highs certainly this year, but still doing okay. i think when you get a tumble like the one that apple had a year and a half ago, that's when the wolves come out after your cash. google not quite in the position. >> just to touch on the brand study. it's an important study that everyone in the community looks add. done by wpp. paid for by wpp, the biggest ad holding company in the world, and for google to move up the ranks, it's very evocative of what walter isaacson said on cnbc a few months back, the mantel has gone from google to apple. >> that is interesting, yeah. a spot you used to have, and now once again on top of the heap.

up next, streaming headlines. the chief product officer at netflix says changes are coming to the main page. instead of satisfying a sea of titles, the company will try to present with three or four personalized choices on the korean. you should see the rest of the options by clicking through. if you want to watch "the wire" on amazon, today is your lucky day. host of classic hbo shows through the prime instant video platform "six feet under" and others, as well. >> on the personalization, nobody remembers, like, a year ago, they released the netflix max, which was a clippy thing for those that grew up in the '90s, a question and answer thing you could do. what kind of show are you interested in? which was meant to dramatically streamline this. they need to do it. everybody is doing tiles. the amazon fire box looks like the apple itunes. and we need easier ways to discover content. the running joke is you spend more time on netflix deciding what to watch than actually watching something. >> the key is to have a good search function because some of the cable companies, like

comcast, xfinity, and time warner here in the city, they recommend content for you, but it's hard to find anything other than that based on the way it's sorted. >> yeah. >> as long as they can keep an option for you to find something that you're looking for. >> it's a big picture issue in this kind of big data content era that we're in right now. discovery. if you figure out how to put the right content in front of people, you increase engagement, which increases the ways the company can make money. twitter needs to figure this out. very different sort of content ecosystem, but similar issue right here. it's sort of this flood of information out there. i get overwhelmed by it. i'm not sure exactly how to engage. the companies that figure out the best way to do this, it's like the search problem from 15 years ago, they'll be in a good position. >> interesting. netflix at 380, will take you not quite back to the highs of march but getting to the levels they lost, back above the 50-day, at least. >> yeah. >> cfo david wells yesterday at the jpmorgan conference actually addressed the amazon news, though, when an analyst asked

him about what he thought about the amazon and hbo deal. he said he thought it was a good deal for hbo, because a lot of people hadn't been watching these older shows. >> yeah. >> and so, this was a way to tap into a new audience. he said there were a few titles conspicuous absences from the list. >> yes, like "game of thrones." all the new stuff not on there. when you talk to traditional media companies and they're concerned about putting content, whether it's on youtube, netflix, all of the different platforms, there are different audiences. the people that want to watch television are different than the people -- the young people that want to sit in front of youtube or netflix. you can segment your audience effectively. they probably could put "game of thrones" on that platform. certainly a couple of seasons ago without many problems. >> speaking of netflix, talking about europe, they're moving today in france, germany, a few other markets over there. we know international has been a big talking point for those guys. >> it certainly is. that's one of the areas where the opportunity is potentially huge. i mean, the kind of gap between

when things get released, a big appetite for this over there. it's kind of a green field for them. if they can crack into that and really start making money, boy, will they be even further ahead than they are in the u.s. >> last quarter they announced they were on the track to be profitable in the international segments if they didn't do the expansion. they announce the expansion -- >> and they said by early next year. >> and they announce the new markets to get growth in lieu of profits and it seems investors are happy. >> and strong economies they're moving into. >> getting stronger. >> getting word that janet yellen, giving the commencement address at nyu, in yankees stadium this morning, about to take the mike. there's a look at the fed chair. not expected to take any q&a, but that's a nice sized crowd for nyu. any headline we get out of there we'll bring them to you, along with four other fed speakers today, and the minutes at 2:00 p.m. eastern time, which can often be a market mover. >> when you have a crowd that big, you're very safe not to do q&a. >> yes. when we come back, microsoft

unveiled the surface pro 3 in this hour. but is it any good? jon fortt got his hands on one. he'll demo one on set. we'll get the only review you need to hear from the great walt mossberg. we'll speak to one teenager taking on facebook with his own social network. back in a moment. ght time. and when i find it- i go for it. (announcer) at scottrade, we share your passion for trading. that's why we give you the edge, with innovative charting and trading features, plus powerful mobile apps so you're always connected, wherever you are. because at scottrade, our passion is to power yours.

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janet in the house that ruth built with high praise for her predecessor, ben bernanke, saying he showed courage in his response to the financial crisis. there she is speaking at the commencement address. saying he had grit and intelligence, served him well. using -- making no commentary on monetary policy at the nyu address, saying that bernanke faced relentless criticism and personal threats during -- he uses it as an example of perseverance and something kids should use when they get older in their jobs. >> steve, thank you very much. steve liesman bringing us some of the headlines from janet yellen. let's get over to jon fortt who i think is on the floor. jon? >> that's right, carl. shares of intuit recovering nicely, off as much as 5% after hours, after its earnings report. the company cut its fourth quarter revenue and profit outlook, but, hey, a reported 20% rise in third quarter profit. that's the big quarter. it's the tax season quarter. most by far of its profit comes

then. joining us now is brad smith, president and ceo of intuit. brad, when i saw the stock down after hours, considering you had just won your super bowl by two touchdowns, i wondered what the traders were thinking. apparently, different attitude this morning. look, you picked up two points of tax preparation share in the quarter, spending less on marketing. net promoter scores are up. it looks like the product here is getting a pretty strong reception, right? >> it sure is, jon. we had a great quarter. our tax team did everything you just described. the product was better. the marketing was on point. the results showed up in the marketplace. what's really happening is the entire company continues to shift to the cloud. as we do that, we'll see revenue in the fourth quarter shift out to further quarters because you're moving a one-time purchase into a subscription. so i think that's what happened last night with the confusion in the market, and today it's all settling in. it's all good news. >> brad, i think the core issue

for investors has got to be, are you going to be able to take your learning from turbotax, which you've been able to do that -- i think you have 63% market share there, you think you can grow further. will you be able to apply to the other businesses and because the erp for small businesses and individuals globally? if so, there's a big opportunity there. when will we be able to see whether you can achieve something that grand? >> you know, jon, that is the great question out on the table, and it's one we think we're asking and answering. if you look at the results with the cloud-based version of small business, it grew 36% this quarter which is up from 30% last quarter. we added 63,000 net new customers in the last 90 days alone. and if you look globally, it grew 130%, up from 90% last quarter. so the momentum is building. we're seeing great customer adoption, and the good news is the lifetime value of a cloud-based customer is 40% higher than one who was purchasing a desk top license. so this is good news for the customers and good news for the

shareholders. >> two things i want you to address before we go. one, mobile. what sort of percentages did you see of mobile usage? that first. >> yeah, mobile continues to power all of our businesses. we're seeing over 10 million customers across the company using mobile devices. in tax alone, it was up 40% this season. 40% more people logged into a tablet or a phone to do some -- >> looks like we lost him there. but talking about mobile being a big and growing component of how people are doing their taxes. that's part of what's growing their growth. carl? >> rt will, jon, thank you very much. john ft. for us on the floor. in the meantime, look at the markets. s&p is hanging onto the gain, back to 1,881. that's within a percentage point away from the all-time intraday high. as europe has closed about five minutes ago, simon hobbs at post 9 with that. >> thank you very much, carl. i'm going to show you three things that are working on improving in europe at the moment. we have two engines of growth really.

germany and the u.k. today, the u.k. is center stage. not only with the retail sales figures strong, but the bank of england and its minutes from the 7th of may, suggesting the monetary decision is becoming more balanced. in other words, in the future, there may be members of the mpc who start talking or voting for rate rises. the u.k. economy is rising and sterling, or the british pound, is strengthening, now at a 17-month high. if you're traveling to the u.k., if you're traveling to the u.k. this summer, be aware things will be a lot more expensive than they were. there you go. and that's gain of 11% then for the pound during the course of the year. that's a staggering move for a major currency. the second thing i'm going to show you that may be working is it comes the danish conglomerate that basically runs 15% of the world's container ships. they have said today they actually see demand improving, this year 4% to 5%, albeit from a low base. slashing the costs in order to improve profitability. listen to what the ceo had to

say. >> we do see an up tick in europe. we see an up tick in the u.s. first quarter was clearly weather -- weather-impacted, but we have no doubt there's an upturn coming in the u.s. >> and the third thing i want to show you that is opportunity is japan. you saw tiffany's results today with the 29% gain on the sales. burberry has been echoing that. mr. christopher bailey saying there's significant opportunity in japan, more stores and stores within stores. he's also going to be targeting men, selling more coats, and the beauty division guys, which they announced they would make their own perfumes and market them rather than licensing them out. back to you. >> all right, simon, thank you very much. you're going to want to hear this one. walt mossberg taking on the new surface 3. we'll get his review in a moment. over 400,000 new private sector jobs...

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microsoft trying to meld the laptop and tablet with its latest offering, the surface pro 3. announced at yesterday's large me vent here in new york city, it's 800 grams light, but with a larger surface area. jon fortt was at the event yesterday and has one with him on set today. jon? >> yeah, here it is. a nice piece of hardware. you can see it's running windows 8, which is really kind of my problem with it, right?

you still have this kind of funky issue where you touch certain things, you go back into the old windows look, the non-touch mode. if you're trying to figure out how to do certain things in settings, you sort of get kicked out there. and there's an equivalent in the touch arena. but this piece of hardware is gorgeous, right? i mean, really, really thin. on the back, you've got this little kickstand thing that flips out like that. it has a satisfying little snap to it, you can hear, right? >> yeah, kickstand has been getting a lot of attention. >> yeah, the magnetic keyboard attachment, right? it just goes in like that, sits up. the screen size is nice. the resolution not as high as you'll find in lenovo's sort of equivalent, but still really nice. you don't see the pixels. this is more of a laptop competitor than it is an ipad competitor. because if you want to get this whole package here, including the keyboard, you'll be paying right around $950. right?

i mean, you can get a couple of full-sized ipads pretty much for that money. what microsoft is trying to do is raise the bar for the whole ecosystem, make sure tablets don't become a thin-margined, lowest common denominator. >> they're bragging about the keyboard, the fact you can angle it up, to make it like a desk top computer if you don't like the way it's flat. >> yeah, it can do that, too. >> the question is, can it live up to the competition? wa walt mossberg joins us again. great to see you. >> good to see you. >> your take on how at least how microsoft presented it yesterday? >> well, i think a couple of things. first of all, they had to make this thing thinner and somehow more workable, because the first surface pro and the second one didn't succeed. they were kind of neither a

great tablet nor a great laptop. and they're kind of forced into this hybrid position by the way they wrote windows 8 and now windows 8.1, and jon pointed out the kind of jumping between two different kinds of environments. so to some extent, this is -- this is their attempt to correct what they didn't do well in the past. i want to hasten to add that i like the idea of microsoft doing hardware that integrates its software, because like with apple, you can do a lot more when you control the platform of both software and hardware. but i think the jury is still out. and one big missing element to this is a true touch version of office, which is their other big franchise in addition to windows. you know, ironically, they have a very good touch version of office that they brought out for the ipad and which i use now

pretty frequently on my ipad. they yet have yet to bring one out that works in the start screen environment on windows 8, including this surface. >> a couple of different thoughts here, jon. one is, commentators who yesterday said got to give points to microsoft for being persistent and chasing this market down this road. the other is that cramer today says there's no rule that says microsoft has to get it wrong every time. people seem to be wanting to give them some benefit of the doubt. >> yeah, look, what a lot of players are trying to do in a tablet market is build zero margin hardware to sell something else. amazon doing that with services, saying that the kindle is really a service. microsoft can't do that, because they've still got this ecosystem, including lenovo, helicopter, ahp, and dell. so they can't go too cheap with this. at the same time, they want to be successful, however they have to have some margin.

so they're taking kind of an applish approach, aiming at the higher end of the market, creating a bit of a market for something that gets the margin that people will spend money for. we'll see if that works. they need to hit all of the different angles. they need it to work, but not so well that it crowds out their oems. >> so, walt, what about the cost? you have $799 for the basic product, roughly 950 as jon said for the full package, with the bells and whistles. is that a sweet spot that microsoft can succeed in? >> it's a sweet spot if they can do what they tried very hard to do yesterday, which was to position it as a laptop competitor and not a tablet competitor. and it is true that it does run full windows, and they've made some improvements to the physical way that it works. it's still not, i don't think, as good as a laptop in your actual lap. it's still better on a surface than it is in a lap, where a laptop -- with a rigid hinge and

most of the weight in the base can work better on your lap. but if they can succeed in convincing people that, hey, i'm going to buy this instead of a laptop, and i'm going to get kind of a tablet experience, as well, then i think they can sell them at that price. but i have to say that my -- my sense inside microsoft is with the new regime and everything. they certainly haven't given up on this. but this was in the works long before satya nadella took over, and certainly he hopes it succeeds. but he -- really, everything's on the table there now. >> yeah. >> and that includes the surface line. so for the surface team, this particular new model has got to be a hit. >> finally, walt, while we're talking about companies and the challenges of hardware, you look

at the motorola and the moto e, and your thoughts? >> well, this is a huge story that i think we'll be talking about for long time, carl. the moto e is a new phone from motorola, android smartphone, up-to-date android, gorilla glass, 4.3-inch screen that sells unsubsidized and without a contract for 129 bucks. the reason they're doing this is they believe there's an enormous business opportunity in converting the 70% of the people worldwide, cell phone owners worldwide, who are still using old feature phones, have not moved to a smartphone, even in the u.s., roughly a third of the cell phone owners are not using a smartphone. and if you can just get that price down, they think, without sacrificing too many features, you can do it. and so, i reviewed this to take a look at what do you get for

129 unsubsidized, and you get, i think, a decent phone that's a good upgrade from a feature phone. you don't get lte. you don't get a front camera. you get very little internal memory. some stuff like that. but compared to a feature phone, i think this could be -- this could be the price and the kind of brand name that moves people up. >> wow. and, carl, kayla, this is the flipside of the coin from what microsoft is doing with the surface. this is what they don't want to happen with their ecosystem. >> we'll see. walt, the definitive word, as always. >> thanks a lot, walt. we'll see you next time. >> right, take care. the next guest has been called the next mark zuckerberg. why won't he let our own kayla tausche into his own social network? we'll talk to zack marx to tell us how he got over 150,000 people to sign up for his big idea. and you're like. a good deal or not. looking at truecar.com. there's no buyer's remorse.

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on the entire tempur-pedic cloud collection, even a queen size sealy gel memory foam mattress for just $497. better hurry! the memorial day sale ends monday. ♪ mattress discounters coming up at the top of the hour, google beats out apple as the world's most valuable brand, but does that translate into the best stock? lots of big retail moves happening now. we'll tell you where the experts think you can find the most value in that space. the ceo of vanguard, the world's biggest mutual fund company, joins us live. now to rick santelli with the "santelli exchange" in chicago. >> thanks, judge. hey, we'll have an abbreviated one, but it will be fun. we'll talk about three major misconceptions in the marketplace. the first one is, you know, you

have to be crazy to recommend owning treasuries. we've all heard it. many of the experts out there just can't believe and continue to say it, maybe they'll be right at this point forward, but i just want to point out one thing. total return, which is the price appreciation and the income stream based on the coupon for a 10 year, as of this point in time, one minute ago, 6.3%. total return on a ten. 13.3% total return on a 30-year bond. second is misconception. the reason rates have moved lower and the price higher is because everybody is short. yeah, see, this is the sell side of the card. everybody is short. there is two sides to a trading card. i guess that means on the buy side it must be, you know, g-o-d, god, divine providence, because where i come from, there's two parties to a trade. i understand. now, the third one is that the government can't do anything right. that is so wrong! maybe i've said something

similar in the past, and i must say mea culpa, okay? look at this chart of gm stock since they came out of bankruptcy. notice the high-water point on the chart. now come and look at me. okay? because the high-water point was on december 17th at $41.53. and the government got out of their final position on december 9th, where it closed at $40.90. you ask me, who says the government can't do anything right. but it wasn't perfect. they did miss it by five trading days. and it's a good thing that they got out, because i can't imagine investigating ultimately fining them based on this recall if they still had ownership. back to you. >> rick, thanks a lot. rick santelli in chicago today. what were you doing when you were 11 years o eld? old? this man decided to build a social network. we'll talk about that after a break.

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what do you do if you're an 11-year-old and your parents kick you off facebook, not once but twice for using inappropriate language and connecting with adults you don't

know well? if you're zach marx, you don't get mad. you just start your own social network. at the old age of 13, the founder of grom social, zach joins us from l.a. zach, great to have you with us this morning. good morning. >> good morning, thank you so much for having me on the show. >> well, we sort of walked through what the story is. but take us back a couple of years ago at how you got the idea, and how you got the -- the wherewithal to start this on your own. >> okay. well, you know, it kind of all started when i convinced my dad to let me go on facebook. you know, my dad didn't know too much about facebook. and i told him, dad, it's safe. you don't need to worry about anything. which it wasn't. and i convinced him that it was safe. and i went on and i was friending all these people. i was seeing adult content i shouldn't have been seeing. you know, things i shouldn't have been seeing pretty much. you know, and he deleted my facebook account, and i said, what if i create my own facebook for kids. he said, good luck with that. and i started to develop grom

social, for family, and some of my close friends. and started to drew out some of the characters, we drew out the content of the site and some of the features we wanted to have on there, and we have 740,000 registered members in 170 -- excuse me, 167,000 active members on the site. and they're all over the country. kids join every day. kids love the site. and it's crazy how many countries we're in. we're in over 200 countries and territories. it's going great. >> zach, i tried to sign up for grom this morning when i was doing research for your company. i entered in my accurate birthday and it said i was too old and i wasn't a parent. i'm wondering how you police that. could i have just easily have lied or shared content that maybe wasn't safe. and i'm wondering what you do about that. >> yeah, it's actually a great question, because if you really wanted to, you could lie in and put in a fake parent e-mail address. we have so much safety features

on the site. for example, one is we have 24-7 live monitoring on the site. we have usually five to six teachers on the site that are chatting as these characters that are monitoring the site 24/7, seven days a eck would. we have a bad-word filter on the site. we have a grom social report card, which is every two weeks a parent gets e-mailed a grom report card, which is a breakdown of every chat, every message, every photo, every -- pretty much everything that their kid has done in that two weeks of time that the parent gets. the parents get a copy of everything and gets updated on what the kid is doing. >> zach, you're fantastic. i love how clearly you explain what the site does better than a lot of ceos we have. just do me a favor. stay away from justin bieber. stay on the straight and narrow. we want to see this grow into something big, and we'll have you back. >> i tell you one thing -- >> thank you so much. >> -- zach, both jon and i have young kids, and it does sound like the solution to a lot of concerns that a lot of parents have. >> it does. >> zach, please come back. i have a feeling you're going

to -- we're going to be talking to you soon. zach marks, joining us this morning -- >> definitely, yeah. please check out the site. >> grom social. yes, i'm sure -- 167 active, not too bad. >> yeah, twitter should hire this kid. >> school gets out, he expects traffic to ramp up. >> dow is losing some of the gains, we're up 112. we'll see what the afternoon brings. let's get to scott wapner. >> thanks so much, guys. here's today's trade. vanguard on the mark, a big day for stocks. the ceo of the mutual fund giant is here. first on cnbc, where he thinks your money will work best. retail detail, from tiffany's to lowe's, target and beyond, the numbers are in, the stocks are moving and our traders are picking the winners and losers. game changers and money manager investing in disresuuptive stoc. pete, josh, jon are trading with us. stocks are staging a rebound, some of the most beatenen had up