it, i guess. thank you very much. have a great weekend, everybody. let's hand it over now to "squawk alley" and kayla tausche. >> thank you so much. we'll look at the that are again this hour as it is moving l keep your spirit alive, sarah. it is 8:00 a.m. in san francisco, california. it's 11:00 a.m. hear on wall street and "squawk alley" is live. ♪ another one bites the dust and another one gone ♪ ♪ another one bites the dust hey, i'm going to get you, too ♪ ♪ another one bites the dust ♪ welcome to "squawk alley" on this summer friday. joining us today kara swisher and with us here for the full hour quite a treat, jon

steinberg will be with us all hour. jon fortt is here as always. carl quintanilla, we should mention, is off today. but first up we want to talk about a major delay potentially for the iphone 6. according to reuters apple suppliers are, quote, scrambling to get enough screens ready for the phone launch. that's because of a redesign of a key component that's disrupting production. it's unclear whether the problem will delay or limit the number of phones available on launch day. apple is expected to unveil that iphone 6 at an event on september 9. kara, what do you make of this story? it seems the holdup is over a product related to the back light. they wanted the brighter and thinner. >> the phone will be very, very thin. these are big phones, just the way they're sort of copying the samsung phones but they want them thinner and more beautiful.

they're perfectionists at apple. these stories happen every time apple has a product, there's delays, there's issues. they're going to be rolling out the phone and hopefully they'll have enough depending on the demand. i think there will be a lot of demand for these phones. >> they're saying it might be more like ly with the 5.5 inch, the larger one. there are so many rumors that happen. either way they'll get a phone out in september, something in people's hands. even if it's only the 4.7 inch one people will be psyched and buy it like crazy. >> the bears say what if this is like the ipad mini rollout where they didn't have the screen r d ready, and there were screens whether the supply of that was holding that. >> they still sold a ton of them. we don't even know for sure whether they plan to roll out two sizes at the same time. so to call it a delay i don't know. i think the point is there's been especially in developed markets among higher end phones, if they come out with a 4.7

that's a wide open field for them, steal share from samsung and so potentially either way. >> to jon's point, who cares? they always have a delay with one of the products. remember the white iphone they couldn't get it out the door? people still buy whatever they get out the door and wait a month or two for whatever they need next. >> people have been waiting for this product and despite the deja vu of these potential delays we always seem to get a press release from apple about record sales on launch weekend are for these products. is it inevitable that we're going to see major sales despite potential quality questions? >> i don't think it's quality questions. they're not going to have the screens quite ready. i don't think it will be a big issue. i think there will be two phones, two sizes, and there's the huge penalty-up demand for these larger phones among apple. i want a larger phone. i have this smaller iphone 5. and i think everybody wants one. i'm willing to wait for one. i think a lot of consumers are like me, they have samsung phone

envy and if they provide a phone wait an extra month. you've been waiting this long. >> to hear kara say a small iphone 5 which, remember, that is a five inch, right -- >> no, four. >> and 3.5 inches is what we used to have before. we keep getting larger phones. they seem larger and then it seems like the right size. >> investors seem to be sharing the sentiment investors will buy anything apple puts out. that stock hitting a new all-time high earlier in today's trade despite the broader market being down. certainly seems to be discounting any questions over the supply there. another stock big on the rally train today is sales force. that stock is the leader on the s&p 500 right now. earnings and revenue beat analyst estimates. it's up better than 7% after also raising full year earnings forecast. the ceo was on "mad money" it talking about the company's stock returns and here is what he had to say. >> we've been public for ten years now and you know we've

seen that stock go up and down over the last ten years but we're looking for the next ten years and where do we want to be ten years from now? that's my viewpoint as ceo. i can't do quarterly reactions. i have to deal with the long term and i think for the long term we're doing pretty darned good. >> and yet, kara, he says he can't manage quarter over quarter, but this was the quarter of 30% growth and almost every single revenue segment. what do you make? >> i think he's talking about the earnings and everything. they're doing everything is growth, growth, growth in that company. he's sort of channeling jeff besos. i'm just going to grow and win this market. so he's talking about future profits. and so that's a noise that comes out of silicon valley from almost every company, we're going to go for -- we're going to ride until we get all the land and then profit from it. you know, if wall street puts up with that and doesn't mind someone who is doing that and growth at all costses, that's what you're getting when you're

buying sales force. >> one of the things sales force is extremely good at is managing quarter to quarter. they always kind of sandbag their guidance just enough and then beat it. they're very good at keeping analysts in line in terms of what their estimates are. and when these numbers came out last night, i thought they were particularly good not only because they beat on the top and bottom but they raised the full year guide and that 38% top line growth in this environment when they've got strength in domestic markets that remained strong just really adds to this thesis that they have that among the enterprise players even though you see some of those holding in their sales force is just king of them all. >> and they also lend credence to the idea that sales force is becoming a diversification play. it's not just a cloud company. they were one of the first companies to add space. especially in the social media space we saw buddy media and now relate iq the most recent quarter even though some say they may have overpaid for that.

the fact they're raising their forecast on the back of spending that much money and acquisitions, are they feeling bullish about their ability to pull this off? >> they though they need to broaden into other markets. sales force, we use it to track inwound leads for advertising clients but they want to go into all this other stuff, into prospecting, the social stuff as well, so that makes sense. one question i have for kara, though, what do you think of stock-based compensation? most real world people think it's a real expense. the market doesn't seem to care. they lost $61 million. it was a stock based compensation. they go with the nongap number and no one on wall street -- everyone on wall street buys into that. what do you think that have? >> that's the way they do business here. it's the way you have to do business in silicon valley. i don't know -- wall street does understand that and i think understands, you know, what's going on in the sales force and other companies. a lot of these acquisition strategies are like cisco. just keep buying and expanding. at some point that will be

problematic if they can't integrate them properly but they're trying to go for markets, adjacent markets, or companies that are in their space that add to their offering and allow them to dominate and fwroe. >> stock based compensation does seem to be an idiosyncrasy of tech, i've heard. executives in industrials and other companies saying, yeah, if i didn't have to pay my employees, i could put out much better numbers every quarter. we will leave it there for now and of course we will see that term stock based compensation in many other tech earnings still to come. finally the next generation of windows is coming. according to a report microsoft will unveil windows 9. no changes have been confirmed but the operating system is likely to include a version of microsoft's siri competitor cortana. what do you think this rollout needs to have in xbox integration? >> it needs a do-over. every with once in a while we get that do-over version of windows. you had xp people loved and then windows me. now windows 7.

windows 8. windows 9 will fix some of the interface ib use, some of the usability issues that have plagued it, not sure if it's a touch interface or not. they are having hesitancy adopting this. with windows ni 9 what you want see is an enterprise ready version that this segment of the market that has been booming are actually going to adopt. >> i would also say that it thedz to be a seamless integration between the cloud os and the desktop os. back on outlook for the first time. i haven't been on it in five to ten years. i've been on google aps. that suite works so seamlessly across the devices, that's what they need to do in the next version of the desktop os. >> kara, they're calling this threshold according to reports. do you see this as a threshold from microsoft to get to a new rollout? is. >> i don't know. i think windows 8 has been called windows vista 2.0. one with of the wraters wrote about it. this is an important product for

them and they have to really fix what was wrong with windows 8 and get people to adopt it. this is windows -- one of microsoft's key products. and maybe it will be a thresh d threshold. they really do have to show off as the other guys were saying some really significant integration and seamlessness because people are used to it and they don't have the time to sort of make mistakes here so i think it's really important rollout especially for the ceo. >> we're lucky to have two executives with us this morning. jon steinberg said he's now using outlook again at "the daily mail" whereas he was using google mail. what do you use? >> office. we use a lot of apple products. people do different things. a lot of our business staff is on windows. i just got an e-mail from my brother earlier today, he bought a windows phone and he loves windows. it's a really interesting -- it depends on what system you're in. if you're a business person, you use windows a lot. >> and, kayla, i wish i had the

source, but there was a source with the fortune 500 companies, the vast majority of them are really still on exchange outlook and it tends to be in the mid-sized companies and the smaller companies more easily going to google apps because the setup time is so easy. >> we will see that rollout is reported to happen at the end of september. i believe september 30. certainly we'll get drips and drabs of more information about that in the coming weeks. kara, have a great weekend. >> thanks a lot. >> thanks for joining us. cnbc does have that sharing partn partnership. a team of engineers has found a way to hack into gmail and other sites on mobile devices with a staggering 92 perg success rate. that brings us to this morning's squawk on the tweet. if someone is hacking into your e-mail account, what is something you would actually want them to see, if anything? tweet us at "squawk alley." we will air your responses later on in the show. a quick check on the markets right now and the doi has gone negative after being in positive territory for much of the

morning. that after janet yellen's speech at jackson hole this morning. dominick chu is on the floor with what is moving. dom, it's been an interesting session to say the least. one that's been tightened range bound. it's not like we're up 100, 200, 300 points or down that much either. we are near session lows right now. you can see the dow jones down 30 points right now. the s&p, we'll call it down 4 1/2, 5 points. that is near session lows. what's been interesting we thought there would be a few more fireworks than came out of janet yellen's speech. we did hear her say that there is labor slack in the economy. it's a fancy way of saying that we're not at robust employment because we're not you can see this idea interest rates aren't on the rise. that's putting gold companies as well as gold prices that have been on the slide for a better part of a week or more. also watching what's happening with the dollar. the dollar didn't move you can see on this bit of news.

as traders are getting ready for the afternoon, we are still in a low volume trading environment. we'll see if there are any more or perhaps bigger fireworks coming out of that speech at jackson hole. >> a nuanced trade to say the least. dom, thanks. we'll hear more from you later on today. coming up, a strong tax season for turbo tax maker intuit. why is the stock down this morning? the ceo will explain in a cnbc exclusive interview. a shocking report, gmail can be hacked with a 92% success rate. one of the architects tells us what happened and how to keep yourself safe. and love is in the air. the story of the las vegas airline where people are paying up to $1,400 to join not the frequent flier club, the mile high club. in today's market, a lot can happen in a second.

with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price, maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today.

welcome back to "squawk alley." the biggest percentage gainer on the nasdaq, the sfok joining after japan said it would buy the rest of the radio frequency chip maker it already doesn't own for about $465 million in cash. that comes to about $12.50 a share and very heavy trading peregrine trading up almost 61%. jon, back to you.

>> all right, thanks, courtney. take a look at intuit today. the stock is, let's see, last time i looked it was down and quite a bit, about 3.5%. online subscribers are growing but not as much as people expected because of a shift intuit is making to be more aggressive in the cloud. is it going to work? take a closer look at the tax software giant and small business software giants engs. brad smith is the ceo of intuit. including turbo tax, quick books and mint. brad being thanks for joining us. i want to dig right in here. the reaction of investors to the shift you've made was a little harsh after hours. you're moving from a roughly $200 quick books desktop product to a roughly $20 a month online subscription model and that's changing how you recognize revenue. but are you going to be able to keep these customers and actually take on challenges in the emerging market? why should investors believe

this will be adobe and you're not going to lose to cloud competitors? >> well, thank you, jon. i appreciate you having me on this morning. first of all, you hit the nail on the head. this is a good news story overall. we are accelerating to the cloud. we have over 30 million of our 45 million customers already in the cloud and quarter over quarter it continues to grow and small businesses quarter, we grew 40% in terms of subskraber growth up from 36% the prior quarter. and outside the united states the growth was over 150%. you have to keep in mind the can company's a 30-year-old company. this is not our first platform shift. we were born in the era of dos. we moved to the web and now we're embracing the cloud and mobile devices. we have a clear path to the future. i am confident we will succeed and it be the market lead er. >> you took on 0 some additional expense, i believe it was around $40 million. my understanding is that's in customer support and interest trying to shift from more of a desktop model to more in app

cloud models. are there other expenses you will be incurring that investors should be looking out for? >> we did primarily restructure and you touched on one of the key aspects which is customer support, building more of the customer care into the product through self-help as opposed to the call center model. the second thing we did is moved our r&d investment into the cloud. we moved it away from the desktop product in thames of new features and we invested heavily into the cloud. in terms of incremental investment, we will continue to make the investments in the infrastructure that we need, things like data servers but overall most of that investment has already been made and now it's about descaling and going to market. >> so, brad, the fact that you're saying investors should expect small business revenue to decline 3% to 6%, is that speaking to the restructuring or do you believe there's been a weakening in small business sentiment as the economy continues to recover? >> it's actually the result of

an accounting change. if you adjust for the fact we had taken what is an upfront sale and spreading it over more than three years, if you didn't have that accounting change, which is referred to as revenue, our small business growth would be in the neighborhood of about 10%. so the small business growth continues to be strong and resilient. we simply changed the recognition how we're going to count those sales so we could move more to an ongoing subscription model and it pushes revenue out into future periods. >> you just ended your fourth quarter and a lot of analysts say this is not as important a quarter because of how heavy tax season is. do you think your business will ever transition into being more of an ongoing people using it every single month for managing their finances type of thing? >> it certainly will transition to more of that over time. ultimately at the end of the day, though, taxeses are such a big piece of our company and that happens between january and april 15. we'll still have a pretty big surge in our fiscal third quarter but overall you'll start to see more of an evening out in the first, second, and further

quarters as well. >> brad, thanks for joining us. investors were a bit confuseded by office 365 when microsoft did it very similar, adobe creative suite, shift iing to the cloud. we'll see if this stock dip is an opportunity for investors or if there's trouble ahead. i take your explanation about the shift in revenue to heart. thanks for joining us, brad. >> thank you, jon. when we come back, shares of game stop soaring up nearly 6% after a strong earnings report after the bell. we'll tell you exactly what's leading that company higher. plus, that shocking report that on mobile devices gmail is hackable with a 92% success rate. one of the people who launched g gmail and helped with security at google breaks down what you need to know on the other side of this break.

welcome back. check out shares of gamestop rallying up about 6% after earnings and revenue beat expectations. the video game retailer was helped by strong sales of the playstation 4 and xbox one as well as new game releases. one of the things that stood out to me, guys, the power of rewards program. it seems we're in this loyalty economy where they're able to keep from getting kind of rolled over by amazon because people want to come to them to cash in these points. the console player is a loyalty player. a hard core player and they're seeming to maintain -- >> and also the trade-in. i'm not a points user but i was talking about my kids' wii with you. i can go in there, get half the money back, get them another one, and it pulls you back. >> loyalty programs are hard on margins but competing against amazon margins really are not comparable to begin with. shares are down 13% year to date. they had a few key releases that were delayed until 2015.

but executives and analysts say third quarter is encouraging. i think all surprises to the upside. >> yet another market that was supposed to get crushed by the tablet and yet is still hanging in there. >> an amazing move by gamestop, a company that was thought to be an lbo target in prior years along with radio shack. these two companies have taken quite a divergent turn. radio shack now saying they'll run out of cash in the next year and may just have to liquidate according to moody's. but gamestop is thriving in this economy. >> it's a bandwidth thing, right? you need to get these physical pieceses of software still. it is gigs, several gigs. downloading that would literally take you an hour in a lot of cases especially in new york city. >> do you bring your kids to gamestop? what do they buy? >> we do wii. wii sports, wii vacation resort sports. that's the game the kids love. that's the 5 to 6 crowd. >> you're such a good sample for that 5 to 7-year-old demographic. >> buy a little pony and

nintendo wii. >> your kids will be there soon. >> i hope not. >> we want to take a look at markets, too, as we told you earlier markets moved earlier on head lanes out of ukraine. let's head over to simon hobbs as the markets are set to close in a few minutes. >> across europe on essentially the two-week rally we've had there has ended. i'm not sure if it was these ukrainian or the russian trucks that broke away and into the ukrainian border that have sent us lower. there are many technical reasons we may be down in europe. you can see that france is down 1%. obviously these markets are now waiting for what mario draghi will say at 2:30 our time, the jackson hole symposium. that's critical for their trade now on monday. one of the republics we're lower is we're failing at important it technical resistance in europe at the moment. essentially this is the s&p 500 here. that's the pattern of where we've been trading. the s&p seems more able to make

gains at the moment than does the 50 in europe. and that's because it's just below the 50 day moving average and that's making it more difficult for them to surge higher. some of the russia plays are down today. maybe it's the knee-jerk reaction to what we're seeing on the ukrainian border but perhaps it's because they have been quite strong, ralliers if you like, certainly off its low. adidas is quite heavily exposed to russia. the other interesting thing is the rally that we've had on some of the greek banks coming through the session. there is a local media reporting that the greek government may change the rules there to convert deferred tax assets into tax credits which could basically bolster their balance sheets by just over 3 billion euros. all the major banks in europe are facing, kayla, these tests from the central bank, which is why you may find that when draghi speaks here in wyoming at 2:30, he doesn't have much to say because he's playing for time. until the big june package is

fed through and cheaper loans to the banks in september and they know how they've gotten through the stress testses with the banks because arguably they won't do much before then until they sufficiently recapitalize themselves. i hate it when people do that. >> it's relevant in this case. we have citigroup calling for another trillion euros so it will be important -- >> from the sovereign debt? >> yes. >> good luck for that. >> simon, thanks, as always. we appreciate it. when we come back a shocking report on gmail on mobile devices can be hacked with a 92% success rate. one of the architects explains how to keep your accounts safe in a moment. and that does bring us to this morning's "squawk on the tweet." if someone is hacking into your e-mail account, what's something you'd actually want them to see? tweet us and we'll air your responses later on in the show.

[ male announcer ] since we began, mercedes-benz has pioneered many breakthroughs. ♪ breakthroughs in design... breakthroughs in safety... in engineering... and technology. and now our latest creation breaks one more barrier. presenting the cla. starting at $29,900. ♪ starting at $29,900. my motheit's delicious. toffee in the world. so now we've turned her toffee into a business. my goal was to take an idea and make it happen. i'm janet long and i formed my toffee company through legalzoom. i never really thought i would make money doing what i love. we created legalzoom to help people start their business and launch their dreams. go to legalzoom.com today and make your business dream a reality. at legalzoom.com we put the law on your side.

for that moment, where right place meets right 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.

welcome back. a team of researchers has found mobile devices are susceptible to hacking and malware attacks. gmail came in at 92% success rate. we have shuman ghosemajumden vp at safe security, a member of

the team that launched gmail and co-founded google's privacy council and joins us. shuman, good to see you. >> good to see you. >> so the report that came out of uc-riverside says that on android devices the problem with gmail is its shared memory, that so much is stored on it that you can basically access it from anywhere. do you take issue with that finding? >> well, i think the report is very interesting. the paper itself is going to be published tomorrow, and i'm very interested in reading that. but the vulnerability that they detailed and that has been described in the press so far is not specific to g mail but instead to mobile devices and so they talked about shared memory and android ios and other devices. and i think that the question is, is there anything that is specific to g mail or is this just something that is a commentary on the way that android has been constructed? that's what i'm curious to see.

>> android has been front and center in some of these cyber attack debates. mcafee finding 96% of all mobile attacks happened on the android system. what precautions were taken when android was first built to make sure that it was safer than it appears to be now? >> so privacy and security are issues google has always taken very seriously. so being able to architect the system in the right way and making sure that user data is stored responsibly and the right security mechanisms are put in place to make sure when it's transported that those pieces of data are protected well, those are things google bakes into the security process from the very beginning of developing any type of application. so, for example, hp has been supported in gmail from the very beginning. >> shuman, the main vulnerability here seems once again to be malicious apps. the way they describe this

vulnerability is first you have to download an app that has malicious code running in it. we know that typically happens in android where the app stores aren't all policed very well. and then it can access shared memory. does this raise a fundamental question about openness versus curation when it comes to apps on smart phones? is it just safer to be in a more closed environment? >> so there's a concept in the security industry of attack service, and that idea is how many different ways are there into any given system? so one of the difficulties of android has nothing to do with the fundamental architecture it self but the fact that there are so many different versions of android that are supported on different phones that are current in the market today. so that means that there are phones out there that are running with older versions of android that don't have the same types of security patches that have been applied to newer versions. so being able to address that is more about being able to address the nature of the ecosystem

itself rather than the fundamental security architecture of the 0 operatinging system. >> a question on ad words. quick fraud, that you designed a prevention for, someone kicks on an ad and it's fake and the advertiser doesn't want to pay for it. that was a big issue at your time there. is there no click fraud left in gaggle or google or can that impact the can ? >> the team that worked on click fraud has been working on protecting from the very beginning. it always did a very good job. we always put a lot of resources into making sure quick fraud was controlled well on google and i think there was interest in understanding those systems from an external perspective a number of years ago. but the way google dealt with it was always quite effective and continues to be in my opinion. >> shuman, you are now vp of shape security, which is venture backed but very little is known about the work that you do there. can you tell us a little bit about what you're doing at shape security and where we can see

some of your work in the future? >> sure. so the core problem that we're focused on is automated attacks. so what we see is that just about every major breach, and we're seeing breaches on a weekly basis these days, is enabled through some form of automation, malware and scripts. so what it has created is the first bo it t wall to protect any type of web application used or interfacial against those automated attacks. so by doing that you actually massively reduce that attack certifica service that i was talking about before to be able to create a practical defense for any web application. >> that, of course, a booming field but, shuman, i know you and i both will be anxious to see what that report from uc-riverside does say about the vulnerability about these apps on some of those android ecosystems. thanks for joining us this morning. >> thank you. and in its battle against the class action lawsuit filed by some current and former retail employees apple is

revealing some interesting details about some of its individual stores. those employees allege apple denied them work day breaks as required by california law. but in its defense that it strictly adheres to state laws, they 134i9 submitted thousands of pages that break rooms are almost as large as the stores themselves and contain features such as healthy vending machines and apple product that could intentionally access the internet for personal use but not company servers for work. we reached out to apple for comment but haven't heard back yet. interesting to see behind the scenes some of these break rooms. they have them set up so you literally can't get on to the can company network and do any work. they want people in a relaxed state. >> and they must have the cameras deactivated on those devices because no pictures are out there of these lavish break rooms. >> and yet customers go into apple stores to check their e-mail or check facebook oftentimes leave it logged in and yet it seems they're cracking down behind the scenes which is ironic.

>> not exactly cracking down. they don't want to be accused of making people work on their breaks. i guess they still could if they really wanted to try to. break room is probably not lavish by silicon valley stand ardz. healthy snacks and access to commuters is par for the course. >> it's an oxymoron anyway? breaks are short, they're infrequent. up next $1.3 billion and it's already broken why the san francisco 49ers are fixing their stadium before the season even officially starts. plus, shares of sales force rallying today after a strong earnings report. is it too late to buy in? more on that when "squawk alley" comes right back. here at fidelity, we give you the most free research reports, customizable charts, powerful screening tools, and guaranteed 1-second trades. and at the center of it all is a surprisingly low price -- just $7.95. in fact, fidelity gives you

lower trade commissions than schwab, td ameritrade, and e-trade. i'm monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. call or click to open your fidelity account today.

e financial noise financial noise

financial noise financial noise the latest from jackson hole including a live interview with dennis lockhart. what does he think of janet yellen's remarks today? plus, a longtime bear reverses course. we're going to find out why he is now running with the bulls. and we head to sin city where the traders are betting big and so is one well-known nightclub. we're inside the velvet rope coming up at noon. kayla, we'll see you there. scott, good to have you in house. in case you missed it, the san francisco 49ers new billion dollar stadium is not ready for prime time. the team is already fixing the field, resodding just four days after the first game ever

played. chunks of grass are missing. yesterday the team canceled a public practice because the field was in such bad shape. they do expect to have the field ready 0 for a preseason game this sunday but it's not looking good so far. guys, $1.2 billion. the grass needs time to take root but yet they allowed the preseason game to be played there and now in a couple days they have another scheduled to take place. >> the san francisco 49ers, did you see them get rolled in the first two games? that's the bigger concern. >> but that's just real estate. we're moving into a new office. i just everybody october because you always need to add at least 30 to 06 days. >> there's no off-season for a company. there is for a football team. >> right. you slate it to be ready just in time and then you have to allow these gaps for your big real estate projects. >> did you see what the 'bron do

cos did to them? >> there were divots, pockmarks. it doesn't look like it will be getting better for them, jon, anytime soon. sales force.com coming out with better than expected earnings. beating analyst expectations bay penny while raising guidance for the full year. the chairman and ceo joined our own jim cramer on "mad money" last night. take a look. >> what are you doing with marketing that is an exact target that's doing this? >> well, number one, jim, it was an awesome quarter and you saw, jim, we've got what i think you call accelerating revenue growth, an rg, to 38% from a year ago. now more than $1.3 billion for the quarter. that was amazing. >> for more on sales force let's bring in tom roderick, a senior analyst. tom, is sales force fully valued at this point? i mean, with these big revenue beats quarter after quarter, they've still got room to grow

arguably. what do you think? >> well, first of all, thank you for having me on this morning. i have certainly been a big believer in the opportunity for sales force. you know, i think if you look at the debate on the stock what's been going on is that there's a number of people that don't believe that the sales cloud, the sales force automation piece, can continue to grow at the pace that it's been growing at. we tend to take the opposite side that have view that says there's still room for penetration and if you actually look at the results that came out last night, one little data point the can company gave was that the sales cloud itself, which is over $600 million in revenues now in the quarter grau 6% quarter on quarter so if you annualize that, that piece alone, the most mature piece, is growing over 20%. and then you look at some of these additional topics that marc was talking last night, the marketing cloud, the target acquisition folded in wonderfully with where the company is going. when you think about where they can take that and bolt it on

with the core sales cloud, there's a lot of room for growth here. i think i believe most strongly in is about the model. we've been talking about the cloud and everybody started talking about it. what's different about it in the last few years is that large enterprises are finally taking the leap. they've been told by larry ellison and others that, hey, it's okay. you can take the leap and make a big investment. and so as that happens, sales force has the distribution mechanism. they have the model, the sales model, service cloud and the marketing cloud, and the customers are making big purchases. >> so everybody has been talking about the cloud. you just mentioned that. what is it about sales force's execution and product portfolio that makes it so complimentary not just for the core cloud business but some of these newer companies like exact target which we just heard jim cramer talking about with benioff. >> if you go back to where the company's roots came from, i

mentioned sales force ought mace, that's putting the right information in the right people's hands. that model is becoming more automated so how do you get the right information whether it's a marketing message or a b to b type of message. more automation, exact target you mentioned is a great way to fold that in because it's taking a lot of very heavy data, sophisticated customer data, and wrapping that back into the model and you have large customers. 3m was mentioned on the call, hp, aetna, allstate, big customers that are lacking at ways to not only interact with their end customers but with their partners as well. and so there's a lot of things in the front office that sales force can continue to sell them and that's why we're a believer this growth trajectory can continue. >> tom, nobody debates that the company is innovative and does cool stuff and customers like it and the top line growth is huge. the debate is over price. i'm looking on charts, forward price sales ratio, 5.57 times

and then the issue it's not profitable because of the stock base. valuation and stock base making it nonprofitable. how do you think about those? >> well, they're tricky topics. they've been the bear case element of this story for going back five, six years. so i don't think those topics are necessarily going away. i think the big question is if you're a growth investor particularly large cap growth, where are you going to find exposure to the cloud? and so how much do you want to pay for that? the way we look at the valuation methodology is a back of the envelope math if you look at 20 to 25 times the growth multiplier on what that growth rate is and kind of back into the revenue multiple. we could argue that 5 1/2 times revenue is certainly not cheap but where others are trading at particularly for that 25% organic growth and as marc mentioned 38% growth, i think that's a reasonable price to pay.

the stock base you mentioned, i think that is an element of a company that's growing, enticing a lot of young employers to come work there. there will come a time this will move from a gret story to becoming more of a value story and there may be transition in the story at that point. there's a lot of room to create leverage in the model, though when that happens. >> all right. well, i'm sure benioff will be crowing about it either way. thanks for joining us. >> thank you for having me. >> let's send it over to courtney reagan for a quick market flash. let's check out rackspace, a computer service moving higher, regarding the company's growth and full year earnings. it rates the stock as outperform with the $67 price target. it is currently trading up 3.24% and actually under $35 per share. kayla? >> all right being thanks so much for that, courtney. when we come back, the moment you've been waiting for, find out who you chose to be this weak's tech leader. a hover bike or a smart bike

helmet. that winner coming up in a moment. on this flight turbulence might be a good thing. >> tonight the biggest party in years happens in vegas when the at midnight, but almost every day there's a party happening one mile high. up next, we profile an airline whose slogan is what happens over vegas stays over vegas, when we come back. make a lot ofs for my business. and i get a lot in return with ink plus from chase. like 50,000 bonus points when i spent $5,000 in the first 3 months after i opened my account. and i earn 5 times the rewards on internet, phone services and at office supply stores. with ink plus i can choose how to redeem my points. travel, gift cards, even cash back. and my rewards points won't expire. so you can make owning a business even more rewarding. ink from chase. so you can.

♪ ♪ [ male announcer ] during the cadillac summer's best event, lease this 2014 ats for around $299 a month. hurry in -- this exceptional offer ends soon. ♪ hurry in -- this exceptional offer ends soon. could help your business didavoid hours of delaynd test

caused by slow internet from the phone company? that's enough time to record a memo. idea for sales giveaway. return a call. sign a contract. pick a tie. take a break with mr. duck. practice up for the business trip. fly to florida. win an award. close a deal. hire an intern. and still have time to spare. 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.

this week's tech crowd was all about a wild bunch of motorcycle innovation. between two crowd funding products on indigo go and kick starter. one hover bike is a drone that project leaders hope to use to create the first manned flying motorcycle. it went head to head with the smart biker helmet skully ar1. that product can hook up to the web. it has a rer view camera and onboard gps. it was most likely our closest race ever. with 52% of the vote, hover bike has become squawk alley's tech crowd leader of the week. 52-48. very close race there. >> you can never bet against something that hovers or flying. hovers or flying things always win. >> mark, it's bigger for the helmet though. >> a lot of comparisons on twitter made to e.t. and "star

wars." hover bike our winner this week. inflight entertainment just got a new meaning. i'll send it over to jane wells to explain. jane? >> this is the pool area opening tonight as the parents company bets big at the vegas recovery. at the same time, smaller companies are returning to sin city and starting things up here including an airline called love cloud. so this is where it happens? this is where the magic happens? >> this is where the magic happens. >> now, andy johnson put a bed in a plane and he's charging people $600 to $1400 to fly a mile high for anywhere from 30 to 90 minutes so they can, well, join the mile high club. businesses taking off four to ten trips a week. champagne onboard and other stuff. his own mother made a noise canceling curtain between the cockpit and the cabin. >> the most unusual request we've had is how many people can go up at one time. >> what did you say? >> i say currently we only

provide a couple or two people at the moment. >> how thoroughly do you clean between light ifs? >> we do have a professional industrial cleaning -- commercial cleaning company that comes out here and cleans the plane, literally from top to bottom, inside and out, for every flight. >> all right. well, we were there i'm not kidding you, a couple came to use the service. they went up for 45-minute flight. shockingly, they did not want to be interviewed for -- by us because perhaps what happens over vegas, they really want to stay over vegas. i don't know if it really counts. are you really in the mile high club if there's no chance you can get in trouble? >> there's always a chance you can get in trouble, jane, especially that couple that wouldn't let you interview them. how do you know whether to pick 45 or 90 minutes though, i wonder? >> oh, okay. here's the thing. he just started the 30-minute special because a lot of people

were saying after like ten minutes, can we land now? so he started a whole 30-minute. nobody has asked yet to go up by themselves. he's waiting for that. >> jane, we got -- we got to go. i'm always interested how you find these stories. >> they come to me. >> yeah. all right. thanks, jane. >> thanks, jane chlks a team of engineers found a way to hack into g-mail and other sites on mobile devices with a staggering 92% success rate which brings us to this squawk on the tweet. if somebody is hacking into your e-mail account what is something you would want them to see? tweet us at squawk alley. we'll hair your responses next. machines will be sprayed to be made. and making something stronger... will mean making it lighter. one day, factories will work with the cloud.

one day... is today. what does it mean to have an unlimited mileage warranty on a certified pre-owned mercedes-benz? what does it mean to drive as far as you want... for up to three years... and be covered? it means your odometer... is there to record... the memories. during the mercedes-benz certified pre-owned sales event now through september 2nd, you'll get complimentary pre-paid maintenance and may qualify for a two-month payment credit. only at your authorized mercedes-benz dealer.

we stathat the kid on thehought back of the bus might have a song that he has in his head but he just can't get out. with the technology of cloud, we change all that. i can sing something into my device, up to the cloud it goes, back down it comes, sounding better. we break down the walls of creation and we give music creation for the masses.

♪ ♪ unlock the creativity in anyone. with the ibm cloud. the ibm cloud is the cloud for business. let's get to it. time to squawk on the tweet. a team of engineers found a way to hack into g p mamail and oth sites but g-mail with a staggering 92% success rate. if someone is hacking into your e-mail account what is something you would actually want them to see? i had a hard time thinking about what i would want people to see. greg tweet, old sent messages to others who hacked my account and how i emptied their bank

accounts. question of all, tyler tweet, probably all of my match.com invites. those are always a good laugh unless you're my girlfriend. hopefully she's not watching. and ryan tweets, my obscene amount of junk mail. i think we could all agree that's a problem. >> i like looking at my bills and paying them. i'm going to go with that one someone. that's similar to one of the tweets. >> thanks for joining us all hour. >> thanks for having me. >> jon fortt, have a great weekend. send it over to "the half." okay to post 9 for the "halftime" show. josh brown is the ceo of health management. stephanie link, coportfolio manager of jim cramer's charitable trust. mike santoli for yahoo! finance and john najarian. we do anyone with what everybody is talking about, the market's reaction toian net yellen's big speech in jackson hole today. josh, maybe it wasn't that big because i've heard it described as wishia washy. yes, everybody is going to be data dependent.