fat. brent up a little bit. natural gas lower by about 2%. that will do it for this edition of "power lunch." >> "street signs" begins right now. have a great afternoon everybody. ibm losing more than $13 billion in value right now. microsoft ceo promises change. apple earnings out in two hours and we ask, is the dow a flawed index that should be dumped? we will dig into them all. something really surprised me. the dow has gone more than a month without a two-day gain. let's hit the refresh button. new week, new trading day. s&p 500 and nasdaq up for a third straight day. >> apple reporting earnings in just about two hours. it launches the new apple pay payment system. ibm posting a huge miss

abandoning earnings goals. and microsoft ceo going on the record exclusively with cnbc. let's not play favorites. let's dig in and go in alphabetical order and begin with apple. will power joining us. will, is this just about an iphone quarter. does anything else matter for apple? >> i don't think unless you talk about future products. i know the focus will be on iphone. i think importantly really the mix of iphones and how big a contributor the iphone 6 plus is i think that can provide upside to margins and saps as you move into the december quarter. >> lots of buzz about apple pay. how much of a hit do you think this will be in terms of immediate adoption? it feels like it has kinks to work out? >> we just got out and tested. the software just became available. we walked into a walgreens and

bought a bottle of water. flashed it in front of the card reader. it asked for the touch id. it is a slick solution. that is one transaction. apple will need a lot more of those and a lot more retailers. to us it is a big piece of the ecosyst ecosystem. that is really the key for apple here as opposed to revenue contributi contribution. >> even on the volume of transactions, how long will it be before apple pay actually moves the needle? >> it is probably going to be at least several years. the reality is this is something that is probably not more than 1% or 2% of revenue. >> several years not quarters? >> years? >> this is something that generates a couple billion dollars of annual revenue, a company that will generate 200 billion. it is a small piece of the overall revenue contribution.

we really don't know the full economic terms. >> we have already heard a lot of news about apple. you have an outperform rating. i am wondering how much is building to the stock? >> i think everyone is expecting strong iphone 6 numbers. our estimates for the december quarter are above consensus modeling close to 64 million iphones. i think the bigger piece is the potential on 6 plus in terms of higher iphone sap and what that can mean to margins. we think that could provide upside to margins and that could be what pushes the stock higher. >> i don't want to take away thunder. the iphone 6 only out a couple of weeks. aren't the numbers booked once the item is delivered? we are talking about a few weeks of impact for this past quarter. >> that is right. i think the numbers for this quarter are probably general yeah in line.

i think the potential upside is really more the december quarter and i think that will be thefoc >> what is the risk for achieving the price target? >> there is always risk from competition. i think our initial experience looks good. they have to continue to execute on that. outlook as we move into next year. we are at $112. that is 15 times earnings without consideration for the cash. that is building in conservetism. >> let's get out of iphone and ipad. is apple really starting to push the limit with what they can command in terms of pricing? >> are they at risk of burning out core customers? >> i think on the i max side no question.

that is a premium price. there are other price points below that. we will see what the mix is there. the ipad is a good question. you think you are early and yet the numbers have been declining. the next quarter will be telling. generally speaking those numbers are disappointing the last couple of quarters. the good news is expectations are probably lower. >> do we need an ipad? if i had the iphone 6 plus why would i need an ipad? >> we already probably have the ipad mini mini with the iphone 6 plus. i thought the mini was a nice device. now that i used my iphone 6 plus i'm not sure you have a mini too. that presents the opportunity for bigger screen ipad potentially as we get into 2015 then you have a mixed combination. there is still a place for the ipad. there is no question there is probably crossover between the big screen.

>> the bigger ipad with the blue tooth keyboard known as the mac book. we are looking forward to tonight. thanks for taking some time. >> i think apple has a 71% positive surprise history. next on the list in alphabetical order is b for big blue. we are talking about ibm and a big miss. let's bring in herb greenberg, welcome back. it feels like old times back here on the old set. you have been harping on for some time now the absurdity and guidance for years. >> in this case ibm was telling you they had this road map and something you had to pay attention to. they were telling you how they were going to get there. in reality they had enough where they could basically, it was a lever. >> i am going to do something.

i'm standing up to do this. physically here. i am giving you literally a pat on the back. i will tell you why. when the former ceo of ibm stepped down you were at the top of the stairs like mr. america ready to descend and you looked me in the eye across the news room and yelled something to the effect of something stinks. you questioned him leaving and felt many would be left with a steaming pile of badness. >> i think i said he was getting out while the getting was good implying the rest would be bad and you were right. >> i was out there still raising questions back in 2012 in a piece on cnbc.com about the whole issue of the guidance and whether the whole five year concept even made sense. think about what can happen between here and there. the street wanted to see that. they were dangling it in front of the street.

until two years ago -- >> because analysts -- >> it leaves so little room for error. the margin for error is tiny when you put out guidance like that. >> it is hard enough for some -- i think every company needs to have a road map of its own internally. for five years we have seen enough over time that the long term guidance is meant as a tool to try to lure, try to basically play the stock as opposed to keep the discipline. >> can we back it up just a second? i will say this and it will sound snarky or tongue and cheek. of the dow 30 ibm is the company i understand the least. 430,000 employees. their revenue per employee is under 300,000. 1.2 million per employee at google. 1.4 now at facebook. what is ibm?

>> let me give ibm some credit here -- >> they don't make anything. >> here is the issue. ibm has done a great job of reinventing itself. it went out there when it was an old company and moved ahead. look what kodak didn't do and what ibm did do. look what xerox has been trying to do. ibm has reinvented itself. the problem is it too big. is cisco going to be in the same position ibm is in today? that is what is going on here. they have shifted themselves to faster growing businesses. they claim the smaller ones. >> they make slower version stuff. >> you get my point. what are they? >> 430,000 employees. >> it is a big tech company. >> can i ask a quick question? how much of this is because it is a victim of global growth? >> i think the size is an issue. i think you can say everything

is an issue to the point of this. i think you can ask the question regarding ceo, is it -- can somebody else have done better? i'm not convinced somebody else could have done better. cramer says don't invest in a company the first year of a ceo. this is the first year and second year you have that with this and mcdonald's. >> competition coming -- everybody in america besides the three of us has a cloud computer company nibbling around the edges on ibm. >> there is so much out there right now. ibm has made great internal acquisiti acquisitions. >> should ibm become ibm? >> it is not a question of should it and even though it is says it won't, they will have to do something at some point -- >> is that a yes? >> yes. >> you're on the record for a yes. >> we will see you in just a second. your third big story of the

day microsoft on a mission to reunify all units into a single corporate org inism. easy for you to say. that is what microsoft ceo told john fortt in an exclusive interview. great, fantastic interview. now go after nadella. >> it is his first tv interview as ceo and interesting transition from ibm. you ask what ibm is, it is an enterprise software company that used people and hardware to deploy the value. now it is in question in the cloud era. microsoft also a software company with a play in enterprise trying to reorganize itself around those issues. first, a couple of years ago steve ballmer trying to flatten it out. take a listen. >> we had actually for many, many years a microsoft structure which is a business unit structure where we managed each one of the businesses

independently. it was, of course, integration. at the same time the accountability culture was about the business unit performance. we always had a shared sales force but the product creation was always inside of the business units. now we brought it together into the one microsoft rubric to be one play, one strategy. and the thing that it requires is a fair amount of coordination. if there is anything, communication. one of the books i first recommended that everyone read when i first got on was nonviolent communication which is to say let us make sure we are empathetic to needs. >> also three vertical divisions to move faster just what microsoft is trying to do but perhaps there is a bit of a jump because a lot of that has been done. >> slightly offtopic but still

to do with microsoft, what are you hearing with regards to reports about the launching of a smart watch by microsoft mainly focused on fitness? >> i haven't heard anything specifically about that. my conversation was about cloud. we touched on the controversial comments made about women. we talked about the whole big picture that he sees from the economy in general and difficulty in emerging markets. a watch wouldn't be surprised. microsoft still sees itself as devices and services company. part of that is playing to the consumer. we will be watching. great interview. good job. the dow just turned positive but it could be much higher today without ibm. is it finally time to rethink the dow as the stock index you should be watching? in other words, should you not be watching that index. should companies sacrifice profits for the so-called good of society. what the fbi thinks.

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dow just turned positive. ibm itself is down about 7% and is dragging down the dow. the dow would be much higher if not for ibm's drag. for nearly 130 years the dow jones industrial average has been the stock market index most referenced. the dow takes lumps with many complaining because of the way it is built one or two stocks

could artificially move the index like today. it should be way up if not for ibm. about 21 of the dow 30 are higher so it is a good day for the dow but you would never know it. herb greenberg back with us. a lot of people say because it is a price weighted index that it is worthless. >> if you look at the index over the past time period beyond three month period you find the dow jones industrial average under performed s&p 500. it is tradition. i want to point something else out here. we talk about market cap weighted for other indexes. if you look at the nasdaq 100 and look at apple we are talking about how apple is overly influential there. anytime you have an index and a component in the index that same thing will happen. >> tradition is great.

still textile mills, steel companies and railroads and has the tradition probably arguably most well known in the world. >> maybe it is relevant. i wish i would have seen how the dogs of the dow has done consistently. that has been a great investment strategy for people who follow that strategy to buy the ones out of favor they did very well which would bode well for ibm if the strategy were to follow through. >> it is what mom and pop know. the dow is up today, the dow is down today. the cnbc viewer is different. we know about the russell 2000. this is for mom and pop. do you believe the dow is reflective of how the stock market is doing? >> you can see it under performs. >> which is its only goal. you said it has one job like a kicker and it missed like a kicker.

>> it is not doing the one job it was built to do. >> it doesn't appear to do it today. >> we talk about do we rethink the dow. >> i don't think i have heard anything. by the way, usually look at the companies they bring into the dow. i think that when you look at on wall street in general and the indexes that are basically the benchmarks you never hear anyone comparing anything to the dow. it is always the s&p 500 and always a broader index. it is the vanguard 500 when people want to invest in an index that may be one of the best known mutual funds for the index. is there a fund for the dow jones industrial average? >> greenberg 517. >> sounds like a good name to me. burritos, burgers and jet engines, earnings squad about to

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welcome back to "street signs." facebook is suing four law firms which were involved in the lawsuit against facebook ahead of the big ipo claiming he owned half the company. a suit a new york court dismissed you can see him in video leaving court after that case back in 2012. facebook's lawsuit claims the firms knew the suit was based on fraudulent claims. let's take a look at how facebook shares are trading out of that news. guys, back to you. i will be taking it here.

i am melissa lee here for another round of earnings squad. joining me now stephanie link and herb greenberg. i will be tackling mcdonald's. 17% of the s&p 500 have reported. 63% beat eps estimates. 10% have met estimates. 46% have come in below forecast. let's start off with mcdonald's. i guess the question is how much longer will this stock be dead money? we haven't seen same store sells increase since last november. analysts see perhaps ramp up spending as an investment in digital platforms like domino. how much will that move the needle? >> now doubt this company needs to do a self help restructuring across the board. i don't think we will get it tomorrow. we may see disappointment for sure. how negative are comps tomorrow?

what are they going to do about it? do they have an outline for us. people are interesting because of the 3.7% dividend yield. you get paid while you wait and the potential to lever that balance sheet up to return more cash to shareholders while we figure out how they orchestrate the turn around. >> and the franchisees are getting inpatient. they are saying it is the company's fault. they did not spend proactively in order to stave off the sales decline. >> we have coffee. we have mcdonald's coffee going into supermarket aisles. that should save the day. >> they did hire back two north american executives. they mean business in terms of trying to fix it. we need to hear the game plan. i think expectations are low enough. if there is weakness tomorrow you have to buy this thing. >> let's turn to chipotle. this is a spinoff of mcdonald's.

what kind of valuation. >> from the balance sheet to income statement to margins everything is firing at all cylinders. it is firing on cylinders so well. remember a quarter or two ago everybody was blaming the weather. who wasn't blaming the weather? chipotle wasn't. if they are not firing on all cylinders this time they literally have to deliver. when you go into these stores i continue to say this. you go into the chipotle stores and watch how they operate and create their team members. you watch the factory in each store and how they motivate people. that is bringing people into the doors. let's see. it is not going to go forever. they have to constantly expand or bring more people into the units. >> they have been good in terms of catering business. they have also been investing in digital and mobile payments. they are thinking that will increase. >> to that point if you have 18% to 20% comp how much does it

fall to the bottom line? i think that is what people are focused on, that leverage. >> exactly. let's talk utx. a great read for industrials. >> it is down 16% since last quarter because people have been nervous about europe. the dollar and quite frankly last quarter was really messy. all they need to do is really develop a clean quarter where it doesn't take days to figure out what the bottom line was. not only that but i want to say if there is organic growth acceleration. you saw that at honeywell and ge. do we see it at utx. high quality company. i think you have to be keeping your eye out. >> utx out tomorrow morning. join the conversation. we will be back tomorrow with updates and insights. i will be tracking the cmg conference call. >> thank you very much. on deck three stocks analysts say buy two stocks analysts say

sell. patriotism over profits? the government wants a key to their data and our devices. is that outrageous or good for the nation? you decide when "street signs" returns. can you start tomorrow?

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i'm just looking over the company bills.up? is that what we pay for internet? yup. dsl is about 90 bucks a month. that's funny, for that price with comcast business, i think you get like 50 megabits. wow that's fast. personally, i prefer a slow internet. there is something about the sweet meditative glow of a loading website. don't listen to the naysayer. switch to comcast business today and get 50 megabits per second for $89.95. comcast business. built for business.

welcome back to "street signs." we are watching shares of the vitamin shoppe spiking on a reuters report that it is speaking to investment banks about appointing a financial adviser amidst activist shareholder. gnc moving higher, as well. that vitamin shoppe talk with sharp moves. >> would you say it is vitamin shopping itself around? >> or vitamin shopping around. >> time for something we do every single day at this time. it is street talk hitting five analyst calls. let's start with two sells.

first is cliffs natural resources. >> they expect iron ore prices to remain weak. citi group cutting target to 16. >> lost about half of the value over the past six months. >> they have been tanking and stocks have been going with them. >> a downgrade for avista. >> ubs cutting the washington state based electricity company to a sell. their target remains $30. the range is $33.50. you do the math. ubs is the price below where it is now and says the company is unlikely to be bought up. nu skin enterprises. >> remember tim reny. >> used to come out and spar. he is back with pivotal research. i know on fast money halftime they talked about the price target on herbal life.

he has a buy rating on nu skin implying about a 70% gain in the stock, calls the business solid. very bullish. >> next up is micron tech getting upgrade. >> recent drop is opportunity stock. they point to stable pricing. stock is at 29.50. >> we dig under the radar. let's find one of the days. arizona based bank western alliance under the radar name of the day. >> it was up to an outperform from a market perform. they cite a couple of things, strong loan growth, target bumped up to $28, about 15% upside. seven analysts cover the stock. average target is higher at 28.50. a lot of bulls on wal, western

alliance. from street talk to talking numbers, our daily look at a stock from fundamental and technical perspective. let's look at xal airline index. fundamentally, is the xal about ready to soar after coming in for a landing recently? >> technically the charts say these are a buy into the 68, 70 range on the xal index. i think the long term chart really tells the story here. here is an index that was beaten up really much of the first part of the decade, really has done nothing until the last two years and had this major breakout above ten year resistance and broke through the ten year base. that is now support on the down side. a little bit more on the near term we have broken trend. we broke below the two year uptrend. i don't think i have to chase

this. i would rather let price come to us. >> a buy on a pullback. from a fundamental point of view we saw certainly the airlines moving higher after dozens of people came off of the ebola watch lists here in the united states. how much is the outlook tied to what is happening with the disease? >> that is one of the problems you have with the whole index and the whole sector is that you have the outliar events that consistently punish the stock whether ebola or terrorist attacks or crashes, these stocks get pounded on events that the industry can't control. other things they can't control are obviously oil prices and that has a profound impact on the business when oil prices go higher it hurts the bottom line. when it goes lower it is supposed to be good for business. if it is lower because of weak demand for oil that signifies that the economy could be weak and that is not positive. this is an industry where the customers hate the company.

when was the last time you heard anybody say anything positive about a flight that they took? they have enacted fees and shrunken the seats. i prefer to invest in companies where the customers don't hate the company. >> i heard somebody use the word positive, but it was positive next time i will drive. i like to look at southwest. they are 100% domestic. you can have europe and asian problems that affect delta and united. southwest airlines load factor, the percentage of people filling up seats on planes was up 2% in september. their business is strong. i can't buy the whole argument that the economy is bringing down flying. it doesn't add up in terms of the number of people that are getting on planes. >> i'm not saying the economy is bringing down flying right now. it is something that could happen in the future. and i think southwest is certainly one of the better run airlines. the other thing i would say is it is not cheap and neither is the whole sect.

even if you have a favorite like southwest i don't find it particularly attractive. >> we sure to check out the online edition of talking numbers, as well. let's get a check of shares of companies trying to cure ebola. two big names are chimerix and tekmira. the other name is sarepta therapeutics up about 2.5%. the fbi says that apple and google should sacrifice profits for the good of america. are encrypted devices a threat to national security? we want to hear your thoughts to this topic. you can tweet us. what you think coming up. tdd# 1-800-345-2550 [ male announcer ] your love for trading never stops, tdd# 1-800-345-2550 even on the go. tdd# 1-800-345-2550 open a schwab account, and you could earn

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or difficulty breathing or swallowing, stop taking cialis and get medical help right away. ask your doctor about cialis for daily use and a free 30-tablet trial. black berry shares are higher. i want you to take this with a grain of salt. there is a report that is reporting that lenoevo may be ready to make a $15 bid per

share. one report stock is moving. it is out there. no secret. it is on the web, whatever. the point is after a lot of speculation one report that maybe black berry finds a suitor. >> certainly not you. i remember the cfo saying buying black berry was one of many possibilities in terms of acquisitions. whenever you are talking about a chinese company national concerns are things people start to talk about. it is one of the things that starts to be an issue. do companies have to choose between profits and patriotism? why can't you have both? that is what the fbi director says. he says companies like apple and google shouldn't have uncrackable encryption on their devices. let's see what this has to do with being unpatriotic. >> what the fbi director said towards the tail end of last week is that he is upset that apple and google are offering

default encryption on some new devices, the idea being that apple and google wouldn't be able to respond to an fbi search warrant if the fbi wanted access to the information on the device of one of the customers of the company. they would say it is not up to us to give this information to you. he says the fbi wants these companies to be able to get access to the information and turn it over if there is a legal search warrant issued. he said after snowden we have swung too far in terms of the pendulum in terms of security and wants to see it start to swing the other way. take a listen. >> have we become so mistrustful of government and law enforcement in particular that we are willing to let bad guys walk away, willing to leave victims in search of justice? >> reporter: we have been talking to civil liberty advocates saying comy is talking about something that is not

really a problem. and they say the examples he is offering up is examples where the fbi would need the information is far from adequate. >> well, i don't think his argument was particularly convincing. he is talking about are a few outliar criminal cases and doesn't justify the vast invasion of privacy to the general public. what we have seen come out over the past few years with the revelations from snowden and others is that law enforcement has really been abusing its capabilities. >> and what the fbi director was saying last week is that he said we might get to the place where congress needs to step in and mandate that american companies suffer a little bit of harm to their profit margins in exchange for this security, national security and law enforcement security. that is the trade off that he is talking about here, whether or not the companies should be allowed to market the encrypted phones and whether or not they are able to see the phones on the market overseas versus here in the domestic market.

>> i'm going to put you on the spot about something different because i know you can handle it. you tweeted a reuters story about a guy who is high level executive at national security administration but moon lighting as an executive at a private security firm. does that create controversy in the government? how can somebody have those two roles? >> this is a really interesting issue of whether or not high level intelligence officials should be able to moon light in the private sector. i wrote about this in terms of cia in my book a couple of years ago. this focuses on general alexander who left nsa and brought on board on a part time basis win of the nsa's top people and that individual stayed in the nsa and private capacity. is this a conflict of interest. alexander says it is perfectly

appropriate but critics say the nsa should not allow people to moon light for any private consulting firm. >> just to get back to the issue of profits versus patriotism we solicited viewership for tweets. i wanted to read a couple of them. fred bower says the fbi's version to encryption is like saying no one should have locks to the doors because criminals could lock the fbi out. >> director said last week that this is the equivalent of having a lock on the trunk of your car that the fbi could never get the master key to and then criminals could be storing anything they want and fbi would never have a search warrant. he said we don't want a back door to these technologies. we want to get in the front door with a legal warrant. what apple and google are doing prevent us. >> someone said no profit should

be compromised but they could do better with security than fbi can. >> you are much too humble to do it. broker, trader, lawyer spy inside the corporate world. shout out for your book, my friend. have a great day. >> i appreciate it. >> no problem. if last week's volatility made you a little nervous buckle your seat belt because you could be in for another whieild week. we will tell you what really matters. as if the california drought wasn't bad enough already? is it effecting brewerys? the unique take on draft and the drought. when change is in the air you see things in a whole new way.

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it's been a wild month of october. i thought we would show the best

performing stocks in the s&p 500 in the month of october. what is interesting is these are the three top performers as of right now, health care reit, equity residentialreit, basical nursing home reit. you have health care reit and people are going after reits. there's the top three an kind of related. >> interesting. apple and ibm kicking off a busy week of earnings to digest. how critical are the earnings reports and will it push the markets higher? we haver inially 130 s&p companies with the results this week alone. we have guests. gentlemen, great to have you with us. tell me it's a calmer week, this one. >> i can't promise that. i think the earnings coming through fine. guidance will be quiet,

uncertain as twaens struggle. weakness in europe. uncertainty of emerging markets. so earnings this quarter's fine. guidance is mediocre. >> let's rephrase my original question. what has changed since last week that could mean for calmer markets? >> well, the most -- the pick-up in vix signals uncertainty. uncertainty has gotten priced into the market so we now have incorporated a lot of negative information coming out, vis-a-vis ecb and japan. so market tend to react to incremental news. it's not particularly negative during the next couple of weeks. >> andy, you and i have been here before times before, my friend. you know when's on top of my mind right now is greece. stock mrkt's down 11% this month. credit spreads are widening again. europe seems to be going down the tubes. when's the biggest worry right now for you? >> well, there's no question

about it. we just see no way out for europe right now. any way you cut it, i mean, the earnings look awful. the politics look awful. the ecb is somewhat constrained. they started their asset backed buying today. it was mildly disappointing. you have a widening of spreads in spain, portugal, italy. but you did not have a widening of spreads in greece. greece blew out the last couple of weeks. it is a small part of europe right now. i'm less concerned about greece. they have surpluses and may or may not believe and i think it turns it around and the yields more than double if not triple the yields of other countries right now. >> that is without a doubt the most polite anybody's told me i'm flat wrong. >> but let me get back to mandy's question if i could. >> yes. >> how it happened an things better this week than last.

you have a capitulation last week and then first in bonds and then stocks and in oil. all these things cleaned out. you on last wednesday traded 11.9 billion of stocks, this's the most traded since august of 2011 when s&p downgraded the u.s. so i really think you got rid of a lot of leverage positions in lot of areas and i think it's more quiet and reasonable between now and certainly the fed meeting next week and then possibly towards the end of the year. >> i hope you're right, andy. talking about greece, move around the world a little bit and go further east here. you have a gdp print out of china this afternoon and i think larry summers said they'll go down to maybe 3.9% growth over the next decade of what's been 7% plus. how much does it mat tore the u.s. markets tonight when that gdp print comes snout. >> well, i'm certainly looking at it and i'm sure everyone else

will, too. one of the things in the journal over the weekend and the press other places is the chinese central bank alerted banks to start a similar plus program of $325 billion. i think the chinese are aware of it. it wouldn't be surprised if the numbers are better than expected and we have a relief rally from that. having said that, i'm not predicting that. i think that's a good of scenario as any. >> i would say the 7.5% number of mandy referencing is -- >> a little pumped up. >> maybe a little massaged. that's a different segment. tell us what the viewers need to be most concerned about and out mystic about the week or couple weeks ahead. >> as far as the most concerned, you still have a tremendous uncertainty of what's happening in europe. you're going to continue to get fairly negative news flow relating to politically disjointed statements. uncertainty over how to implement some of the

quantitative easing and continue to weigh on the sentiment in the market. that's probably the most negative. and the most positive side, i think some of the conclusions people have drawn from the weakening energy prices are probably incorrect. probably within a quarter or so, lower energy prices have a positive immarket, particularly the lower income consumers and freeing spending made available for growth. >> thank you very much for joining us. great to see you guys. okay. well, you can't make beer without water. how are california breweries coping? jane wells trying the find out the answer to that question and joins us next.

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well, the california drought is taking the toll on many industries, and now impacting breweryings, as well. they cannot get the water they need to make beers. jane wells is hitting up the breweries in california in the pursuit of the story and the reality is, you know, we talk about beer and say, okay, let's have some fun and whatever. this is a big -- you guys are struggling with water. >> reporter: well, everybody but this time we're talking about a drafts drought because you cannot make beer without water and california winemaker vs a crush year, a beermaker said we have a crush every day in essence. >> the amount of water in the standard can of beer is about

92%. >> reporter: he manages the budweiser brewery in the heart of l.a. san fernando valley. this is epic. so by using reclaimed water for tanks and ripping out the old landscaping for stuff that uses less water, he says they have reduced usage at the brewery of 9%. he says employees need not only how to make good beer but to as little as water. >> look for leaks, make sure we fix them fast. we have an engagement program that this year the employees suggestions alone reduced 3% without any capital expenditure. >> the beer industry contributing -- 25 billion to the california economy and 100,000 people are employed. modifications made now could just be the beginning.

back to you. >> all right. jane, thank you very much. all right, folks. we appreciate you watching "street signs." apple earnings coming out, right? >> "closing bell" will bring it all to you next. welcome to "the closing bell" on this monday. i'm here at new york stock exchange with scott wapner. >> good to see you again. read the market? >> go ahead. >> stocks trying to overcome a brutal earnings report. you're generous. thank you. from ibm. >> that's right, kelly. the ibm stock is beaten hard today. you know about this. you talked about it already today. if you look at the dow, it is trying to fight back into the green. this morning after ibm came out with a disappointing earnings report, it was down and dragging down the dow about triple digits and look at what's