boxing and mma fights. no plans to do so yet. back to you. >> all right. darn. morgan brennan thanks for the story. was going to go out in new jersey and bet on the bengalss. just kidding. i don't know anything about football. >> to "squawk alley." it is time, kayla tausche. good morning. >> good morning. thank you, simon and sara. it is 8:00 a.m. at google headquarters in mountain view, california, 11:00 on wall street and "squawk alley" is live. ♪ good monday morningp. welcome to "squawk alley." carl quintanilla is off. joining us for the hour today

what a treat, the two johns, that being the john steinberg of "daily mail north america" and jon fortt joining us. >> the john steinberg. >> capital "t." after using the system for only a week, pharmacy chains cvs and rite aid are shutting down support for apple pay. no official reason given, but many are speculating that both are working on a competing mobile payment system. here's the statement from rite aid. the company saying, quote, rite aid does not currently accept apple pay. we are continually evaluating various forms of mobile pay technologies and committed to offering convenient, reliable and secure payment methods that meet the needs of our customers. in total, guys, this is about 12,300 stores, rite aid and cvs combined, jon fortt, losing or at least not gaining acs ses to those stores. do you think it's a meaningful development to apple pay? >> the speculation is there's another payment system called currency coming out later that doesn't rely on credit cards on the back end.

it's supposed to draw from bank accounts and offer some kind of coupons and incentives to get people to use that. a lot of these stores want to move away from paying those credit card processing fees. this is going to be hard to get customer loyalty in digital payments because it's so valuable. they're going to be a lot of stores that are very worried about handing off too much power to any one player. >> two possible causes on this. the first is that by default, a lot of nfc, near field communication technology works with apple pay. may be the retail chains feel it's a half working solution they're not comfortable with, security might not be up to part. the other scenario they're fighting the future. they don't like the fact that their system is not the one people are going to be using so they're going to deprive people of apple pay which is what we are talking about the theater chains which aren't going to let netflix movies in it. >> there are some saying if you did not agree to accept apple pay and yes, the terminal does have nfc ep ables the employees

who are at the checkout don't necessarily now how to use it or interact with the customer using this technology. that being said, steinberg, do you think there's anything there to the fact that merchants could possibly develop a new payment technology that blocks out the credit card companies altogether? >> i think it's possible, but to your first question, i don't buy the fact that it's too hard for the people in the store to be able to use beyond nfc in general. nfc is baffling. apple pay is no more difficult than any other nfc solution. i do think it's possible they could get out of the credit cards and go with banks. why not? >> it's going to be extremely unlikely that could happen. credit cards, everybody uses them. it's a platform. think of it like windows, the mac trying to displace windows, they can gain a share but knocking them out unlikely to happen in this case. interesting to see if they figure out something that works as well as apple pay and is secure as apple pay to go up against it. >> but the debate on "squawk

box" was that even credit cards took a while for consumers to build the habit of reaching for plastic, pulling it out of their wallet and figuring out how to swipe it at retailers. do you think that apple pay has consumtsers developing habits more quickly given they're sort of rushing into new technologies they're used to at this point adapting new payment technologies. >> the magic is with apple pay if you have an itunes account with a credit card already in it, when you sign up for apple pay, you're able to pay right away. you're actually already a step removed from the credit cards. i think they are changing habits. what i've said to people it's easy to set up. go in, do i need to enter a credit card. do you have an itunes account. it's already in there. the on boarding is clujy but i assume they will figure it out. >> for the retailers, it's currentsy. involved as well as walmart and best buy and other retailers who have chosen not to accept apple pay. but we haven't seen the technology on the market quite yet. we were a going keep talking apple later at 11:30, ralph

nader, on his call for apple to give its excess cash back to workers instead of buying back stock going directly up against carl icahn and we will get nader's thoughts at 11:30 eastern time. next up an executive shakeup at google. according to re/code larry page will take a step back to, quote, focus on the bigger picture while remaining ceo. former head of android and cloem will be in charge of all of google's core products. apparently page is concerned google is becoming less innovative and shed some of his day-to-day responsibilities to focus on these bigger ideas which have been the hallmark of google as a cooperation. jon fortt, research, maps, google plus, ad products and commerce. that's a lot for one person. >> this is one of the most stunning asubsequent -- ascentsn valley. he was in charge of chrome, then android, which he took over from

andy ruben and this whole portfolio of products arguably everything important at google except for youtube. what this looks like is a chief operating officer position without calling it that. he's got this kind of calm, this ability to get things done, to advance technologies, that end up taking share. >> the fact that youtube is left out of this reorganization do you think that signals how strategic or iron clad a unit that is at google or do you think there's something else? >> i think it does. it establishes it as a separate business with its own kind of brand monetization as opposed to search monetization, google's core product. there's two possible things that larry page could do with his time. the first he could nap now that he's handed off a lot of his day-to-day responsibilities and relax or invent new big lines of revenue for the company. of course that is what he will do. he's a driven entrepreneur. someone that wants to create. i think this is an exciting move for investors. open up the next chapter of growth and get the day to day

running of trains off his plate. >> should we be talking success at this point? >> you still have larry and sergei who have a huge amount of stock. no indication they're going to step back wholesale. seems we've got this new generation of super leaders at google. at first when larry page took over he had, you know, practically a dozen business leaders reporting directly to him. now only cord staneny taking the business end, you have sundar pichai running everything else. a few other people running corporate funks but you have a different layer, a powerful layer of super leaders at google. >> those are important people. >> when i talk to people in tech what do they think is the ideal number of direct reports. you get all varying responses. some say they have 15 direct reports, 20, but the sweet spot tends to be 5 to 7. you want the ability as a ceo to imagine what the next leg of the business is, dig into strategic transactions and you can't do that when running every one of

the orgs. >> some investors i spoke to liken this to what howard schultz did at starbucks. that was more definitive in stepping back from day to day operations, the fact is some of the executives feel the organizations need to innovate and it's an important thing for someone that senior to take on, but shares didn't react friday when this news came out. do you think that investors will need to see results from page on that front? >> well -- >> i don't think it's a stepping back. >> right. >> it's a leveling. a leveling what is you do. insert somebody in the middle so you have one point of contact so you can spend less time having to do weekly one on ones with eight people. it's not a stepping back. >> this is different i think from when google said we need to do fewer projects and focus on the core. this is them saying we want to do more and here's a way. >> this is the first of many conversations and probably going to see pitch chi out there more often for google. another big week for social networks with twitter set to reporting earnings after the bell today. the stock will look to regain

momentum after falling about 20% so far this year. meantime facebook set to report after the bell tomorrow. shares of that social network up more than 45% in 2014 alone. let's talk about twitter first because that's obviously going to be the firsts data point we get. as much as the company doesn't like to focus on events analysts are saying the fact that ferguson protests happened during the recent quarter could be the lift that we could see to subscriber growth. do you think that's the case? >> i think the world cup will be a hard sequential quarter to come off in terms of user growth. investors don't care about user growth anymore. they know it's not going to be big. everybody says it's going to come in at 280 million-ish users total. what people will be looking for is a revenue beat which as twitter always sandbags their revenue number, that should be easy to do as well, and close that gap. twitter only makes a dollar a month off each user. facebook makes $2. can they close that gap? the analyst data they will be holding on november 17th, where

will they talk about making the product more accessible to normal people. i think those are the key catalysts. >> some on wall street say that gap will be closed, twitter will begin closing that gap. we'll see if this quarter is the beginning of that. >> what are you looking for? >> engagement is likely to benefit perhaps from the news events but as far as user growth goes new phones, the iphone 6 and 6 plus are likely to spark user growth at the end of the quarter because twitter sign-in is built into ios 8. people get their new phones if they aren't on twitter they're likely to sign on to that. around 14 million is the number i've seen out there that a lot of analysts are looking for as the baseline for user growth. if it goes much above that, close to last quarter, 16 million, that's upside. >> we have seen that if user growth does come in better than expected this stock can soar. was up more than 20% on the most recent quarter. when it had better than expected numbers. that can go both ways as we have seen a volatile stock after earnings so we will have those

numbers. julia boorstin, we should note this afternoon, will be speaking to twitter ceo dick costolo at 4:00 p.m. eastern time to talk about earnings that's at 4:00 eastern, cnbc exclusive, and you will not want to miss that. all right. we want to get a check on the markets. right now, some averages are mixed. we did see losses paired from earlier in the session. the dow up by 23 points. we have six dow deponents reporting earningses this week. s&p just turning positive, nasdaq up by one point. softer than expected pending home sales earlier in the morning and, of course, we were trading lower on the back of some of the european markets trading. so certainly something to watch there. also, shares of merck slipping even though third quarter earnings beat analyst estimates. the drugmaker did report a revenue miss and did narrow full year earnings forecast. see that's taking shares down by about 1.5%. also take a look at ba ba, shares of alibaba rallying after jeffreys initiating coverage with a buy rating.

the firm's pointing out alibaba is the largest player in chinese e-commerce but sells to fewer than 25% of the population in that country so jeffreys thinks there could be more room to run and that stock up 9% today. first time that we have seen it actually go above the price where alibaba opened just about a month ago. all right. when we come back in an open letter consumer advocate and presidential candidate ralph nader is slamming apple ceo tim cook. nader will join us live to explain. plus, inside information that could go a long way toward predicting earnings over twitter and facebook. we will bring that to you in just a moment. and another celebrity is getting into the app business. melissa eat ridge will join us this hour. "squawk alley" will be back in a moment. r tomorrow? tomorrow. quick look at the weather. nice day, beautiful tomorrow.

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welcome back to "squawk alley." shares of at home soda machine maker soda stream given back much of the gains they had yesterday or friday in today's trade down around 12% in early trading. you may recall that on friday shares rocketed higher by around 15% on the heels of pepsico saying it was conducted limited small-scale tests of products with soda stream machines. pepsico and soda stream cautioned nothing more should be read into the agreement. some traders looking in to lo lockiloc locking in some of the profits. >> we'll see how that turngs out. quick off a week of social

earnings a company that tracks shares across multiple social media platforms. could data on clicks and shares be an early indicator for earnings? mark is the ceo of bitly and joins us here. mark, engagement, user growth, do you have any confidence that bitly shares sort of indicate which way things are trending on either or both? >> absolutely. so at bitly we work with thousands around the world to help them on social and get insights into what's working and not working. we're tracking 8 billion clicks a month across every platform from regular users to the biggest brands in the world. we see a tremendous amount of insight in there that we think might be good leading indicators. >> what are you seeing? who's growing quickly? >> the bitly data is interesting third over second quarter a couple things jump out. the first the continued dominance of facebook. facebook at scale and to have the growth that it's having quarter over quarter,

particularly in mobile, they're a machine. and the data supports that. it's incredible how fast they've been accelerating their growth and grabbing share in overall click volume. >> facebook might be a machine but i'm looking here, facebook's desk top users alone, twice the size of twitter, but we've been talking this quarter about how twitter's user base is being refined as the news junky base, those are people who use bitly more. are you seeing that refining of the audience? >> continued growth for facebook in mobile, twitter and mobile, but they've been predominantly mobile first. they saw desk top growth quarter over quarter which was interesting. what we found interesting and telling for twitter in q3 was an increase in click volume in share from bitly brand tools customers, subscription marketers like geico and ge and pepsi use, twitter is gaining share in that market and that's really a good sign for them i think on their focus on advertising. >> mark, facebook being a munster in terms of sending media traffic is a story that

everybody has been following for a while. is twitter still relatively insignificant? as a publishers i think it's relatively insignificant. other emerging platforms, whatsapp, e-mail, aol, ya who, what other companies are you seeing activity on? >> strong growth in b to b with linkedin, doing a nice job building out their publishing platform. i think you're an influencers on linkedin. linkedin doing a good job of reaching the b2 b audiences. >> what are the other sources of emerming growth for bitly in conjunction with linkedin, twitter, facebook. >> the biggest thing in social broadly is a redefinition of the goals of social from engagement and audience driving, going to switch to conversion and acquisition. i think you have to look back at what happened to search and search advertising in the early days and how quickly they pivoted hard towards cost per click and acquisition metrics. social still focused top of funnel.

you have to be focused on conversion. >> are you able to track anything in conversion and acquisition and who's doing better, facebook or twitter? >> we are looking at that data now and we're going to come back and talk about that next time. >> apple versus android, the conventional wisdom, android much more market share, less web usage than ios. what do you see there? >> consistent there. what was interesting this quarter tablet growth actually. continuing to rise despite some of the things we're hearing about, ipads. >> hopefully when you have the new data come back to post nine and come back to us. >> thanks, mark, for joining us. >> thanks for having me. >> when we come back the streaming wars are heating up as amgz gets ready to launch a brand new device for the holiday season. we will break it down. former presidential candidate ralph nader writing an open letter blasting apple ceo tim cook. he will join us later this hour. "squawk alley" will be right back.

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video streaming device maker rocco preparing for an ipo. the company could raise as much as $150 million but timing and valuation not quite set. this year ceo anthony wood joined squawk on the street and couldn't comment on financial plans. when we reached out over the weekend the answer was the same. set top box maker competes with apple tv and amazon's fire tv and raised about $153 million in financing and speaking of streaming amazon launching its own streaming device called the amazon fire stick and supports all the normal video options like netflix, espn, and, of course, amazon instant video. it joins amazon fire tv, of course. this one, though, will cost $39 which is a bit more expensive than google chrome cast but cheaper than roku. it comes with a free month of amazon prime.

stick is the new box. >> i assume stick has less processing, no video game playing. less funks th ions than the con >> that would serve as a way to get more low cost or -- yeah, low-cost customers to join amazon prime? as taste for a month, about an $8 value and then they sign up for the full year? >> amazon stated strategic need is to increase digital media sales and interest. a way to get people watching more of their video and then maybe buying more of that video. that media line in amazon earnings last week was one of the major disappointments. did not move up as much as a lot wanted to see. they have to sell more books which shows they're pressuring, prices down, volumes, and maybe a stick like this gets people watching and buying more video. >> before we move on one note on roku, the journal reports they're looking filing confidentially, roku has less

than a billion dollars in revenue which might not surprise some people, the fact that he could get up to $150 million in an offering does given how relatively small their business is. >> there's such a lack of differentiation now in all of these kind of connected tv boxes. these boxes which allowing you to sling video, watch it, watch amazon prime, i think the company needs innovation, needs to move into new product areas and i assume they're aware of that and an ipo that came a little too late, something that should have happened years ago. they need the capital to diversify. >> do you want to innovate as a newly public company? >> i don't think you have a choice. obviously it would be preferable to raise private capital at this point and feel for some reason the public markets are the only option. maybe there isn't enough interest in private equity to do this with them. >> sounds like the discussions are at early stages. still watching the market where bioteches are up more than 20% since july when fed chair janet yellen called their valuations stretched.

bertha coombs is back at hq in the latest installment of sector nom micks. >> at times if you're a biotech investor you might be heading for the ambulance bay. the sector sold off a bearish 20% in the spring but has roared back to new all-time highs on track to exceed its five-year compounded annual growth rate of 31%. that compares with 12.7% in the s&p in terms of an annual growth rate. one of the reasons why is the fact that the sector's revenues are growing much faster, despite the fact that janet yellen called out the sector for rich valuations its revenues are expected to grow 38% this quarter according to thompson reuters, almost four times more than the health care sector as a whole and ten times faster than the overall s&p. and it's driven by a number of new drug launches for some big names. v vertext up 50% year to date. it's not expecteded to be profitable until next year when sales of its cystic fibrosis

drugs are expected to nearly double and total revenues are expected to nearly triple from 550 million to 1.4 billion on the top line. regeneron another of the biggest gainers in the biotech sector. price to earnings ratio of 109, trading about 4% above the analyst mean price target right now. but after two consecutive years of earnings declines, the maker is expected to earn more than $10 a share this year up from it 380 in 2013. meantime gilley adscience is the one that everyone watches soared with its hepatitis c drug. it's all in one help c treatment. harvoening just approved. sales of the hepc drugs combined could top $12 billion per quarter in 2015.

gilead is at about 5% below the medium price target on this, but we may see those targets raised after gilead reports tomorrow. a big one to watch. >> all right. thanks so much, bertha. important sector to watch with the fed policy meeting this week where we could get more comments about valuation. almost 11:30 eastern and for frequent viewers normally at this time we have the market close in europe, but daylight saving time starts one week early overseas so all this week, cnbc'ses european close will be at 12:30 p.m. eastern. you can see that an hour from now on the "fast money halftime report" back in "squawk alley" at 11:30 a.m. next week. >> up next, former presidential candidate ralph nader not shy about going after big corporations and today he has apple and ceo tim cook in his sights. he will join us to explain if a moment. plus, as we get closer to halloween, elon musk is warning about demons. what he's talking about later on

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consumer advocate ralph nader setting his sights on apple stock buybacks telling the

company forget carl icahn and give the money back to workers. in the open letter to apple's ceo tim cook nader says, quote, no matter how you spin it on the iphone packaging you continue to turn away from the hard-working conditions and mice early pay at your chinese factories. joining us by phone is ralph nader, author of "unstoppable the emerging left/right to dismantle the corporate state." tell us how you conceived this idea that apple should set up a trust fund and use cash to funnel it to workers at plants of some of its suppliers. >> that's right. there are 3 hupz,000 workers in china building these iphones and they're very underpaid even by chinese standards. the conditions are horrible. many reports on this by human rights groups. and apple is now spending in the process of spending $130 billion of its post-tax profit to buyback shares to put them in treasury stock and get them

ready for stock option executions for their executives. there couldn't be a less productive use of capital. they could have used this capital to send stock dividends, special stock dividends to shareholders, mutual funds and pension funds, cut the prices for the highly priced iphones, they could have put it in research and development, improved the working pay of the workers overseas, and factory workers here. instead, they did exactly what an oligarchy would do, they bought it back for their bosses. and this idea that it increases stock value, i can give you ten exampleses where that is not the case. cisco, for example, has spent $65 billion in stock buyback since 2000. since 2000, cisco has made good profits, good sales, no stock split, so what's the price of cisco stock? the price of cisco stock is less than one third it was in 2000. >> cisco could have other

problems as well. but i'm wondering why you think this responsibility falls to apple to increase worker pay when at the 200 plus suppliers apple uses those are individual standalone companies in their right. shouldn't those suppliers be responsible for fair pay for their workers? why is this apple's responsible? >> it's apple's responsibility and the subcontractors in china responsibility. but the squeeze on these subcontractors to give apple the best price for the phone, is put on by apple in california. they squeeze the chinese contractors who squeeze their workers mercilessly. they have nets in factories to diminish the lethal effect of desperate workers committing suicide by jumping out of the window. >> i don't know whose numbers you're looking at but the numbers i've seen suggest that apple and foxconn pay at the high end of manufacturing jobs in china. of course there are these suicides which are terrible, when you consider the number of

people living inside of these facilities and suicide rate inside these facilities, it is not that far off of what you would expect for a society at large, plus apple has on their website they've talked about their supplier commitments, the education they give to workers, the audits they do to try to make sure that workers aren't under age. wagers have gone up over there. i talked to other entrepreneurs in other industries say if you unilaterally raise wages in one area for one group of workers there are all kinds of disruptions that can happen that are not expected, that aren't actually beneficial to workers. so -- >> that's -- >> where are you getting your numbers from that suggest apple underpays based on the chinese manufacturing sector in jeple and what do you do about the follow on effects if you try to spike wages? >> that's the party line and you're very articulate on it. number one, it is not a living wage in china even though there are workers in china that get

paid less than apple workers p. >> who gets paid a living wage. >> wait. they live -- eight workers to a room. in the dormitories. it's miserable. it's all been documented. say you don't want to do that. >> i've seen the documentation. it's not as you describe. >> this money belongs to the stockholders. why don't they have the stockholders how to use it. see if the stockholdersp wouldn't want it to come back in cash dividends. i mean you can give it to -- you can put it in much more productive uses where people spend the money or go into pension fund and mutual funds and improve the value there for millions of americans. but to do the stock buyback is a very, very greedy approach to the high bosses at apple. much better uses here and in china for that money. >> ralph, you can debate the efficacy of a stock buyback and a lot of investors say it doesn't move the stock, some say it does but why are you

differentiating between a dividend to shareholders and a stock buyback which would effectively benefit all shareholders as well. one is more a tax efficient structure? >> it doesn't. in most cases, i give you the cisco example, it may improve the price earnings ratio but doesn't increase the stock value. that's been true for a whole series of stock buybacks. i mean, $2.4 trillion of stock buybacks can you imagine what that money could have been used for if given back to the dividend, the shareholders themselves or improved the workers. walmart has had 50 billion in stock buybacks. for heaven sake look at the way walmart workers are being paid. million walmart workers making less today than 1968 adjusted for inflation. it's all done for the walton family. that's what it's done for. >> suggesting that you would want apple to spend its cash to increase the dividend and recent shareholder meeting one investor went after tim cook for his

environmental programs saying why are you spending all of this money on solar farms in your data center and these things that don't benefit shareholders. would you agree with that shareholder that said give us the money in dividends and don't spend on environmental? >> apple is first in terms of profit and do both. ask their customers. there are people who are asking, consumers would they pay more for environmental improvement, air, water, soil and they've come out 70% in polls over the years. in other words, whatever way you once want to go there are more productive ways to use that money. the interesting thing a few men in apple decide where to put 130 or $150 billion. that is a decision that should be made by the shareholders. that is not a business judgment decision. that's a major decision. it it's owned by the shareholder they should decide how to disperse that money. >> in the last quarter apple spent $17 billion in shareholder

returns and still ended up with $165 billion in cash, but you chastise the beneficiaries of those shareholder returns as wealthy shareholders and billionaires. who would the beneficiaries be if they did a special dividend. wouldn't it be the same people? >> yes, but it would go to the mutual funds, the pension funds who own the biggest share of apple stock. the other thing that's important to remember here, is why are they making these kinds of profits? why don't they reduce the price of iphone 6 which is outrageous. because they have a monopolistic competition. they're one step -- >> monopolistic competition. given that android has greater share, samsung is a huge company involved in lawsuits, in what way do they have a monopolistic position? >> you can tell just by what they're pricing the i phone. we can kwibble about that. all i'm saying of all the ways to spend that money they could send it back to the

shareholders, mutual funds, pension funds, improve the lives of workers in china, put it more in r&d, reduce the price of the iphones so more can afford it. the worst option is the buyback and i think this is going to be a huge issue with the securities exchange commission, with publics discussion all over corporate capitalism. $2.4 trillion, i think, is the next worst thing to burning that money. >> ralph nader, your letter has been a provocative one to say the least. this will be a discussion had across the market. we appreciate you joining us this morning to talk about it. >> thank you. that's what we hope to do. public discussion smp. >> all right. i would like to note we reached out to apple who pointed us to information on its website about supply chain practices. let's get back to our top story this morning after using the system for about a week, pharmacy chain cvs and rite aid are shutting down support for apple pay. mary thompson is back at hq with more. >> hey there, john.

this story got buzz in the twitter verse with apple pay advocates saying they're taking their business to apple pay. cvs didn't reply to e-mails asking why they disabled the nfc systems that process apple pay. rite aid acknowledged it's not accepting apple pay. what's important to think about retailers may not be taking a swipe at apple pay but apple pay partners. rite aid and cvs were not among the retailers that partnered with apple pay originally though their point of sale systems would allow clients to use it. what both drug store chains are a part of is a group of retailers called the merchant customer exchange building its own app linked to client's prepaid card or bank account. this means payments will go right from the customer to the merchant and merchant won't be paying fees to credit and debit card processors, visa, mastercard and american express. for years retailers have

complained about the fees some taking the processors to court. the processors have been working to improve their value proposition to merchants but with forester research estimating mobile payments will hit $90 billion by 2017 in the u.s., retailers are seeking ways to keep more of the money for themselves and this app is seen as one way to do that. it's expected to launch next year and like apple pay, it uses tokenization to protect client information stored in the cloud. currency will track your shopping habits and in turn offer those clients discounts and promotions in the stores of the retailers that are part of this. kayla, back to you. >> mary thompson at headquarters, thanks so much. before we leave the apple topic your thought, a report out from the information today that says while retailers are trying to decide what they want to do about apple pay and nfc, apple is eyeing other uses for nfc and that technology saying potentially access to buildings

and past security checkpoints and accepting tickets at public transit. they're having discussions with potential partners but does seem interesting. >> i was pretty negative before apple pay that it wasn't going to work and was going to be hard to use. and having used it in the taxi where it's not even -- i didn't know the taxis accept apple pay it works with nfc i had a vision maybe i could walk out of my house with just my phone and if you could access buildings and all those things i think there's a possibility in it. >> you could leave your house with your phone and your charger less your phone loses its battery. >> phone and mfoi and you're good. >> when we come back beats and itunes together at last. as closer look at the future of music at apple and following tom hanks and kim kardashian a celebrity is jumping into the mobile market. jane wells is here. she will be on set. what is going on? >> i just kissed art cashin. how cool is that? the music business when they

think they've figured out how to make money oops melissa eat ridge hopes the new distribution platform for selling songs could be mobile gains. we will talk to her after the break. there's a difference when you trade with fidelity. one you won't find anywhere else. one-second trade execution. guaranteed. did you see it? in one second, he made a trade, we looked for the best price, and the trade went through. do the other guys guarantee that? didn't think so. open an account and find more of the expertise you need to be a better investor. i have $40,ney do you have in your pocket right now? $21.

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for that stock. jon, see you in a bit. >> all right. i won't want to miss it. in case you did miss this, apple has big plans for beats. according to the "wall street journal" the company is rebuilding the brand and plans to relaunch it next year as part of itunes. this comes as digital music sales continue to slip. sales from itunes down about 14%, music sales, since the beginning of the year. guys, thrill will be interesting to see if they can build it in without looking like they're shutting it down. >> it says relaunch, not rebrand, right? at least as far as the beats brand goes, it appears at least from what we've seen it will stay intact. >> what's interesting from "the journal" article streaming is up 28%. i didn't realize streaming had penetrated that much into the mainstream and makes sense they need a streaming product. beats was not that broadly ad t adapted of a product. even if they took the technology and made it itunes streaming white be fine. >> one less thing to download. one celebrity singer the latest name to jump into the world of

mobile gaming. jane wells here at post nine with that story. >> it's all about streaming and subscription services. we may be in the napster 2.0 era. itune sales down, the music industry is trying to figure out how to make money. melissa etheridge is so concerned she got new management, left her record label, went independent and is now experimenting with a unique way to sell music, get ready, a mobile game called the take my number phone book challenge. >> oh. i got the right number. >> by the way, she's hilarious. the game named after her latest single "take my number" which streams while you click on the guitar picks and remember phone numbers of people in your contacts. it was created by hyper jams and free though you pay $2.99 to turn off the ads and leads you to her new album. >> it raises my awareness to

people and it also leads them to the song. going to buy the song maybe they like the song, they might like the album and if they like the album they might want to see me live. >> did you win? >> yes, something. >> not only have i seen the record sales plummet, i mean serious plummeting every year like an avalanche of plummeting and yet, i can go out and i can still play and fill hallsp. i have seen a balancing in the last couple years, so the of a hit in the bottom -- sort of a hit in the bottom and balancing of then entrepreneurs who want to -- i still feel like i got years of music to make. this is a change. wrong number. try again. >> cap you remember anybody's phone number anymore? >> i don't know my children's phone number. they have -- the older ones have

phones. i could not call it right now and that's -- it's astounding. i can remember the -- i grew up, my phone number when i was a kid. >> me too. >> yeah. 913-268 -- >> 805 [ inaudible ]. >> there you go. >> those are no longer our numbers. hyper jam created the game to target etheridge's core fan. hyper jams is a new dial with napnater which owns games tailored to celebrities including a tie in with nik wallenda discovery channel special. the goal is -- the goal, hope, is that maybe what mtv did for music in the '80s, mobile games can do for music now. i know it's a big goal. >> do you have to keep developing them when you have a new single. when people get tired of that song do you have to come up with a new concept. >> of course. i asked her, i asked, what games do you like to play. she says i love solitaire. i can play solitaire in a minute

and 20. you need a song for ha. >> apps are the new touring for celebrities and musicians. remembering phone numbers sound like an unreasonably hard game. >> it's a double game. you have the picks going, like tetris or candy crush where you're -- and then also have to remember the numbers. two things going on, it's crazy. and the song. >> ♪ come to my app store >> oh, my gosh. >> 867-5309. >> good to have you in the house. thanks for bringing that to us. >> jane wells at post nine. all tesla caress about is your state of mind. why a new program from the electric car maker is offering what it calls a happiness guarantee. that story on the other side of the break when "squawk alley" comes back. cute little guy, huh?

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tesla calling it the happiness guarantee making improvements to its model as the leasing program. phil lebeau joins us from plano, texas, with more. phil? >> kayla, this happiness guarantee about making sure you have the model that you want and stick with it. here's what tesla announced over the weekend. the happiness guarantee, if you lease a model and within the first three months you're not happy for any reason at all, you can return it to tesla. no questions asked. one catch, you cannot return it simply to turn around and lease another model, upgraded model. they will stop you before doing that. tesla and ceo elon musk in

announcing the happiness guarantee says it takes less than five minutes to order a model s at the tesla motors.com website. just like any normal buying experience on the internet, they are stressing you don't need go to a dealership or what people would perceive to be a dealership or gallery. do it even if your state does not allow you to have tesla sold directly to you in that state. by the way, if you take a look at shares of tesla over the last three months, keep in mind that there are a number of states now that have passed laws, michigan being the most recent, banning the direct sale of automobiles called an anti-tesla law. we want to remind you coming up on "power lunch" at 1:10 you do not want to miss these interview, first on cnbc, jim leapts and the governor of texas mr. perry. we will be talking with them about tesla or toyota moving their new u.s. headquarters here to plano, texas. we're going to hop inside. the ceremony is about to begin. "power lunch" at 1:10.

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from tesla to the hyper loop, elon musk isn't scared to build futuristic technologies but when it comes to artificial intelligence musk is sounding the alarm. speaking at a symposium at m.i.t. he cautions the technology could be a threat and needs some regulatory oversight. with artificial intelligence we are summoning the demon in all those stories where there's the guy with the pen ta gram and holy water he's sure he can control the de mon and it doesn't work out. he has raised the spector of artificial intelligence on cnbc. we though it's on his radar, though. >> nothing in technology scares me more than elon musk scaring me on artificial intelligence. he's the guy that should not be afraid. >> the problems with the computers, the computers and internet are modest and self-aware. i was at heathrow on friday -- i'm sorry on saturday and the baggage computer system broke down. the computer crashed. it does the baggage. they couldn't put anyone's baggage on the plane.

baggage much more systems are worrying than demons in ai. >> the computer doing that to you on purpose is scary. >> we'll see you back on friday. that's all for "squawk alley." now we'll send it over to the halftime report. thanks very much. welcome to the halftime show. let's meet our starting lineup. joe tare nova. stephanie link is coportfolio manager of jim cramer's charitable trust. mike murphy ceo of rose cliff capital. jim is president of labenthal asset management. we begin with stocks off their best week in years. the s&p amazingly up more than 5% from the lows of 12 days ago. this happens to be the biggest earnings week of the season with more than 140 companies reporting their numbers. including facebook and twitter. the drop in oil remaining a big story today as well, so our question is