tv Squawk Alley CNBC November 20, 2014 11:00am-12:01pm EST
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>> good morning. 8:00 a.m. in cupertino california. 11:00 a.m. on wall street. "squawk alley" is live. welcome too "squawk alley." joining us this henry blodget. also jon fortt, kayla tausche as always. interesting day. dow made up a lot of ground. philly fed looked pretty good. the question is is apple going to be the first trillion company. shares above 116.
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but to hit the number the stock needs to go to 167. about a 46% increase. host of analysts are raising targets this morning. we actually get some blowback on twitter. why are you guys talking about apple again? but when it gets this big you can't ignore it. >> it's the biggest company in the world. the only product known to move like gdp numbers and is it strongest brand in the world. those are all good reasons. it's weird we seem to go from dramatically underestimating apple to the iphone is dead now in order to reach all these targetings you are betting they are going to have another iphsce hit. apple is going a lot of things well. but there are a lot of assumptions built.
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>> is that why apple is so underowned at this point. seems like these institutions if they don't have the index they don't have much in terms of the apple exposure. >> a lot of people gave up on apple two years ago. we got too excited about the iphone 4 i think was the product cycle that took it to the moon. disappointment, apple is out of business. went down to 390 now started the run again. i'm a shald shareholder. i'm routing for them. but this quarter and next quarter will be massive because of the iphone 6. after that we're all guessing. optimism about the watch is getting extreme. i have to say i am very skeptical there. i want bigger screen. not a little screen. >> do you think the short term performance is reflecting the cycle we're in?
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>> yes. -- hundred dollars extra for the big screen. all that is going to drop to the bottom line. >> 20% in a month. off october 15th lows. that is a big move in a hu. you don't think it happened too fast. >> the stock is 18 times trailing earnings. you could argue for lower or higher but it is not insane if you think the earnings continue to grow. once we get past the iphone 6, what is next? is there an iphone 7 that is going to have some dazzling thing that is so good. if the watch takes off, then fine. right now that is anybody's guess. >> there is never going to be another great product cycle to every product is going to be as great as this one, valuation it seems. >> and ipad. our gang got together.
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what could they do to save the ipad. came up with our best ideas. none is interesting. the ipad has basically become redundant. maybe the big ipad will do it. but that product line. boy have expectations changed there in the last year. >> in the last year consensus has become this rally lasts until february and march and at that point it's over. >> it's certainly possible. and usual when everybody agrees it actually ends a little earlier than people think. but there is a strong story. if the watch kills it. comes out and morgan stanley's su assumptions are 10%. we'll find out. >> next up alibaba launching its first ever bond sale today. abouted to be worth about 8 billion dollars. company started marketing the bonds overnight in asia and will price them this afternoon. similar to the process facebook
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and twitter went through. and more alibaba. jack ma reportedly blaming greedy consumers for the knock of goods on the internet. ma said if you want to buy a rolex for $4, you can only be blamed for being too greed. >> and it does seem different from what facebook and twitter. they were largely doing their bond offers to raise more cash to build that car chest to have a little for fund to go around. alibaba seems to recognize that interest rates are still low. it is paying more than it probably should on existing loans and can refinance while momentum is hot. but david said it right in thth morning. this is a mature company and making mature decisions. >> and a company with extraordinary cash flow. yes, take on debt. the as good time. and my guess is they are thinking war chest too.
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there is a lot they can do. huge opportunities to buy stuff around the world. it is going to get political interesting when they start trying to buy stuff here. but that's coming. >> there is about 7 billion dollars worth of refinancing i'm told it wants to do. so anything above that could be play money. >> in the 13 fs this week and last week. seemed to be a bit of a shift in manager getting out of apple in favor of alibaba. >> as the the hot stock right now. hot enough to make jack ma nervous. what puzzles me is comments about knockoff goods. it's like the law of retail. everybody wants a sale but you don't want to associate your brand with that. and that was one of the questions going into alibaba going public. i wonder what his strategy is with a comment like this? >> it's kind of mystifying to
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me. $4 rolex sounds nice. remarkable the quality of some of the fake watches. >> finally uber still a big story after senior executive emil michael incinerated the company should investigate the private lives of journalists over the week. now senator al franken sending a letter to them. a couple weeks ago you said revenue coming in strong, and value looked conservative. what do you make of this? >> you have to separate this little frackis which is happening in the journalism community mainly. the financing which i hear is still going very well. another eye popping valuation. but i think if you step back from uber they are going through the progression that facebook went through.
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you start as the scrappy start- start-up. incredibly aggressive. fight to survive. then you are so successful that your success backfires. and people say wait a minute you are now the elephant in the room and. no firing. they just need to bring in someone whose a real professional to not only change the outward communications but also some ethics in the company. but there is very good precedent for that. we've seen this many times before. they will move past this very fast if they do that. >> do that end uber just posting a blog saying they have added a woman, harriet pearson. to uber's privacy team. so certainly they are looking to reinforce their team around
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this. but henry, the question really becomes how mature can we expect this company to be? we talk about snap chat and write off blips and gaffes at that company because you have a mid 20s founder, an accidental entrepreneur and the business is still figuring out what its niche is. travis is 38 years old. and tons of senior experts around him. and why is this happening to a company of that valuation and that experience? >> it is time for those advisers to step up and be stronger. and travis to recognize, look, we're in a different place now. everyone is coming after us. we just have to be that much better. and change can happen. again look at facebook. look at twitter. look at all the big dogs over time. they need to get people in washington. >> more after practice i think. >> -- >> i think this is more than a practice. i think this thing with sarah lacy and the journalist, sure it
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was an off the cuff comment but uber has given ammunition to a lot of powerful people who want to see them fail. you see a senator coming out. they need to respond to that. and there is a blog post coming out. >> your point might with get used to that. because the norm when you are big. >> they have been ruthless in execution. people are blown away. they now need to dull that. >> they need to not become microsoft which gets neutered by that kind of attention. they -- >> and you call it a frackis. and you might be right. but yesterday's -- this was the only story above the fold. why aren't you tieing that to people deleting it off their phone. >> same with facebook. early blow ups. and you had a lot of people quit very publicly.
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that's it. and look at facebook. we should all be that toast. companies can move through phase like this. and if uber gets on top of this, and my guess this is the big warning bell. if they get on top of it and move past. they will be fine. >> at this hour the dow certainly turning positive. had a rough open earlier. now trying to avoid a two day losing streak it hasn't seen in over a month. of course we did see block buster data out of the physically fed showing factory activity in the mid atlantic states double what wall street expects. shares of best buy also rallying after earnings and revenue beat estimates. the company posting a 2.2% increase in same store sales. and shares of sales force.com slipping after forecasts for this quarter and next year fell
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short of estimates. the company posted earnings and profit that topped expectations but not enough to hold up. . >> hbo shaking up the industry with its decision to launch the stand alone service. ceo joins us later on. and according to nick bilton there is a gigantic scam across all social media. he's with us to explain. and starting told we have a new way of bringing you inside market information that previously only a few big hedge funds has access to.
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earnings. best buy and sales force.com. both beat on earnings but what happens immediately after. let's show that status box. best buy shares after earnings beat. what happens here? earnings beat by a penny. at least 15 times in the last five years. shares up 87% of the time in a month after the beat. now you can slice and dice this a lot of ways. and part of the way is find out what is most valuable. month after, up 87%. average one month return is 7%. best buyout performs a lot of other --. just for comparison we throw in a these. you can see best buy
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outperforming. average one month return since 2004 for salesforce.com up 4.7%. so what kensho abled is a deeper dive on the markets. and often times earnings beats have very good indicators. >> thanks for showing us how it's done. meanwhile we want to bring other news to your attention. docu sign is near closing
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another round of investment. the new funding on top of an existing series e round. the new round i'm told could be announced as soon as today. the investors this time are the following. spanish bank, the economic development board of singapore, and samsung. the first two are helping europe and asia. the samsung may help get itting technology on samsung's devices that ship globally. it's valuation pushing $2 billion. and the ceo has said he wants to go public at some point. not obviously not the right time because they continue raising capital. but so many strategic partners.
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>> interesting to see samsung among them. they recently did a partnership with the blackberry that also surprised people. as the devices sales are going down they seem to be having shaft software partships that help in the nuch. >> what nick bilton is calleding the biggest scam in social me a media. and the world of tv looks a whole lot different. the ceo of hbo joins us a little later this our.
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out there. >> i actually now am the proud owner f 30 bots. i can command them to do anything i want. i had them follow all of you. so they are now your friends. you should be very excited about that. what's interesting is how many spam bots there are out there. they are essentially fake accounts that act like robots and retweet things and so on. on facebook there are i think between 67 and 114 million on the service. 8 to 5% of users are actually robots and there is an entire pyramid scheme where people are making money creating them and selling them. and celebrities are making a lot of money getting advertisement deals based on how many followers they have even though a lot of them aren't even real. >> a lot of this was in per speculatis when they came
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public. >> the fact that i could 30 bots and if i wanted i could create 30,000 in an afternoon. the fact i could do that and i'm not a programmer or a hacker speaks to the fact it's getting so much easier. and as it gets easier and easier you will have kids in their bedroom -- one person told me this. kids making bots and making money rather than doing a paper route to supplement their allowance by running bot farms and selling them. i think what you are starting to see happen is as it gets easier you will see more and more of these on the service. what i found fascinating is the services are not really doing anything to stop it. >> this strikes me as a huge problem. i just ran the check, the fake follower check you mention in your column. and it says 24% of my followers are fake i've never paid anybody for that.
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so 27% of carl's a fake if this thing is accurate. to me this makes me question twitter overall. i thought this was real engagement and apparently a lot is not. what is the motivation when i don't even pay for that or want it. >> it is not just twitter first of all it's every social media. facebook, vine, twitter, instagram. the motivation is okay so if i decide that i want to make extra money. i can create 100,000 fake accounts in a couple days and sell them to people. if you come along and say hey, land rover has offered to let me take a land rover for a week if i tweet about it but i have to look like i have a lot followers. you buy the bots that follow you. and land rover thinks they are
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getting a the great response but in reality it is fake accounts. and when you look at this overall with the advertising deals that take place on the social networking sites there is a lot of fake stuff going on. a lot of spam out there. >> how do you get to the rooftop probl -- root of the problem? is it the brands willing to pay nor creating the incentive? or is it the central networks? you could makeplace blame lot of places. >> that's what i ended up finding out. is that everyone is to plan. the hackers that make the software, the kids that run the bots, the advertisers who tend to look the other way. and the social networks that aren't doing anything to eradicate them. one thing that was interestings are when i started some of these fake accounts, i didn't do anything with them. i just let them sit. i came back a week later and some had 50, 60 followers. and all of them were bots.
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so if twitter really wants to be taken seriously with the number of users it really needs to address this as a problem. >> and people are literally writing in right now and saying i'm a real follower. >> thanks. >> what they are not saying is i'm a real follower and the carl pays me. >> simon hobbs is here. >> rough close in europe. france and germany make up 50% of the euro zone. overall the pmis across europe are moving down. growth is slowing within services can the manufacturing. in particular the german manufacture is at fifty. and france down to 47.6. french manufacturing is contracting according to this data. and also puts further pressure
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on the ecb to act. one of the senior members of the bank of italy. euro zone on the brink of deflation because only two of the 18 members have inflation above 1% and therefore the credibility of the ecb is now at stake to act. and spanish banks also in negative territory. generally the situation appears economically quite dire in the euro zone after we had quite good surveys recently. that's led citi to conclude there will be full blown qe at the january 22 meeting. corporate level today. casino has had to slash the price of its commerce ipo. down 4%. within oil services, just as
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here, you have halliburtibulibu buying baker hughes. so this desire to do deals in europe. tech nip a surveyor in france. the word is deals like that will be done. >> this week in tech crowd we're looking at two projects putting cyber security in your hands. mooltipass stores your log in information off line and deletes all passwords from your computer when signing ufr o. up against wedg which stores files on its hard drive. users then access data securely via wifi. it's up to you. vote now. cnbc.com/tech crowd. tomorrow we'll reveal the winner. hbo shaking up the world of tv
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after its decision to launch a fully online streaming service. and they do so without destroying the relationship it has with satellite and cable? we'll ask in a exclusive interview next on "squawk alley" 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.
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our own julia boorstin has more. with an exclusive sbf with the ceo of hbo. >> thank you kayla. the big question that next year we're going to vhave an over th top hbo service. how can you do this without cannibalizing the business? >> we want to work with the barters to go after the big broad band business in the united states. we think there is a big opportunity to market hbo with our partners there. and we've done a lot of research. there are 10 to 15 million homes out there we think are receptive to hbo. this is not going to be can ballistic of the current
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business. we think it is additive. and great for the industry. >> one of our partners just yesterday on our air was very critical of your plan. let's take a listen to what he had to say. >> anybody who sells their content over the top and also expects to continue to exist inside a bundle of services sold to cable or satellite providers i think is really diluting themselves. >> that seems a little bit like a threat. >> well listen, i have nothing but respect for tom. i had lunch with him on tuesday. we had as they say at the state department a full and frank conversation about all this. i just frankly disagree. charter is going to have three million new subs in their new company. i thinketet it's a huge opportunity for them. can the point i made to tom at lunch and i would make to
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anybody is let's get the business that is obviously out there that we can market to together rather than complaining act competition. if i sat with him when the satellite business emerged he wouldn't have liked that either. the truth is the business is evolutionary. and for hbo which is a content provider we are going to work with all distributors to go out and give the consumer the product they want. >> quick question. title two reclassification of broad band. would that be good for hbo? or are you against it? >> listen, what we're most -- what's most important to us obviously is that the market continues to allow for investment. because we want to give our consumer the very best experience they can have with hbo go. so we want the market to make sure it protects the opportunity
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to invest and to give our consumer the best experience they can have. >> so what does that mean? >> now, i want to go back to this idea of -- >> that means, the net neutrality and title two debate is a very complicated debate which i will leave to my corporate brother. we want to make sure that investment continues in the pipe and investment continues giving our product and other stream products the opportunity to continue to evolve o our customer gets the best experience they can have. >> what do you make of the president's comments earlier this week. >> i don't want to get into a debate about title 2 and net neutrality. i think it is a very complicated conversation. it can't be turned into an either/or. somebody is going to have to pay for the clutter on that broadband highway. otherwise too much video taking
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up too much space. that is the attention we have to reconcile. everybody in principle is for a free and open internet. we want to make sure we don't retard the ability to continue to invest so people can continue to get the best product possible. >> you did a deal with amazon earlier this year to license shows to amazon prime customers. you left game of thrones swems future content off that. >> i don't think it competes at all. the most important thing to remember about our amazon decision is its three-year-old windowed library. what we basically decided is somewhere in the neighborhood of 65 or 70% of amazon prime subscribers do not get hbo. so we thought this was that terrific opportunity not only to monetize some library but to give the consumer base an opportunity to sample and taste
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some of the best hbo programming. we hope that brings them back into the eco system. and since weapon gr grew this y think the amazon move contributed to that. >> i want to hear about what you see your future business model being like. you talk about partnering with companies like charter or comcast. what does that mean? >> that means none of this is binary. there is a big temptation to look at this either you are in the eco system or driving an ote product. the it is not binary. we're going to have a big business with all of our current partners and we will have new relationships and the most important thing is to make hbo available in as many waysble
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possible. >> how much do you have to charge to. >> we're not going to destroy the business and do anything disadvantageous to partners but we're work tong pricing models as we speak and we'll have more to say. >> my parents may never ditch the cable bundle but if i could subscribe just to hbo and maybe just a few other channels i would be willing. >> there are people who only would have ro broadband in the united states. that may grow a little bit. one of the big reasons we made this decision is because currently that is an audience that didn't have an opportunity to get hbo. we wanted to change that. a lot of those coordinators were never going to be part of the bundle. so we don't want to suboptimize our opportunity to reach them by
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not be being available to them. let's go slow. our partners own that pipe. you need to use charter or comcast or cable vision or time warner cable to get into the home with the broadband only product. so this is not dispositive for them. >> what --. >> i think the world of bob. i don't think we're hastening the demise of the bundle. i think we're adding opportunity for new consumers to engage with hbo and to become part of the hbo persons. >> can you give us any details what the new business will look like? will you able b able to get it without paying for a package. >> we'll come bah back with the models and pricing in the very near future. >> and what do you make of showtime and everyone else following your lead. >> it doesn't surprise me at all. because they have the exact same model and they are thinking the exact same way, which is how do we get our product into the hands of as many consumers as possible?
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>> and netflix is game. and netflix and hbo have long been rooism rivals. >> it's much over done in the press. netflix is the terrific. it's a streaming product. mostly repeat television and a couple of new good shows. we tip our hats to them. but nothing netflix has done has prevented hbo from making the kinds of shows we want to make, from growing our business domestically and around the world. i just said we grew more this year than any time in 30 years. netflix can continue to do what netflix does. hbo is going to continue to evolve. >> will you have to -- >> we'll talk about pricing going forward. >> we look forward to going to those details. thank you for joining us. back to you. >> good stuff jewel yasmt when we come back, iibm's watson has
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already won jeopardy. now picking it's own coworkers. >> 40.8. 21 year high on philly fed. did the markets respect the number? my answer may be different than many. i say the answer is yes. and i think the secret of how i can answer that lies in the spread relationship with europe. tune in after the break. we'll dig down pretty deep on this one. the holiday season is here,
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adjusted for inflation that is about $220 today. the operating system was unveiled two years prior to the release. the delay causing some criticism in the tech world. one major highlight was it removed ms-dos commands instead allowing people to use a mouse to point and click. sounds so novel to say it back then but gosh it really was. >> not really. the mac was already out and doing this right. and it wasn't until windows 3.1 microsoft became the huge player but i guess we can commemorate 1.0. why not. >> let's get to the cme in chicago. hey rick. >> today was really a great day. and this isn't the topic i was going to do. but you have to look at that 21 year high on philly fed. and it has to be the center piece of anything we talk about the markets today.
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earlier i showed two chart on the yen. one showed the big surge in over 12% value of the versus the yen since the end of last year. 105 and a half is where it started. and when you switch gears because you need a baseline for anything to be meaningful. somebody says something is rich or cheap or expensive or not it has to be on something else. when you switch it and baseline it to europe and use the euro versus the yen we see it isn't as big a move. much much smaller. so what can we extrapolate from that? that europe and japan are weak and the u.s. is not weak and the currencies reflect that. same could be true for philly fed in a way. the argument on the floor was it didn't move. treasuries didn't move. have they lost their indication
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or predictive value with regard to global economic horsepower? u.s. economic horsepower? i don't think so. so quickly look an interday of tens. now if you look close you notice right before cpi, 230. at cpi hit, 231 to 234. --. we're basically holding very close to those levels. look at interday of bund. what you want to look at is if right side. the scale. dithering between 79 and a half and 80 and a half throughout the whole thing. hardly any movement. now we get to the nitty-gritty. the interday of the spread. 151-155. there is your four basis points and open it up and what you need to see is the all time --.
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--. so what am i saying in english? the treasury market definitely paid attention to the strong philly fed. variance aside. why? because it showed up in a move in the u.s. not in europe and that is something to pay attention to. i'm glad the mid atlantic region is cooking in grease but history addict dictates we need to be careful. >> kate rogers here. >> check out dillards. the stock moving higher on news that marcato a reit spin. >> when we come back, ibm's watson is hiring. literally. the company will tell us how the supercomputer is finding the next great crop of talent up next.
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to create a whole new era of computering. people who can think about not just programming computers but how do you teach a learning system? it's a new era and we're looking for smart creative people who can make things work differently. >> do you see this technology being close to being rolled out. >> we started rolling it out. last year testing. can it do things like help in healthcare and help work with the u.s.a. to bring the troops back home. we put a billion dollars into it this year. and we've expanded into that whole eco system of people buildening on watson. >> say i'm applying. what am i asked? >> people doing video sbfs how they see the future. one of the biggest challenges is what are the opportunities to go
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after? so we opened up watson to an eco system. because there are thousands of ideas people are coming after. just last month we made it lick publicly available on the cloud. so you have to be able to think bigger. >> are you going to use watson to fire people too? >> we're using it to go find and connect ideas. >> why not use to it figure out who's not working out. >> watson didn't actually hire people. we did the work through ourselves as we went through and sorted them out. thousands of people came on that this mission because they saw it as an opportunity to change. just yesterday i was talking to people up the street. one of them was into med school. >> you're scaring me because you're not answering the question. >> that's not where we're focused. we're focus on bringing in the talent. >> the obvious knock is not only have the computers taken our
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jobs but now they are hiring for those jobs too. seems like it is coming from all angles. >> to me. and i talked to another student last night from mit and harvard. this propels into the information economy. it lets people interact with systems because they have to speak and act naturally. imagine if that is all you had to do to be able to work with systems. >> watson is going to be telling 65 people today they are hired. what type of people are those. >> we're going to have a whole mix. people who have industry expertise. or they think about design and user interactions. the whole way we interact with systems is the fundamentally different. >> notified by text? >> we notified by text and communicated back and forts in lots of ways here. >> hopefully watson doesn't learn how to anchor a television
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show. >> more trouble for the steve jobs movie. we'll explain in a minute. cute little guy, huh? this guy could take down your entire company. stay with me. on thursday a hamster video goes online. on friday it goes viral - a network choking phenomenon. why do you care? he's on the same cloud as your business. the more hits he gets, the slower your business may get. do you want to share your cloud with a hamster? today there's a new way to work. and it's made with ibm.
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see aaron sorkin's steve jobs movie. sony is ditching the project after christian bale dropped out. unclear why the studio decided to abandon the film but talk about a troubled project? it's been tough to get a solid green light. >> steve jobs is a guy a lot of people are used to seeing talk. a lot of method. christian bale would have been perfect. >> he would have been. >> and didn't do as well as many suspected. >> brings to mind what zuckerberg said about the social network. where he said the film was hurtful and basically based around a series of lies. >> it should have been colding
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for two hours. which wouldn't have done as well. >> 116 is something you can't shake a stick at. continues to move higher on these increases. that's it for us on "squawk alley." back to scott wapner who will take othver the half. >> carl, thanks very much. welcome to the halftime show. let's meet the starting lineup for today. stephanie link, jon and pete najari najarian, joe terranova. our game plan looks like this. fresh off its earnings stunner, we debate whether best buy we'll is the best buy for your money. and the japan still a place to bet big? we're going to ask melissa otto. we begin with the captain america trade. more evidence today that
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