♪ ♪ welcome to "squawk alley," joining us kevin o'leary is the chairman of o'leary funds and an investor on shark tank. kayla tausche, and jon fortt is at intel headquarters in santa clara, california. he's going to talk to ceo brian krzanich a little later on. the market having a tough time. we're seeing pressure in retail names and housing names. oil back up above $60. first up, apple unveiling its new music streaming service, called apple music. the service will debut on june 30th. cost about $10 a month.

available in more than 100 countries. apple music will offer personalized playlists that stream over the internet and pull from the massive song library that's on the itunes store. the service will offer a live 24-hour radio station. called beats 1. the response has been tepid. i'm looking at a note from ubs saying everything they did supports the superior user experience that defines apple. do you agree? >> you know, carl, i look at this as an investor and ask myself. would this today with what i know, because i was focused on this yesterday, does this change my mind about leaving the stock or buying more of it? and to me, the whole thing is a giant nothing burger. who cares? even if they owned all the streaming companies with all the features it wouldn't make a difference to their income statement. to me the only reason to even think about this is maybe it keeps more people within their

ecosphere and you don't lose it to a spotify or pandora. but boy, is this a big nothing. so what? >> i think part of the criticism seems to be this is largely an event that has not focused on is a big flashy unveil. except that this year they did choose to unveil apple music. there were high hopes for it and the criticism has been for a company that made its name on simplicity and elegance, it looks as if they couldn't decide how to roll out. does that concern you, there seems to be a lack of a streamlining in a product like this. >> no, no, it doesn't. they're going to get share in this market which is a nothing-burger market. what i'm learning about all of this kayla, as i dig and keep peeling the onion. what a crappy business this is, every part of it sucks. to get a whole bunch of investors like me focused on it,

i don't know why. what i got out of the conference is i'm not going to get any material changes to earnings per share in this calendar year from anything i saw. what it looked like to me, they're going to be providing a whole bunch of tools to developers to make the earnings stickier so the earnings are more protected for me as an investor. these days i'm walking around with the android platform. watching it get better and better and the music thing is a sidebar, it's a nothing-burger. >> not every move can be material to earnings. i mean overall, the quality of the ecosystem is about small acts that are repeated effectively, quarter after quarter, day after day. small decisions that will pay off in the long-term. >> no, carl. i think every decision should be that in two years, will this be 5% of the income statement? show me moves that protect and grow my dividend in apple. this is not going to be material while i'm alive. it's not going to be material

for anybody else, what i'm amazed about is music is going back to historical times. you put out music for free or low cost and pay for merchandise and the live performance, that's what they did when shakespeare was around, you told people come to my village and pay to watch a play. this is a merchandising and bands. i don't like it for helping me make money in apple. not excited. >> processing payments is a very low-margin business, that snots going to create the same revenue stream that the iphone does, it won't move the needle. yesterday we got apple saying they'll cross the one million merchant mark in the coming months, we'll see discover on board and also that they're going to read loyalty cards. none of that matters, i would assume? >> no, kayla, now you got me licking my chops. payment processing is a

multibillion-dollar infrastructure i don't care how many basis points you take out of it. it's going to be big and you're going to get a lot of customers, that i'm interested in. i can't see any similarities in scale and size from the music business, i look at in two silos, music sucks, payment processing gets me billions of dollars of top line. even at three basis points, i'm excited. >> not everything went as planned for apple as you probably know, eddie q, head of software and serieses had some trouble with siri while demonstrating services and music. >> play the song from selma. >> let's do that again. >> that's just part of holding these demos, right, kayla? lots of things went right we should make the point. >> it was a two-hour plus

presentation. i think you have a moment like that. there have to be some moments of levity here especially for a company as big as apple. >> one of apple's new competitors is going to join us to respond to the apple music announceme announcement. the cfo of pandora will join us later this hour. kevin i'm guessing you're not a fan of pandora, either, if you don't like muse nick general. >> i like music, i'm a huge steely dan fan. i have a pandora premium account and a spotify premium account. and i'll get an apple account. my conclusion is from a financial standpoint, not material. sorry, it isn't going to make me buy more shares, i'm a shareholder but it's not going to grow my dividend next year, it just isn't. >> music wasn't the only big announcement at the conference yesterday. apple's new operating system will allow multitasking on tablets, users can work with two

apps simultaneously. our josh lipton is live in san francisco with a closer look. >> when spoik to apple, after the keynote at the developers conference, the first point the company wanted to make was this. they believe the new mobile operating system, ios 9 is going to have a huge impact on the ipad. new features will allow users to work with two apps simultaneously. the so-called picture-on-picture feature. allows users to watch a video while composing an email. such features make an ipad a more productive device, paving wait for greater adoption in the enterprise market. here's how apple's senior vp of software engineering describe what is the changes mean for the tablet. >> ipad is a transformational device. for our users in education, business, and at home, for many

of them, their ipad is their primary computer and ipads are just tremendously powerful. at ios 9 we're elevating the ipad experience to a whole new level. >> the ipad represents nearly 20% of the company's sales. but that product has been under a lot of pressure. shipments in the most recent quarter dropped 20% year over year as larger phones eat into the dpand for tablets. not everybody is convinced that ios 9 will reverse the ipad's fortunes. patrick moorehead of moore insights and strategy says the ios 9 is a big improvement, but the tablet will only win more fans when apple releases an ipad with a larger, 13-inch display. moorehead argues that ios 9 sets the stage for the larger ipad which could carve out a bigger part of the commercial market. benefitting apple and hurting

microsoft, hp, dell and lenovo. kevin, we all know apple is called the tablet issue a hiccup that they expect to resolve itself in terms of growth what are your thoughts? would you have to admit is material. >> yes, it is. in my view, my numbers, my looking at apple by the end of 2017. is this will represent less than 15% of their business. one of my portfolio companies is iberian, we service the internet on tablets, ever since the larger format samsung and 6-plus phones came out, lots of sails sales forces that use these don't have tablets, they're cannibalizing their own business. i wouldn't be optimistic it's going to stay anywhere near 20%. it will be less than 15% at the end of 2017. maybe less than 10% in 2018 as the file and format gets bigger and bigger on the core mobile device. i think that's okay as long as the marmgens remain the same.

the operating system benefits that are going into the tablet find their way immediately into the phone. i don't think this is a long-term business, it's a buggy whip. that's what tablet is. >> jon fortt, how defensive do you feel apple is being about the ipad business and what they're doing. do you feel they're finally coming to the point where the developments are on the offense? >> i think they're on the offensive here. and it's important. because what we've seen, it's appropriate here, on intel talking about it you've seen the traditional pc become a lot more tablet-like with the help of intel working through the supply chain. they worked touch into the pc. they'll take it to a different level, with windows 10. so pcs have become more tablet like in this mobile and touch era. more quickly than the ipad has become pc-like. taking on the productivity characteristics that people expect when they want to get to work and we've seen survey information show that people are immediately intensive, sho

ecommerce intensive. they use these things in bed when the day is over. getting their work done. with this multitasking, apple is trying to reverse this. i suspect they'll have to do more. maybe within ipad that comes with a keyboard. maybe some other functions working with developers and maybe their own apps to make sure you can in a way that makes sense move a curer, they showed that yesterday. dig in to select things, get things done in more of a mode that people are used to with a pc. >> interesting to watch. one last left turn, alibaba's chairman jack ma wrote an op-ed in the "journal" this morning. he writes about how china and the middle class can help american business, quote today china's middle class is equal in size to the entire u.s. population. and is expected to double within seven years. this is an enormous number of new consumers with plenty of disposable income. how they spend it is important

for america's small business. the charm offensive that ma is on as he comes stateside what do you think he wants? >> i read ma's note and it sounded like a trojan horse strategy. bring a big horse over, get the best ideas out of america go, sell them on his platform, his customer base. i don't think it's great. this is going to be the largest consumer market on earth in the next couple of decades, you should want to establish your own presence, your own brand, your own platform. not go with ma's trojan horse and become just another subset of his growth engine. it's a dumb strategy if you've got something hot, new exciting, go do it yourself. if they want access to the north american market. let it be free trade. don't use ma's brand on great new american innovation, that's what i read. >> he's making the point that there's no such thing as a national retail brand in china. that there isn't the traditional bricks-and-mortar strategy that worked so well here.

and that you need something like alibaba if you're going to bring an american brand to china. you disagree? >> i think you're on his payroll now, kayla. that's what it sounds like to me. i want some young entrepreneurs to say this is a great opportunity to go establish a national brand in china. go and do it there's an opportunity to be the amazon competitor. they're the amazon over in china. i want to see some american competitors in that market. just like i think they will eventually be a competitor statecide here. by the way those margins are succulent they have. if that's the opportunity they have in china. it will attract capitalists to start a competitor against it. i don't think it's a great idea to take his offer and become part of his future. i think young entrepreneurs should look at this as an opportunity. not a path. they got to compete, that's what i think. >> we'll find out more tomorrow. ma going to sit down with david faber tomorrow for an exclusive interview. that begins at 2:00 p.m. and it will be interesting to see what

ma tells david. kevin great to see you again. and jon fortt we'll see new a few minutes. let's take a look at the markets, we're seeing the dow and the s&p in positive territory. the nasdaq struggling to hold on to gains, down by .33%. the markets have been closely watching data. we saw wholesale inventories data come in stronger than expected. we saw the highest number of job openings since the data were collected. we'll keep an eye on that and a lot of people watching a three-year bond auction hitting at 1:00 p.m. eastern. shares of lululemon rallying, comparable same store sales rising 6% and the stock sup by better than 6%. and shares of pandora slipping down more than 5% or they were at least earlier in the session. now down about 4.5%. coming after apple unveiled apple music.

late yesterday and carl we'll hear more from pandora later this hour. one of apple's top new competitors will break down the music service, the cfo of pandora will join us. could we we see a stock split from netflix? we'll take a closer look at what that might mean for the company and talk top tech companies warning the obama administration to stay away from laws that could weaken consumers' privacy. former yahoo's interim ceo will tell us where that's headed. ♪ ♪

call 1-800-royal caribbean or your travel agent today ♪ ♪ at chase, we celebrate small businesses every day through programs like mission main street grants. last years' grant recipients are achieving amazing things. carving a name for myself and creating local jobs. creating more programs for these little bookworms. bringing a taste of louisiana to the world. at chase, we're proud to support our grant recipients, and small businesses like yours. so you can take the next big step.

shares of netflix trading at 643.12, it comes as shareholders are garying for the company's annual meeting later on today, with potentially a massive stock split on the table. netflix shares are trading close to double, if you can believe that where they were at the start of the year. up by about 85%. for more, we bring in andy hargreaves, senior research analyst at keybank capital markets. good to see you. walk us up to the shareholder meeting today. the only proposal that really anyone cares about is proposal number four. about increasing the amount of stock they have available. what should we be watching for? >> well see if they get it or

not. i think the shareholder advisory services have come out against it the amount of shares they're trying to get approval for is too much. but on the flip side, shareholders quite often like stock splits. so you have those factors and we'll see how it works. >> especially when the stock has such a staggering rise like netflix has. a lot of people are pointing to ibm and saying just because you have this allotment for potentially issuing more stock it doesn't mean you're going to do it. are people really getting riled up about nothing? the fact that they filed to raise up to you know, five billion shares, does that necessarily mean that they'll be splitting their stock or making a big acquisition? >> well they said they hope to split it. it doesn't mean that they're going to do an 80 for 1 split. i think they're doing, trying to get approval for a big number so they don't have to do this again. i trust their management and i trust their board to do what's right for shareholders, i wouldn't expect them to come out and do some massively diluted k

acquisiti acquisition. >> people are keeping a close eye on the international expansion. but they're also looking at content costs which are rising at double the rate that revenue is rising. any chance over the next year that either of those efforts could hit a hiccup? >> well there's always a chance, right? the model is highly reliant on subscriber growth. but what we've seen historically and is that these guys are better than anyone else in the world at using content spend to driver subscriber growth so incremental margins have been fantastic and i don't see it changing any time soon. unless you see some sort of massive change in competition which is pretty unlikely. >> there's obviously this new headline, this week that they're getting into, the theatrical business, signing up brad pitt's new film. that will be a global release. after he came out last week and said there wouldn't be any

advertising per se, do you think there's enough content that people would put up with advertising and stick with it? >> it depends on the market in some cases, over time, certainly in the u.s. people have shown a willingness to stand quite a bit of advertising and pay a large subscription fee if they like the content. so the precedent is certainly there. i think for the time being while they're still in growth mode, for the next several years, there's no reason to introduce advertising and rock the boat. longer-term, the potential is there. >> we've got "seinfeld" hitting on hulu and the news that yahoo won the rights to stream the nfl game in london in october. are you seeing kpcompetition flexing its must until a big way? >> competition has been trying. netflix has sort of led the way and everybody has realized that there's a model here that works really well. the difficulty is, is in

internet businesses, scale tends to win at the distribution level. and while we've seen a massive increase in the number of people trying to execute the netflix model. nobody seems to be doing it anywhere close to as good as netflix does. even with all the increasing competiti competition, it seems like netflix is still moving away from competitors. >> we'll see where shareholders weigh in this afternoon. andy, great to see you. when we come back, the cfo of pandora will talk about his brand new competition, apple music. he will join us in a cnbc exclusive interview.

when you're not confident you have complete visibility into your business, it can quickly become the only thing you think about.

that's where at&t can help. with innovative solutions that connect machines and people... to keep your internet of things in-sync, in real-time. leaving you free to focus on what matters most. bring in seemen hobbs as europe wraps up its trading day. >> in is the sixth day that europe is in negative territory. what happened in greece is a

concern and the fact you've got the correction on the dax yesterday we were talking about the 10% correction. people are a little unnerved with what is happening. if i show awe chart of where we've traded recently. over the last six days for example, six sessions we've lost about 4%. this is european markets outpacing where we've been in this country with the s&p 500 for the year. but clearly we're eroding that for the last six sessions, down about 4% on the broad market across europe. bank of america, merrill lynch put out a note that suggested if there was some sort of greek resolution you could get a 5% rally easily. they believe the down side is protected on greece because of what the european central bank might do though we've had an argument from the head of ratings at fitch in the last hour suggesting the down side argument may not be accurate. in the meantime in brussels, the commission spokesman for jean claude junker, the commission president, has said they received a counterproposal from the greeks. and you started getting a

briefing from "reuters" in particular. junker said the greeks are back-tracking on the budget targets he had already agreed to with them. in athens, ware waiting to get any comment from the greek prime minister. you see him arriving at the serisa headquarters earlier today. extend the deadline for the cash that disappears currently on the agreements at the end of this moth perhaps for another year or so the greek prime minister gave an interview with the italian press where he said when he meets merkel tomorrow and indeed the french president, they will define a clear timeline on the negotiations. however to be honest, if junker is reacting to the way in the way that he is, i would have thought that that statement is now somewhat dated. because i don't think hollande and merkel are likely to roll over in an environment where they're back-tracking, back to you. >> simon, thank you very much. when we come back, a look at the future of streaming music

from apple's new competition, the cfo of pandora will join news a cnbc exclusive. and some of the airlines and why they're down 13%. opinions. there's no shortage in this world. who do you trust? whose analysis is accurate? how do you make sense of it all? a simple, unbiased stock score consolidated from the opinions of independent analysts... is that too much to ask? nope. equity summary score, powered by starmine, will help you execute your ideas with speed and conviction. and it's only on fidelity.com. open an account and find more of the expertise you need to be a better investor. [ radio chatter ] ♪ [ male announcer ] andrew. rita. sandy. ♪ meet chris

jackie joe. minor damage, or major disaster, when you need us most, we're there. state farm. we're a force of nature, too. ♪

>

i'm sharon epperson, here's your cnbc news update. the reverend franklin graham is calling on christians to boycott corporations that promote homosexuality, he's moving all of his ministry's money out of wells fargo because of a recent ad featuring a lesbian couple an their adopted daughter. franklin graham is the son of billy graham. an italian ship carrying 400 migrants arrived at a port in sicily. 4,000 have been rescued in recent weeks. a fleet of russian bombers was grounded after a crew member was killed and another injured in an accident. one of several mishaps involving russian planes this summer. israeli defensive menster, said no peace in my lifetime. is one of prime minister

benjamin netanyahu's closest allies. that's your cnbc's news update at this hour. back to "squawk alley." we do want to draw your attention to some movers today, shares of hovnanian a big drop. they say they probably will not be profitable for the year. and the airlines as well, southwest slipping after the company lowered its growth expectations, delta having a rough day as well. down about 1%. southwest leading the list of s&p decliners right now as oil is back close to $60 a barrel. >> the transport is in officially correction territory. both of them about 10.5% from their highs. streaming music is in the spotlight this morning after apple's announcement of apple music yesterday. joining us in a cnbc exclusive, mike herring is is a chief financial officer of pandora and

joins us now. it's a huge week for the space in general, i would love to know what your thoughts were as you watched apple's announcement yesterday? >> we're happy to finally get to the announcement. we have been expected a lot of what was announced i don't think it was anything too surprising. we still feel really confident in pandora's position as the market leader and expect to see our business continue to grow. we have you know, a very large loyal listening base of 80 million listeners living to five billion hours a quarterer. it speaks to the excitement around connected music and music streaming. >> it's safe to say there's room for more than one business model in this space. but listening hours are finite, you mentioned five billion hours in the last quarter. even if there are multiple competitors, how do your hours change? how does that shift? >> you know, we understand consumers are curious and we

expect as new services are offered, people will reach out and try different services. that's happened many times over the years, that's fantastically well is to play music well. especially in the lean-back radio environment that pandora is. we've been doing it for 15 years, we have massive amounts of data. the music genome project that was created to bring the human element to the curation of the music environment and using data to scale that in a real one-to-one direct-to-listener interaction. and that's created this product that has a lot of loyalty and has really been very successful with a lot of competition. we don't expect that to change. >> do you worry that you're up against a rival that obviously people are going to sample. if they're in the ecosystem. they might try whatever apple has to offer, they don't need to make money the way you might need to because of all their firepower and all their cash. >> well clearly apple is going

to make money in a lot of ways besides their music streaming business. i don't think that changes the fundamental value proposition itself. that's where we're focused, we monetize that business extremely well. we lead the industry in terms of ad-supported radio. we think that that's going to be a competitive advantage for years to come. as long as the product is addressing the way listeners want to listen to music and the advertising experience for bringing has a positive r.o.i. for advertisers, those two things can help us grow for a long time. >> apple now wants to be in your home. want to be in your car. they're trying to leverage siri and the watch and all of this hardware. and new software functionality that they're introducing. how does pandora fit itself into that ecosystem when they have a strong competitor, potentially coming in? >> well, their attempts to be in all of these places follows a strategy of ubiquity that pandora has had for years, we're in 150 automobiles integrated

into the dash. we're in over 1200 consumer electronic devices. we're across every platform, ios, android, windows phone. xbox, we've focused early on on that ubiquity. we think that strategy is an advantage as an independent company we have. that people can listen to pandora however they want to. whatever device they're using. rather than in one specific platform or another. >> do you feel like you need to answer their announcement with more announcements of your own? more features? more moving the lever on the cost of pandora one, anything like that? >> innovation has always been a big focus of pandora. a lot of it has been subtle. it's about making plate list functionality better and better. we've launched new features and functionality over time. what's differentiated us is the focus we've kept on just playing lean-back radio better than anybody else. playing the right song at the right time.

that focus i think has been a tremendous competitive advantage. rather than being a feature war it's really about a competition for music listening. one that pandora has been winning for a long time. you mentioned the price competition and the commoditization of some subscription services. subscriptions are important part of our business, we're mostly an ad-supported business, the prescription piece is a nice adjun adjunct. but we think of our audience how do we grow ad-supported streaming. >> i remember signing up for pandora back in the day. i wasn't going to listen to any ads. if i could afford not to, i wasn't going to. why isn't it a bigger chunk, the subbase stuff? >> because the bigger opportunity at least in america at least through our research is in the ad-supported. most americans are not like you, carl. sorry to tell you that. they actually don't want to bay a subscription, we're talking

about 80% of americans are not going to pay $120 a month for a $9.99, or $120 a year. having a free option, a high-quality music option brings people into music. it gives a platform for music makers to reach bigger audiences. creates a platform to drive other forms of revenue for the music industry. but still delivers music in an ad-supported format that is really cult rattly the way americans want to consume music. >> people say apple has credit cards leveraged into their system. that's everyone who has ever bought a 99-cent download. can you bust the myth of the credit cards and how easy it will be to convert those to paid users? >> there's no doubt that having credit cards on file is a great advantage for driving apple's subscription business. they need to convince consumers that there's a value proposition there that they're interested

in. i think that is a lot harder to do. in music than most people appreciate. now, i'm sure apple will get some momentum. you know they're great at building products, they build beautiful products over the years. they're incredibly good partners for pandora. pandora wouldn't be where it is if it hadn't been for the launch of the iphone and other devices we play on. but the key differentiator is to penetrating the music industry, the musical tastes and just access to payment processing. >> this issue of curation, they're trying to make it a selling point that we're 100% human. there's a human being behind every song selection, you talk about using data to scale it do you need to respond and emphasize the human element of pandora's curation as well? >> pandora was built on the back of human creation. one thing key to remember, we have 80 musicologists, musicians that listen to every song.

we don't just put 85,000 songs on a music service and ask you to choose. our team has analyzed and put up on the service, we he playing the right music, not just any music you can think of. we fuse it to scale. we do it on a one-to-one basis for users. versus a one to many. apple's curation means there's a handful of deejays that are going to choose the same playlist for everyone on the planet and that's taking terrestrial radio, that's been around for decades and streaming it through a distribution model through the internet or through mobile. that's not really new. what pandora is what's new. which is, doing it on a one-to-one basis, very individualized, personalized and creating special, unique experience. a curated experience but for a single person by combining the human side with the technology side. >> it's going to be fun to watch. if you love music it's a good time to be a music consumer. you got -- >> it's really interesting. i think we're going to see a lot

of cool stuff come up in the next few years. >> please come back. a closer look at the future of the pc according to intel our jon fortt is live at their headquarters coming up next. by the time police arrive on a crime scene, they could have little to go on. a vague description. a single piece of evidence. a partial plate number. with an app from ibm, officers can now access over a billion police documents to find hidden connections, and identify potential suspects. ibm analytics helps one hundred thousand officers work smarter every day.

every auto insurance policy has a number. but not every insurance company understands the life behind it. ♪ those who have served our nation have earned the very best service in return. ♪ usaa. we know what it means to serve. get an auto insurance quote and see why 92% of our members plan to stay for life. the u.s. versus the world. is a correction getting closer? gemma godfrey is live in london for us and super bull tony dwyer

is here as well. plus will netflix announce a big stock split today? we're live in l.a. with the latest as the company gets ready to meet shareholders and an exclusive interview with intel ceo brian krzanich. who reveals his next big investment. jon, think you'll have something to do with that? >> i will indeed. for now i'm here at intel with navin shanoy, a vice president of client computing we're going to talk pcs and devices, you ys have a new chip coming out second half of the year, sky lake. there's a lot of hope that that combined with windows 10 are going to reaccelerate the pc market. but i got to ask you first of all, is there enough in this chip with the kind of wireless charging capabilities that are going to come with it with the redesign of the chip itself, to really get the enterprise and the consumer back into the pc market in the second half? >> great question. it's an exciting product for us,

it's been in development for many years, it's a major rearchitectural rehaul. the underpinnings of the chip have been redesigned for windows 10. the timing is perfect. the combination of windows 10 and six-generation core or sky lake is a pretty rare event. when both things like that come together. it will be faster, better battery life, thinner and lighter. when you look at the environment, you have to remember there's over 600 million new p.m.s out there that are over four years old and most of them are thick, with low battery life. low display resolution, slow wi-fi, so all of new capabilities could excite the market again. >> we thought, i'll take the blame for this as much as anybody, that tablet were going to eat pc market a lot more than they have. it can be uga argued that the pcs are eating into the tablet market with some of the touch capabili capabilities.

what's going to happen with that and windows 10 in the second half? sometimes the windows 10 upgrades are not as exciting. are you as excited about this upgrade with windows with intel? and why windows 10 as well? >> i am excited. i was in asia and talked to all our partners. the ecosystem is looking forward to windows 10. it has lots of new capabilities, like voice capability embedded. windows hello, the ability to use your face to log on. and it improves on some of the things that users didn't necessarily like about windows 8. when you combine those users experience improvements with new technologies like fifth-generation core and sixth-generation core, intel real sense, wireless charging, it's exciting. >> show me some gadgets. >> we've got stuff over there, 90 seconds left. >> let me show you an old pc. a 4-year-old pc. five pounds and two inches thick. combine it and compare it to a latest generation pc. you see how much thinner and

lighter this is? much better hd resolution. this device is more than a laptop. right? not only does it function as a laptop. but it can convert into tablet mode. people are buying these kind of devices instead of tablets now. we're excited about bringing new technologies like these they'd cameras. started in pcs, we're now bringing it into fablet like form factor to do 3-d scans and capture the world in 3-d. augment in virtual reality. >> show us the pc on a stick. >> this is a full desk top computer in my hand. full capability of a desk top pc. you plug it into the back of a monitor with an hdmi port and you're off and running in a full pc. emerging markets where maybe you can't afford a full pc. >> or maybe my basement. the chromecast dongles are all the range. this is a full pc in a chromecast dongle. >> absolutely. >> we're going to have brian

krzanich in the next hour. don't miss it. jon fortt in santa clara. up next, according to jack ma, china's middle class represent as huge opportunity for u.s. businesses, how can alibaba make it easier for u.s. companies to sell to chinese consumers? we'll ask a former alibaba board member and former cfo of yahoo when "squawk alley" comes back.

leave early go roam sleep in sleep out star gaze dream big wander more care less beat sunrise chase sunset do it all. on us. get your first month's payment plus five years wear and tear coverage. make the most of summer... with volvo.

alibaba executive chairman jack ma is in the u.s. this week being meeting with potential american partners, in an effort to expand the company's international strategy. and joining us now is former alibaba board member and former yahoo interim ceo, tims more announcing he's also the new ceo of auction.com. welcome and congratulations. >> thank you very much. i appreciate the time on the show. >> we're so excited to have you, especially on a day, in a week when alibaba is front and center. you know the company so well. i'm wondering what you see as the opportunity here in the u.s. for expansion? >> they're a wonderfully run company and really, the sky is the limit for them. i honestly, i've been gone from yahoo for more than two and a half years. i'm not that up to date on the

yahoo story or the alibaba sorry. i'm rooting for both of them. >> seem sure you've been watching as the ipo happened. >> i have. >> now we have the tax-free spinoff happening. quiet is what does yahoo look like without a crown jewel. do you think that's a fair question? >> i think it's very fair. am rooting for them. i don't stay that close to the story. i've got lot of friends there. i hope they do well. they've got a great leadership team, and i think they will do well. i really do. >> do you think the overall strategy going to be alibaba investing in u.s. businesses or trying to draw u.s. commerce their way, to the middle class asthma puts it today in this op-ed? >> i think trying to pigeon hole dl hole alibaba is the first mistake. they're a very big thinkers. very diverse plans and great executers. >> people say if the suspect did want to bring its business stateside, there might be regulatory issues if they tried to do it organically or if they

tried to do it through a deal. so this is the only thing they can do, is that fair? >> that's not my area of expertise, i'm very much a free market person. >> let's talk about auction.com which had been run by jeff friedan. serial entrepreneur what does it mean that you are talking the helm as of today? >> i think as companies evolve, there are different skill sets that are needed at different stages. and jeff has been thinking about this tore a long time. he's an incredible entrepreneur, but i think he's now as we've worked together for about 13 months. i think he's decided that he's, he's comfortable handing the company off as we grow to scale. and that's my experience. big company experience, operating at scale. it's a real honor to take over for him. >> the good news is he's going to be fully engaged in the business so we still have the entrepreneurial fire and we'll marry it up with other management skill sets and go far. >> for those not familiar with the site. you want to talk about the

strategy and the tailwinds that are driving growth right now? why is it working? >> in the u.s. alone it's a $1.6 trillion industry. so massive. it's about $1.2 billion residential and the over $400 billion is commercial. we're both, very unique. we have a very big business in both. and what we started off on are origins we origins were disposing of or liquid eigating properties, we leveraged into a nice business that's growing nicely of commercial natural holders of commercial real estate and take the next step of leverages our relationships and the deep supply agreements that we have to get into the residential consumer market. you know, it's just such a fantastic opportunity. we believe in the next ten years, that most of the real estate transactions in the country will be done online and we're out to a huge lead in making that come real and it's just a lot of fun. >> who does that disrupt? the real estate agent?

the broker? there are so many people that are still skeptical. they will look, but they won't buy. >> we actually embrace the brokers. we provide tools and information for everybody to transak. what we are as an independent marketplace. a neutral market place, we just match up buyers and sellers. there's room i'm of the opinion in real estate you're never going to get away from the personal touch. you want to hear about the neighborhood. see the neighborhood, hear about the local schools. the same thing on the commercial side. there's going to be a role for the human element. we're not trying to get rid of that. we're trying to provide a i have shent. simple, effective way to do it online. efficient. helping everybody can do those kinds of transactions in a simple way is what we're about. >> times they are a-changing, tim, it's great to have you. >> thank you very much for having me on the show. we mentioned jack ma will

join our david faber tomorrow for an exclusive interview that starts at 2:00 p.m. eastern time. as the company continues its push to get u.s. businesses on board. when we come back, in a moment, the doctor is in -- your apple watch, we'll explain that in a moment. can it make a dentist appointment when my teeth are ready? ♪ can it track my crew's performance, and protect their heads? ♪ can it tell the flight attendant to please not wake me this time? ♪ at cognizant, we see opportunities for every company. to meet the new digital demands of their customers. can it process my insurance claim? like, right now? can it download a track while i'm sampling it? can my keys find me? with the power of digital, analytics and automation,

now every little "thing" can provide even greater value. ok, so can it tell the doctor how long you have to wear this thing? the answer is yes, it can. so, the question your customers are really asking is, can your business deliver?

as the company that's all about printing. but did you know we also support hospitals using electronic health records for more than 30 million patients? or that our software helps over 20 million smartphone users remotely configure e-mail every month? or how about processing nearly $5 billion in electronic toll payments a year? in fact, today's xerox is working in surprising ways to help companies simplify the way work gets done and life gets lived. with xerox, you're ready for real business.

can't remember to take a pill? now there's an app for that at least on the apple watch. bertha coombs is live in nerns with the story. >> kayla, here doctors give patients apps, they belly up to the hospital's genius bar and they get all set up with the apps that they need to track their diseases. they've been using it with hypertension patients, so they can monitor their blood pressure, their intake, their activity. and last april, they started to step up the program. by using the apple watch. patients say it's really useful to get them to get up and move every hour. and also, particularly to help to remember their medications which often changes, as their blood pressure changes. one patient in the trial says it's been incredibly helpful.

>> i love it, i want them to know what's going on with my blood pressure for sure. it would be different if they were listening to my phone calls. but this is for my own good. >> all of the engagements so far has produced remarkable results, 60% of patients have their blood pressure under control. back to you. >> bertha, thank you so much mpb, let's get back to headquarters and scott wopner and the "halftime report." ♪ ♪ >> well welcome to the halftime show, let's meet the starting lineup. >> joe terranova, pete najarian, josh brown and steve grasso. and joining us from london today, is gemma godfrey with brooks mcdonald and joining us from new york is tony dwyer of kanacord securities. split decision, is netflix