good morning, it is 5:00 p.m. at the cannes festival in france, it's 11:00 a.m. on wall street, "squawk alley" is live. ♪ ♪ ♪ ♪

♪ ♪ welcome to "squawk alley" for a tuesday, joining us this morning, the founder and ceo of inside.com. we might be spending some tuesdays with jason the next few weeks. kayla tausche is live at cannes lyon in france and at post 9, jon fortt. s&p trading into the red by a touch. today facebook is unveiling plans for the future of mobile advertising at cannes lyon and kayla is there. >> good afternoon, carl, we're missing happy hour for you guys right now. i hope you know that but in all seriousness, cannes lyon is the biggest international advertising fest valival in the world. in recent years it's become increasingly popular for u.s. companies looking to spend global ad dollars, as well as the likes of google, yahoo, twitter, microsoft, salesforce, the list could go on and on.

and social media and tech companies are not only stepping into the lime light, they're getting into the agenda of some of the biggest ad buyers and biggest brands with the biggest purses to spend in advertising, they're mingling from the beaches to hotel suites that are decked out with products wall to wall. you can imagine that networking here does go until the wee hours of the morning. but because of the huge audience here, there are about 14,000 people in attendance, increasingly the company executives are using the main stage to unveil new products. facebook was showing off an undated look for the mobile news feed that will include richer media and that's going to be something that will be rolled out in the future. and we do have an interview with facebook's advertising chief. it will air tomorrow, but whether these changes -- can move the needle. [ inaudible ] [ inaudible ] [ inaudible ]

>> the other name in the game here in cannes is video. for facebook, for twitter adam bain about that in just a moment. and also for snap -- >> listening to the satellite stream and the weight of trying to get the signal out of cannes. she mentioned facebook. its market cap today about $238 billion. that surpasses walmart and knocks the retail giant out of the top ten for the first time since 1997. and historic move for a stock that in the early days following the ipo, jon, not many people had faith they understood mobile and were going to make money off of it. >> they proved the doubters wrong pretty quickly. when i saw it surpass walmart's market cap. the first thingdy was look at the employee count. the head count at facebook as of the end of last quarter was 10,082. >> as opposed to 2.2 million. >> a million in north america for walmart. >> so when you think about the value, market value and revenue

per employee, that's got i implications for labor and employment and for productivity, when you think about where facebook goes. >> it's one of the big macropuzzles of the year. why productivity is not budging. apple may have changed course on royalty payments after being called out by taylor swift. it still has to figure out how much to pay. for comparison, in december, spotify paid over 25 million in royalties for its subscription service and 5.8 million for free service. but apple still has artists, i think that apple is just about the coopest company in the world. i'm a huge supporter of apple and i feel very safe with them, more streaming music news, the ceo of jay-z's title stepping down after less than three months on the job. it's amazing how quickly this space has gotten volatile and interesting. >> i think jay-z deserves some credit for what's happened over the past few days. the fact that he put this

spotlight on how much artists get paid. you have to wonder if apple's i don't think they're worried about title in particular. but if taylor swift were to join title it could put some wind in their sails. now clearly jay-z says he's in this for the long haul with title. he's got the money and the backing himself and with others including madonna, who are backing him to see this through and hopefully find some better management. but they've got problems in marketing the way they rolled the service out. apparently they've got problems at toth in terms of getting stable leadership. but this is a long game they're playing. >> jason, your thoughts on the streaming news at large and more important, how does an average investor play it? because to a large degree it's sort of interesting talk, but it's very difficult to directly invest in some of these spaces. >> apple coming into the space is a pretty clear sign that this is a must have for a technology company. special entry you're selling phones and you've got the large

base of consumers. one of the interesting things about their services, you can use it across i think six devices for $15 a month. you'll see a lot of people sharing these accounts and unlimited music for free. these young consumers don't want to buy albums, it's not in their head space to buy an album. so the music industry is moving to making money from doing live concerts at coachella and these types of events, i think you're going to see the live revenue is going to outpace the subscription revenue and apple doesn't need to make money from this. this will never move the needle for apple. it's just sort of a checkbox. the music is going to wind up getting 80%, 90% of the money here eventually. i don't think there's an opportunity here for investors and i think spotify has a challenge on their hands, they're moving into podcasting and adding a lot of new features, they've got millions of americas. so the idea of buying cds, is the real loser. digital downloads is the real loser, think almost everybody is going to have a subscription plan or they're going to be on

their parents' plan or cousins' plan. a lot of sharing like you see with netflix and hbo accounts. >> are you more interested in playing it as a direct play, pandora, a public spotify, or is it better to you in your mind as an investor, to use it as part of an ecosystem where do you check off a long list of things that you want to give people to keep them in the box? >> there are two industries as an angel investor i never touch and one of them is music and one of them is health care and i've done two health care investments now because consumers are taking control of their health care. i still don't invest in music companies, because the music industry has to renew the contracts every couple of years and every time they absolutely demolish the companies with their requests and they're always under water i don't think it's a great investment. stay away from music. >> it would have been nice to invest in taylor swift if you could pick a winner. >> i think taylor swift is probably the front-runner for the ceo of twitter at this point, right? >> who knows. but what is the secret sauce

that's going to determine who succeeds in the space? if it's curation, is it human curation? is there some algorithm place, maybe it's not a music that you're investing in, but the technology underlying whose going to determine whose distribution has more legs? >> pandora, that use as combination of algorithms and humans. humans tag the music, this says this has an upbeat this is fast, slow, country, whatever it is. it takes you on the journey, that's been successful for people. think people love just turning on a station. now with the arrival of electronic music and deejays, a lot of people want to play a set from a specific deejay, calvin harris, teosto, i so i think we'll see the branding around, especially apple with the studios they're making to do 24-hour radio stations, the rebirth of radio. except those radio stations have absolutely no need to make

money. they're just there for the pleasure and delight of the consumers. and so again, not a great investment i think in any of these companies, just a commoditized service. this service might be bundled with your phone. or your contract with at&t verizon. >> cautionary tale early on. according to "the wall street journal," chinese fund manager hill house capital group is leading an investment in uber that could lead up to $1 million. uber's funding is close to $10 million. the ft says uber's financial firepower sun precedented in silicon valley history. jason, you were an early investor in uber. the question is quickly becoming is anyone ever going to be able to catch up to these guys in terms of valuation and funding? >> to be clear, i have no operational role at the company. i don't have any inside information on purpose. when i invest in the company, it was worth 5 million.

>> $5 million with an "m"? >> yes. so i went to the fifth anniversary party and the statistics in china are extraordinary. at this period in time. nine months or so into some of these cities, they have 400 or 500 times the number of rides as they did in new york city, my home town. so what you're seeing i think with uber is probably one of the best-run operational companies in the history of silicon valley. they're executing at an extremely high level and they're staying private and they're dealing it in. and it's by no means is this going to be easy for them. china going to be a challenging market. they have a lot of competitors and they have to stay on their toes. they have to keep the service you know and the response time very low. the margins -- you know are going to be challenging so it's not, i don't think it's a foregone conclusion that they win in every market. they have to wake up hungry every day and fight. there's regulations and a lot of issues they have to deal with.

this is a very complex business. >> at a certain point it almost becomes concerning that they're raising so much money. do they need that much money? if they need it, what are the things that cost $10 billion to do? over time. and do those costs come down over time? again recognizing you don't have an operational role at the company. but are they really burning through that much cash? >> well, you know again i don't have an operational role, i can't tell you what's happening on the balance sheet. but i will tell you is what we've done here in silicon valley is privatized the ipo. the ipo doesn't happen publicly any more. you have all of these investors come in and put money into airbnb or dropbox, twitter, whatever the company is. and it's just a large amount of money comes in before the ipo. and hopefully when the ipos happen in these companies, you have a lot more stability. when we were sitting here ten years ago, 15 years ago, we were seeing these incredible whipsaws in companies going you know up to $100 and down do $1.

now it's a lot more tempered. we have more predictability. we're taking out the availability by keeping the companies private longer and dialing in the business model. dialing in the revenue. dialing in the consumer experience, i think it's wise. because now people when companies do go public, can have a lot more faith in them like hey, this company is not going to come off the rails or this company is not tremendously overvalued. we don't want to wake up and feel like we don't understand why companies are valued and the people putting the money in are the most disciplined investors in the world. they're looking at the revenue numbers at uber. fy ask people, if you ask people, if you think about how many dollars twitter or facebook makes peruser. it's a couple of dollars per year when you look at their entire base of users. then if you ask anybody who uses an uber, listen, this is a service that is now for everybody. you have two, three, $4 rides occurring in a lot of cities with uber pool. if everybody can afford the

service, then the amount of money everybody contributes to uber per year not going to be single digits like other services, it's going to be tens of dollars, perhaps hundreds of dollars peruser. this will be a billion-user company. this could be, this could be the company of the decade. like facebook was. i think it really is the execution level and the delightfulness of the service. the service now when you come out of a building, it's almost scary that you hit request uber and you get a car in one or two minutes. sometimes you come out of a building and you see your uber. it takes you longer to physically recognize it than it did to call it incredible for transportation. >> and that is the long-term play. there's a lot of things that need to happen between then and now, but it's fascinating to watch. jason, we're going to see you later on, i'm sure. thanks again. jason kalakamis joining us from san francisco. more modest gains today, the s&p just above the flat line having dipped into the red earlier. shares of at&t rallying after getting upgraded to overweight

over at barclays. the firm citing positive effects of the firm's purchase of at&t tv. ed a shares of fitbit up 3%. let's get back to kayla tausche, at cannes lyon today. kayla, news on snapchat this morning. >> that's right. carl, it was one of the most closely-watched presentation here's at cannes lyon. evan spiegel being interviewed by joe anna kohl's at the head of "cosmopolitan" magazine. they talked about where snapchat is going. the key according to spiegel is what they're doing with video. it's a strategy he calls 3 v and the most prop nent v is vertical. turning the video ads vertical. he said it's giving the advertiser more real estate to play with and equivalent of striking gold. here's whey said with? >> i think by having a really great product, a great full-screen video unit the focus

wb on terrific creative and not necessarily you know some of the, some of the other not so attractive advertising techniques. >> of cures, he has talked at length in the past about what he calls creepy targeting. when you try to buy something on the web and it follows you around. he says these are using data like your geographic location. but they don't have your data follow you around. he says it's more curated conte content. and he talksed in what appeared to be a barb at facebook saying brands should be able to have friendly on a platform. but they shouldn't be your friend. some interesting comments. and we're starting to get an open kimono, on what snapchat is doing and what it's building on its platform. >> kayla, talk to you in a few minutes out at cannes lyon. when we come back. a ton of great guests for "squawk alley." twitter's adam bain has been rumored as a replacement for dick costolo, eel join us and

omar ishrad, the ceo of tronic and john chen, the ceo of blackberry. you probably know xerox 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

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involved in the conversation this year. we're joined exclusively right now by adam bain, the global revenue officer of twitter. and what a treat it is. and what is such a busy week for the executives on the ground. >> i'm really excited to be here. >> you've been an attendee of cannes since you joined twitter. how have your conversations with your clients and ad partners evolved? >> cannes lyon is the time of the year to focus on creativity and innovation, we feel like we've got a major part in the conversation around creativity. in fact even just yesterday we won a grand lyon along with our partners at volvo cars for a campaign that they ran on twitter. during the super bowl. and you know just five years ago we were just stationed over on the beach with one chair and a table and doing meetings with cmos, so we've come a long way. >> and nothing in revenue at that time, either. >> we've come a long way we did

$1.4 billion in 2014. going from 0 to over $1 billion in one of the fastest revenue ramps of all time. there's i don't know of any other billion-dollar-plus ad business that's growing anywhere close as fast as twitter. >> you do have some new products that we've gotten a glimpse of before this year's festival. first, pronl lightning and project pages. talk about those to the extent you can and where the focus for advertisers, and where the opportunity for them is. >> sure. so i'm incredibly excited about the product that we have in the pipeline. of my five years at the company i've never been more excited about what we've got coming out. there was news that came out last week around project lightning. i can't say too much about it essentially what it is is how do we organize content in a better way for consumers? how do we make it easy to find structured, organized content on the platform. from what we hear from marketers, they would love the opportunity to bring their

marketing messages in front of consumers in that way. >> why wait until now to do human curation when it seems that that has been the winning solution for so many companies up until now? not algorithms. >> yeah so we will be bringing on humans to curate content into these channels in project lightning. and you know we think that ultimately it's an interesting balance between humans and algorithms to find the right balance of bringing customers, essentially consumers onto the platform. >> visiting your client suite here was quite a trip. there's a periscope wall, there's a vine wall, it's very video-centric, it's not a twitter feed-centric? sfw we're making a major move into video. last week to the marketing world we made a big announcement for voixt for both consumers and marketers, we've launched auto play video, inspired by vine for the last two years. watching how consumers were

experiencing auto play videos on vine. we brought it over to twitter. consumers love it people love it. on the platform. there are two and a half times more likely to favor twitter now. because of auto-play. and it's great for marketers. video completions went up 7 x. brand lift and sentiment went up almost 20%. so it's incredible in that way. for marketers we also made an industry changing move. we think, which is we announced that we will only charge marketers when the video becomes 100% in view. and so that what that means is we don't think it's right for another folks to charge when only one pixel of an ad comes into view for one millisecond. we stepped out from the rest of our peers in the industry and taken what we think is a bold move. we did that in conjunction and coordination with a bunch of agencies like group m and also in consultation with big advertisers and marketers like unilever and the cmo of

unilever. >> we obviously see sponsored vines, talking about user-generated videos, not ad videos of course. when will we see periscope be monetized? >> so on the video side and on twitter, there's all kinds of really interesting opportunities for marketers to get involved. in fact some of that content is actually being provided by the users themselves. we did an acquisition of a company called niche, something i'm super excited about for marketers. it helps solve the creative problem. how do you create content for platforms like this in a rapid way? essentially there are all kinds of creators who have quit their day jobs and produce content for vine and other companies like that including periscope and niche is a software platform to connect them. hp has run a tv campaign just of vines that were submitted by these creators. >> you talk about how auto-play video is seven times more likely to be watched. there are a handful of statistics that show that the type of video we're looking at

now is so much more effective as a marketing tool than before. but there's a question over what metrics we use and what metrics are actually meaningful to advertisers, we've been hung up over maus and now snapchat and facebook and instagram are saying we have so much engagement we're going to talk about daily active users, what are the metrics that your advertisers are saying are the most meaningful to them? >> the ultimate thing that marketers are care about are results. that's what we are focused on, how to drive the best results, moving products on shelves for those customers. in terms of reach there are only a handful of companies in the world who reach over a billion people. i'm happy to say twitter of is one of those companies there are over 300 million people who log in, and consume twitter content on twitter. but there's over half billion people who come to twitter in a logged-out state. you're probably seeing some of this now through the new google

search deal where tweets are insbeg grated inside of search and there's over a billion people that we touch in syndication, that's content syndication and ad syndication. for marketers, we just monetized the logged-in state later on this year we'll open up logged-out in syndication. >> what does that mean, we're monetize the logged-out? >> we'll bring opportunities for marketers to target and bring relevant ads to consumers in that logged-out state. >> what type of long shots are you making? because i imagine that on one hand you have things that you've been working on for a while, been in the product pipeline and things where you say you know what, twitter needs to make a big bet. the nfl could have been one of those. what are you doing that's a big bet? >> well we think right now the core things that we're doing is making twitter easier to use. and i think from a consumer standpoint, that's is the prime directive for the product team. and there are things like project lightning which i think are a massive move in that direction. the other thing that we've

announced in terms of video, is a beginning part to the future. certainly both content and marketing are being fundamentally changed by digital video. and we certainly have a hand in that. you mentioned the nfl, the nfl was a proud partner with us over the last couple of years. >> did you bid for the rights to the london games? >> the nfl is a proud partner for us over the last couple of years. in a platform we have called twitter amplify. just this past postseason with the nba, we also did a program with them. so we think sports in particular is a real natural to bring video content on the platform. we also have a monetization way that the leagues or the broadcast partners with us can essentially generate a win-win. >> what you're outlining now sounds like a pretty well laid plan. even the best-laid plans can go awry. i'm wondering what went through your head when the street had its reaction to the news that not only would dick costolo be stepping down, but that twitter wasn't going to be changing its strategy. why was there so much pessimism

around that? >> dick had been at the company for about six years and now leaves the company. in a strong and resilient place. the team actually is very focused on the products that we have set ahead. you know when i look at the pipeline it's incredible. we've started showing the marketers here what's coming. and the excitement that you feel in the room when we show them what's coming is just palpable. jack joins us as ceo, and on july 2nd. it's something i'm personally excited about. jack and i meet on a weekly basis to review the business and talk about product and i think there's no one that's been thinking about fwtwitter, the product, longer than jack. >> are you of the view that he can do two jobs at once? >> i'm incredibly excited to have him come back to the company in the ceo role. i've seen what he can do when he puts his mind to it. and so it's something i'm personally thrilled about. >> you describe morale as being strong, resilient.

excitement surrounding the product pipeline. i'm wondering for someone who is a veteran of the company, been there for five years, do you see the need for stability from an insider? or change from the outside? which is the better path? >> so we have an incredible amount of product in the pipeline that's coming out. that's what really gets me thrilled. we've shown it to some of the cmos and agency heads over the last couple of days and the feedback from them has been that this is a direction they're going to support. so when we talk about results for those marketers, we talk about how we move product. where are we going in terms of the overall product road map and ultimately you know, the future for twitter and also our other supported product lines and it's super exciting. >> what needs to change about the company's communication with its existing investors, potential investors and peemt who have been so vocal around this company? >> there's definitely a difference between what we know to be true on the inside, and

what we, where we see the company going in terms of the product road map and also what the perception is from the outside. totally understand that. and it's ultimately going to be seen for the world, through the product that we ship. so i think ultimately we're heads down right now. shipping product and that's all you can do. >> i've lost count of how many people have come on the air and said when is adam bain's first day as ceo? what does that make you think when you hear people say that? >> i'm ecstatic that jack is coming back as our ceo on july 2nd. him and i talk every week about the business, you can't find a more commercial ceo than jack. he's running a terrific business-to-business company. he thinks all the time about brands and marketers. a bunch of our marketer partners know jack and are exposed to jack. so it's something that i'm really excited for him to come back. >> would you want the job, though? it's as simple as that? >> i'm super excited about jack coming back and i think from my perspective i'm doing the one thing that i know how to do,

which is scale the revenue for the company. >> despite what seemed like positive seeds having been sown in the recent past there are a number of wall street analysts who have downgraded twitter stock in just the last few weeks, since we got the news that dick would be stepping down and jack would be stepping in. what are they missing? >> we're just getting started. we've got a lot of work to do for sure. both on the consumer signed and also on the revenue side. from our standpoint on the revenue side, our big focus area is outside of video are in the direct response business. in the ad business there's two ends, there's the branded business and the direct response business. most big companies start by going after direct response money. we and then they try later on to ladder up to legitimacy into brands. and we realized five years ago that the biggest brands were already on twitter. we did something in opposite of everybody else, which is went out and focused on the branded business first. and now we're just turning our attention to it.

>> hopefully you'll come back soon, adam. >> i would love to. >> adam bain, the chief revenue officer from twitter, guys, back to you. >> kayla tausche, thank you so much. europe is closing, let's get to simon. >> you've got to remember that many of the j indices made 3.8% gains yesterday. this is a good result to be able to inch forward again on optimism around greece. data that came through the pmi data services manufacturing composite. running at a four-year high, indicative of 2% gdp growth in the eurozone. the backdrop as well to the greek negotiations is also fairly positive. but take a look at the video from last night. look at the smile on the greek prime minister as he came out of the eurozone summit. is this a man who thinks he's got a deal or having to project home to everybody else that they've got a deal that they're going to have to sign off on in parliament? a lot of the focus today is around the fact that he's going to face a major challenge in his own parliament with any deal that he does with the rest of europe. given he only has 11 mp majority

and between 10 and 40 of those may rebel according to reports. let me show you what's on the table. obviously we're within a 24-hour deadline now. for the technocrats to work through what is being offered and whether that's acceptable to the rest of the eurozone in front of the finance minister's meeting tomorrow and the heads of state meeting on thursday. these are red lines that have been crossed according to the royal bank of scotland. the sales tax in the main hike to 23%. islands will no longer have a discount. the height in the state pension contributions, the retirement age rising to 67 by 2025. you could laugh at that, for the greeks that's a big deal and an end to early retirement incentives. bear in mind the greek finance minister says 400,000 people this year will be taking advantage of that early retirement incentive for a state pension so it's a big deal. what are the greeks getting back in return? apart from enough money to pay the imf what they owe them? i thought what the french president was reported to have

said last night again, francois hollande at the end of the meeting was significant. he said there was a need to indicate a reprofiling of greek debt. now a restructuring of the greek debt that's owned by the rest of the eurozone and the ecb is not explicitly on the table. the thing to watch for and this is the big prize for the greeks, is whether it pops up perhaps by the end of the week, and there's some quid pro quo going on behind the scenes. meantime, citi pointing out that the european union is offering to front-load about $35 billion of funds to the greeks near-term. one other footnote, if we do get a resolution in greece and calmer markets, you may find the corporate bond issuance brings up. sachin had a note out saying you've got about $2.3 of debt coming through on syndication, go back a couple of months, within a four-week period it was 48 billion. that's an area of the market that could shift. as you've been talking we've been watching the vote in the senate. to give fast-track authority to the president.

think it has cleared a key hurdle. eamon javers. >> right now the vote, 60-37. on final passage for the trade promotion authority that the president has sought this is a tricky political compromise going on right now in the united states senate. what the bill is a version that has worker protection measures that were preferred by senate democrats. liberal democrats among them. that all those provisions now stripped out of the bill. this will pass, it's an unusual alliance here between mitch mcconnell on the republican side and president obama in the white house. that's going to be upsetting and has been upsetting to some liberal democrats in the senate nonetheless this measure appears now to be moving forward. the plan as of right now is to ad those worker protection measures to an africa trade bill that's going to move further on next week that puts liberal democrats in the position of working with speaker of the house, john boehner of, the republican, something they're not entirely comfortable with nonetheless the 60-vote

threshold here just passed. and the bill appears to be moving on. carl? >> thank you, eamon, smells vaguely like bipartisanship of the old sort. thanks so much for bringing us that. >> deal-making. the old-fashioned sausage-making of you give me this, i'll give you that. up next, talking about the state of the health care industry with the head of a $110 billion company in the space. the ceo of medtronic is going to join us in a moment. and apple and taylor swift have been dominating the conversation on streaming music, tim wester gren, the co-founder of pandora joins us. but what if you could see more of what you wanted to know? with fidelity's new active trader pro investing platform, the information that's important to you is all in one place, so finding more insight is easier.

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form, i'm sue herera with your cnbc news update. have a vass governor moving to have the confederate flag banished from his state's license plates, governor terry mcauliffe citing the killings last week at the african-american church in south carolina, as well as a supreme court decision that rules states can restrict license plate designs. secretary of defense ash carter continuing his trip to europe with a stop in estonia. he visited the nato cyberdefense center after announcing new support for nato. amid concerns of russian aggress in ukraine. samsung is developing a smart truck, that eliminates

blindspots behind big rigs. it works by displaying live video of the view ahead on large tv monitors. wall-mounted on the back of the truck. it was tested in argentina and has night vision modes. samsung says the technology works and can help save lives. and new england patriot quarterback tom brady and representatives from the players union are meeting with roger goodell at nfl headquarters. braiddy say peeling his four-ga suspension for deflating footballs in the afc championship game earlier this year. . medical device maker medtronic, one of the largest players in the health care space announcing fda approval for a new heart valve replacement system. medtronics ceo is with our own meg tyrell at the heartland summit in minneapolis. good morning, meg. >> good morning, carl, thank you so much.

om ar istruk thank you for joining us. carl was talking about your new fda approval. talk about this new product. >> it's an upgrade to our existing core valve product. it makes it, makes the device repositionable and recapturable which is a first. makes the procedure much easier. and safer and we think we'll get much better outcomes as a result. so we're excited. >> will it expand the market of heart valve replacements. >> the indications is for high-risk and extreme-risk parkts, that is limited by the patient type today. but it will enable hopefully better outcomes on those patients. guys just closed in january, almost $50 billion of an acquisition. tell us about how the integration is going? >> it's going very well with what we see. we look at integration from a perspective of how people are

feeling. about the new company. and we've done a lot of surveys. and people from both legacy medtronic and kavidian teams are aligned with the mission of medtronic. it's something that kavidian employees are really rallying around as well as medtronic employees. from an overall employee perspective, it's going extremely well. >> in addition, from a financial perspective, we were pleased with the results of our first quarter, finished as a joint company. exceeding expectations, actually. we've got a value capture plan or an optmization of cost plan. that we feel good about. we think that's even better than what we originally expected. and so all in all, it's early days, we've got a lot to do. but we're excited and pleased with where we are. >> let's talk about a big topic at the piper jaffrey conference,

value-based health care. can you just explain ha that is and how you guys are positioned to deliver it. >> yes. well first thing is let me tell you what drives it. essentially in health care, especially in the united states and around the world. value is dissociated from cost. when the cost is incurred, value is not realized at the same time, but often later. as the treatment happens and the person gets better later. but the people who incur the cost, the stakeholders who incur the cost, providers for example or even patients, pay for it before they actually realize the value. as a result, no one is really accountable for delivering. the return on the cost that was invested. the cost of treatment, the return being the person, the patient gets better. no one is accountable for that. value-based health care in essence tries to address that problem by creating a system where, where stakeholders are essentially responsible for

delivering the value as opposed to getting paid when service is provided. >> how do you guys as a company change those incentives so that you try to make a patient better rather than just have them get a lot of procedures. >> we cannot do this alone. no one can do this alone. because multiple stakeholders are involved. one of the central themes around this is that business models from every stakeholder have to change. and by definition, if one stakeholder's business model changes, other parts of the model change as well this require as fairly broad look at the industry and how we approach this and we have to start with defining value in quantitative terms which we haven't done. what are outcomes. what's the time horizon over which you want to achieve that outcome? define it and then you can at least define the value and then you can decide what role every stakeholder plays. the reason it's so important for us as a company, our innovation principles are based on value.

we design products to make peek better. well if we're not accountable for making people better or if no one is accountable for making them better, how do we over time make that innovation quantitative and objective? and i think that's why we're, it is extremely important for us. we apply into this a technology angle, not just with our devices, but in general health care technology. we apply clinical expertise. which can help define and quantify outcomes at certain time horizons and we have as well, considerable health economics expertise which historically has been applied towards reimbursement. but now can contribute as we change the incentives. on top of that we've got a good and strong financial system for ourselves, capabilities for ourselves. and are well-positioned to take intelligent risks in providing this type of system. >> we have so many more questions on that. we'll leave it there for now. thank you for joining us.

carl, back to you. >> i'll take it, thanks, meg for that great interview. blackberry shares are been sliding, down 3% after some controversy over whether revenue can grow there or not and ceo john chen will try to set the record straight when he joins us next. it looked good earlier this morning. settled back. let's go back to cannes lyon. international festival in france, kayla is there along with pandora's co-founder, tim westergren. hey, kala. >> hey, carl, we're delighted to have tim westergren here with us and your first year here, what's the music scene as far as advertising goes? musicubiquitouubiquitous. it's a great plaus for us to be. >> for company that runs an add-based music streaming service, we've seen a lot of the advertising agency outlooks talk about spending across the board going down because of currency

headwinds because of slowing gdp growth. is that still true for your business? >> we're not seeing that. we feel really bullish about where it's headed. i think pandora is crossing over into new territory. we're going to do north of a billion in revenue this year and we're launching great new products, mobile programmatic and programmed listening. >> talk about the human elements to what pandora does. because that's obviously a huge part of what apple is pitching. to potential subscribers. we now seeing it become a bigger part of what snapchat is doing. twitter is doing. how relevant is it to your business? >> this whole product starts at its core with the music genome project. which is this enormous database of music that we've manually analyzed, for 15 years a team of experts has been collecting musical characteristics, it's how we connect songs. we take that and marry it to

this close to 60 billion pieces of thumb up, thumb down feedback. which is incredibly precise information about how someone wants to listen to music. you put those together and you get the perfect play list system. >> my colleague jon fortt has a question at the studio. >> my question has to do with the referral pileline are people still buying music onloads becaused on what they hear on pandora? i think the value for a lot of artists is once people listen to their song on pandora, them taking some further financial action to put more money in their pockets. >> yes. we did a really very exhaustive study with a random control trial nationwide. touching every dma and systematically raised or lowered the spinning frequency of songs and actually tracked it against the sound scan sales. demo by demo. and found that pandora drives the 2% to 4% incremental sales on music.

so not surprisingly as radio has been for so long, it's fou fundamental push service. >> when we have the news of the interim ceo of tidal stepping down from that job, when you hear news like that, do you as a co-founder of pandora say chalk one up for the income bin. what do you think? >> i'm always rooting for start-ups, it's in my dna. it's a tough business to be in. it's a lot to build a successful business. what you're seeing with tidal in a lot of areas is artists stepping up because they want to actually be more involved and control how this industry is evolving and ours have been remarkably quiet. i think to their detriment. artists need to participate as the rules are being set for the future. it is not only an important

sense of income, the plat forms will be the place where they connect with their audiences. that's an area we've been investing in to build a platform so artists can hone their identity and connect with these huge audiences, self-declared fans. >> do you think they need that in addition to the social networks that already exist? do they need that on a music platform? people say that didn't work so well for my space in. >> desperately. it's never existed before, actually. this is the first time with pandora, you have in one place aggregated an enormous audience that you have actual music preferences for. and the ability to communicate one to one with people and we are already now in pilot with artists delivering targeted audio messages, email campaigns to reach out to those fans and the results are really outstanding. >> half of your revenue goes to royalties, which is an alarmingly high number. what do you think about apple's decision to not pay artists any

royalties during a three-month pretrial period? >> i'm not privy to that. we're proud payers of royalties. i think one of the great bright spots in the industry is the trance frigs broadcast radio to the web, every 1% of market share that goes from broadcast radio to the internet, is a $50 million incremental revenue royalty for the business. because it's going from an industry that does not pay performers, to one that does handsomely. it's a big bill, but i think we're proud to pay and fundamentally, it's going to a healthy long-term business. >> the times are changing. >> they are, indeed. >> tim westergren the co-founder of pandora live from here at cannes, we'll send it back to you at post 9. >> the answer appears to be blowing in the wind for you as well. up next, blackberry shares still slipping better than 3% after earnings missed analysts' estimates, the ceo is going to join us to break down the quarter in a first on cnbc interview next. you probably know xerox

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.

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jon, we'll see you in 15 minutes. >> blackberry shares volatile this morning due to uncertainty surrounding revenue growth and the posting of a larger than expected quarterly loss. the stock down just over 3%, john chen is the ceo of blackberry and joins us now. to break it down. first i want to talk phones, you still just over one million in the quarter and lots of questions now about whether you would do a pure android phone. i think you just told some investors you would only do it if the phone was secure it seems like you would know how to do that. >> yeah, i was only responding to you know somebody asking about the rumors, whether we were going to do an android phone. we only build secure phones. so and blackberry is the most secure phone. so if i could find a way to secure the android phone. i would also build that. let's talk about software. that's the business that you say you want to be half a billion dollars by the end of this

fiscal year. perhaps you're on track to do that. you've got competition, vm wear's air watch, they said licensed bookings grew 50% year over year. when you're trying to get the customer win, what is the blackberry advantage that you try to put forth? >> yeah, the blackberry experience, black aboutberry have two advantages, one is security and the privacy, better than everybody else. the second one is what we call the blackberry experience, which you have a lot more features that has been road-tested for a long time which enterprise i.t. department really likes, so the combination of those two are usually what winning ticket is. >> john, the challenge that i'm having, watching your progress as you try to turn this into more of a software company is being able to tell what kind of traction blackberry enterprise servers getting. you gave some customer win flavor on the call today. is there more that you can say

about the increased traction or maybe not, that you've been seeing over the past quarter as you try to get people to convert from just trying out your new enterprise server into actually deploying it and sticking with it? >> actually, both quarters we have grown our software business year over year comparison. and so there was a little bit of confusion this morning, where i fumbled the ball obviously. the best 12, which is our enterprise server business, grew 20-some percent year over year. seshlgt in a row. overall software growth is pushing 30%. that number i did not provide. the reason for all of that is because on top of all that, we have licensing growth. big deal in licensing. and everybody is trying to back, their selling of the numbers. we have agreement with various parties that we cannot disclose

the terms of the agreement. so this is why i was kind of you know, not as clear. but i could tell you that the best 12 are tracking. i've seen all the lists, we're 2600 new customer wins. and so, we're pleased where we are and we're building the force to build it even more across the world and we have some big names this morning that we have mentioned, that we won. >> john, the bull was argue software looks good. but it's about the optionality, the wild card, the chance that a handset becomes a hit again for you guys. when you're honest with yourself, how likely do you think that is down the road? >> we have a road map that we laid out. we like the phones that we're designing. you know, we'll make it a best college try. we believe we could do it. >> the market will tell us.

i like phones, but i'm not emotional about it. you know i think this is a business. we think we can make money on the phone. we have done a lot of things not only about the design, but everything we talk about with manufacturing. arrangements to components to everything included. we're looking, breaking down everything about the costs in the phone business. >> how to turn a profit and grow on top of that. first step first, we have a couple of new phones coming out towards the end of the calendar year and we'll see. we're bullish on it. >> jon, is there one particular industry where bez 12 is seeing the mote success right now? >> health care and financials. both have seen a lot of great customer. i name them, i name a number of them on my call with their permission, obviously. >> all right. thanks so much. john chen, financials of course, a blackberry stronghold

traditionally, it will be interesting to see how much you can win them back. thanks for joining us, john chen. and our series of great guests from cannes continues tomorrow joining us tomorrow, facebook's marketing chief, carolyn everson, google's marketing vp torrence boone and wpp's ceo sorrel. and chris sacca watching our interview with twitter's adam bain. he tweeted, adam bain just went on cnbc and told the twitter story with clarity and energy, the stock rallied, who would have ever imagined. twitter's stock flat when the interview began. now trading up better than 1%. best day in a few days. >> very interesting to hear what adam bain had to say about what they're showing advertisers over there in cannes and what the response is for it.

he seems confident in their pipeline of the different products they hope to role out the rest of the year. >> a lot of good insight. both from this set and from cannes and kayla. over to headquarters, scott wopner and the half. welcome to the halftime show. let's meet the starting lineup. jim lebenthal is here with stephanie link and jon and pete najarian and our guest, paul richards of ubs, the head of fx rates and credit distribution. our game plan looks like this. spieth speaks. the u.s. open champ is live on his dramatic win and how he is scoring big off the course. ready for takeoff? can airline stocks resume their run? one analyst says two names can fly even higher. which is why we've made it our call of the day. stocks have been moving around today. trying to make sense of some mixed economic