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"squawk alley," kayla tausche is in london. joining us this morning, our super panel, former daily male ceo, john steinberg and indy go go co founder. first, you want to wait for apple's top lawyer in its case against the government joins us live later on this hour. don't miss it. first up, the oracle of omaha, warren buffett joining "squawk" earlier this morning, had a lot to say about a lot of stocks, namely ibm. take a listen. >> i don't think so, but it could be. i mean, we -- we've owned stocks we lost money in. and sometimes when stocks go down, we're wrong and we sell them. and sometimes we think we're right and we buy more. and sometimes it turns out we are. a stock going down is a good thing, unless the company itself is losing value. and sometimes that's the case and sometimes it isn't. i don't think it's the case with ibm. but i could be wrong. >> all right. so we've talked about this a couple times this morning, guys. but john, i'll start with you. is he looking past some of the

shorter-term concerns for this company, because he is so long-term focused? i'm not sure he's wrong and i know that's weird to say, given how much -- ibm takes, including on this program, their services modeled turned out to be a bad long-term bet as they have run into cloud. a number of issues, software, their core, their profit center, is losing momentum. but it's not as if this is completely unfixable. it's not clear to me whether they are going to be able to fix it. but if they are, then, yes, the stock could rebound and surprise everybody. >> if ibm goes up it will be because warren buffett is lucky, not because he understands the company. when he talks about watson, it's pretty clear he doesn't actually know what watson is. he says, oh, watson is learning with geico. i mean, it was a bit like listening to my mother explain watson and ibm, right? so i don't think he understands technology. this is not see's candy or coca-cola. the stock is going to decline in terms of top line sales. totally unclear whether it growth back in '18.

>> i agree this is not a sweet spot for buffett in terms of being a tech company not like coke or gillette. there is an opportunity here. seems like there might be a bottom for the first time in five years, they're projecting their revenue will be flattening out as opposed to declining. they have already lost over 20% of their value from their stock for the last few years. and watson and the other initiatives are showing a little bit of growth. keep in mind, those are small initiatives, but if they can start growing and instead of defending the proprietary information, build on the fact they have partnerships with j & j building and doing these acquisitions, opening up their protocols. by 2020, you're going to see huge growth rates in medical analytics as opposed to core business, a 2 to 3% grower, but they're declining. so i see potential for 18, 24 months, they're going to be a big argument this watson area should be spun off. should this be separated things which would be challenging because then you have the cash cow, which is actually feeding the investment area. what happens then? >> but to your point, john.

i mean, whether it's ibm and the cloud or coke and noncarbonated drinks or amx and stripe, or all these other old line businesses, we keep coming back to this theme on buffett. is he understandable the new trend. >> that's the point. he understands these old line businesses like everybody is going to eat a burger, drink a coca-cola. that's not like this. if you look at this company, right now, it's trading at just under ten times revenue. ten times earnings. cisco, 11.5. oracle, 14 times. microsoft 18.5 times. these are all companies that are basically down to flat, to slightly up top line growth. so they are decent comps. if ibm had something interesting going on, if watson actually made sense to anybody, there is an argument for multiple expansion. i don't think i see that. i've never heard anyone tell me what watson actually does for their company. >> yeah, watson is out of business. they keep trying to market it, but it hasn't shown up and ibm has way too many people. massive cuts, probably necessary at that company. if it's going to get right in front of the cloud era. haven't seen that yet. >> and when you hear buffett

talk about mcdonald's, he says the question is over five years, are they making a -- people want to eat. these companies are not like that. you need a continual thread of innovation that drives growth and ibm he thinks works its way out. >> well said. next up, some new money on the way for spotify. that kayla is in london and has that story. hey, kayla. >> hey, carl. as we reported for you a couple weeks ago, spotify had had planned and is still planning to sell 500 million euros and dollars in convertible bonds on either side of the atlantic. the company is also now in negotiations with private equity firm for an entirely 500 million euro for $550 million investment. the exact terms of the deal unclear. i'm told they are similar to the convertible, which is still being raised. that deal pays interest around 3 to 4% and offers a 17.5% discount to the ipo price if the ipo happens this year. the discount goes up, the longer that spotify takes to go public.

most interesting about the convertible, it keeps the valuation the same, which is about $8 billion premoney. and because it converts at ipo, its equity value will be determined then. unlike pure equity the companies raise, which is quite annoying. it has to be recalculated every single time money is raised, it goes up, it goes down. and that can be frustrating for companies as we have seen. bankers have told me, we will likely see a lot more of these types of deals for high-profile household name unicorns. of course we know tpg has investments in air b & b and uber. this is good for a lot of investors and that's why we could see more dales deals like this. they get a high coupon and discount to the ipo price and companies get cash when they need it and don't have to reset their valuation, carl, which so many companies have had to do. >> i love your take on this one, knowing what we know about spotify and the way they have been healthily funded with a lot

of money. >> yeah, mine, clearly they need more money since they're giving a 17.5% discount on the ipo price. the fact they're able to get this money is a good sign, especially since the vc markets have tightened up since q4. i am concerned about the overall market, considering that the public markets when companies have gone public has been really tough for some of these recent tech companies. and then also the tightening evaluations. i mean, if i was spotify, i would grab on to money. it seems the shift is going more towards the investors as opposed to companies getting the deals they want. >> that brings us to microsoft founder -- co funder, bill gates, who did weigh in on valuations in it an interview with the ft. he says there is some sorting out taking place it should never be a case of closing your eyes and saying, oh, it's a tech company, throw money at it. that strategy worked for two years. now you actually have to open your eyes and look at the company. this should not be difficult to grasp, john. >> no. and i think now for me to say something nice with warren buffett. he put in his letter 2% growth

in the u.s. is not so bad. that effectively gets you to 34% growth in gdp over the course of a generation. what we're seeing now is a lot of people looked at 2% annual growth and said we will pay anything for growth at any cost, which led to very inflated valuations in the private market. now i think we are seeing kind of a normalizing or sanity check where people say, these high-growth businesses that inevitably we pay up for and miss our expectations or don't have the profitability to them, we're less excited. and this kind of spotify desperation convertible note round, which you do when you're a small company and don't know what your value is because the public market doesn't want the company now. >> this looks like a good sign we're getting a soft landing in this tech cycle to me. when you look at what we went through a few weeks ago, with linkedin, we've had a number of other small cap techs down big. you're getting more of this talk down. this isn't like a bubble bursting where people are panicking and office furniture is out on the street in silicon

valley at penses on the dollar. a number of companies have come way down, but it hasn't cratered the entire tech market. >> and explains why sentiment is good. in some cases getting better. >> yeah. i mean, like you say, it's a soft landing. i would say spotify should take the money and run. we don't exactly where this is going to continue to shake out. definitely in silicon valley and around the world, i think the vc laurie segall are really tightening up in terms of valuations. the only valuation around maybe is still somewhat normal is the a round, the first institutional money, a little leverage. but when these late rounds and early angel rounds have been super lofty, and i think we're going to see more of these down rounds. there was an organization that was talked about a couple weeks ago about the down rounds. i think that number will continue to go up through q2 in terms of the number of down rounds. >> and i like john's use of the term soft landing and the chart

we had there that showed the unicorns recently gone public trading down 25 to 50%. that's effectively what we're seeing in the private markets. these were unbelievably multibillion dollar companies, so on and so forth. that's by no means the cataclysm we saw. the other point i would make on what slava was saying, the a and b rounds, no issues right now. i'm still seeing high-quality companies that are multiapproximately dollar companies, $20 million companies that have fundamental businesses getting funded. it's the class of companies effectively public companies that should have already been public companies that we're just seeing trade down. >> kayla, the last word on this one. are we all whistling past the graveyard here? >> no, not necessarily. i think that there is a softening in valuations you can't deny. and there is a sense that investors are starting to do more homework. they're starting to be stricter about the companies they're investing in. but i think what's interesting about this spotify deal specifically is that the company

is incentivized to go public in the next year. when uber did its convertible debt round a couple years ago, it has terms that don't get worse until 2019. so if you were to look at that, you would say that uber has several years to go public, but spotify is a company, obviously thinks that being public is in its future, and in the near future, it just needs the cash to get there. and i wonder how many companies will need that cash to cross the finish line and what it means for public market investors once they get there. >> yeah, absolutely. kayla, thanks. finally today, hash tag oscars. still trending on twitter. chris rock probably the highlight for most people watching last night. take a listen. >> i'm here at the academy awards. otherwise known as the white people's choice awards. you realize, if they nominated hosts, i wouldn't even get this job! so y'all be watching neil

patrick harris right now. >> early ratings not looking great. nielson's estimates hit about a seven-year low. down double digits from the last time rock hosted the show. >> yeah. >> thoughts, john? >> i enjoyed moments. it was not great tv. but i think it was a really important cultural moment. he cracked a joke about black people's grandmotherses swinging from trees as being a reason there wasn't this same protest years ago. when have we seen that during this kind of a telecast? that said, i thought the jokes about asians fell flat. it showed to me that american comments still have -- comics still have not figured out how to do smart cultural commentary about asian-americans. i was disappointed. >> yeah, and just on the whole twitter trending thing. twitter is usually you win at events or twitter wins at events like this. and last night i was following most of the conversation. but it does seem like with the comments mark zuckerberg made about facebook live video being

the most focus, they want to take even this away from twitter now, owning these live events. i think the next time we have one of these events, it will be interesting to see how aggressively facebook goes after. and carl, to your point, a lot of people were watching, not on television, the live facebook feed from the black carpet, red carpet, watching from the periscope. >> we're going to make the carpet black the day after. nice. >> slava, to john's point about facebook, stealing the mantle of real-time, right? trying to take periscope's candy to some degree now. is that going to work? >> video is definitely where things are going, and live video the next step. facebook has shown a really great opportunity to take video, competing that with youtube and getting all that content. at some point they were pushing video first but now going back to content. i do think that the live video is an opportunity for facebook. and, you know, i think that the oscars is a discretion where there wasn't a huge movie.

usually relies on a huge movie to drive the participation. between that and also the buy fur occasion i guess that's why oscars had a tough nielson ratings. >> not always about the coast. thanks for joining us today. >> we do want to check on the markets right now. the major averages are just slightly positive. the dow up about .14%. the s&p also up slightly. nasdaq doing a little better. russell up better than all three of those interestingly about a half percent. this comes amid a decent day for the price of oil. crude up about 2%, carl. >> all right. when we come back, behind apple's strategy in its fight against the federal government. their top lawyer is going to join us in a first on cnbc interview. speaking of apple, buffett also weighing in on the company's privacy fight. what he had to say. and tech stocks having a rough start to '16, and janice thinks

it's a good buying opportunity and will give us some names in just a moment. don't go away. out on the town or in for the night, at&t helps keep everyone connected. right now at at&t, buy one get one free on our most popular smartphones. no matter how you hang out, share every minute of it. buy one get one free on our most popular smartphones. and right now, get up to $650 in credits per line to help you switch to at&t.

this morning on cnbc, warren buffett weighed in on apple's fight against the government. he was asked what he would do if put in a similar situation to apple. here's his response. >> there's something major, something that the attorney general or the head of the fbi would be willing to sign and go

to a judge on and say, we need this information and we need it now, i would be willing to trust that official to behave in a proper manner. >> carl, warren buffett, of course, just a titan in the world of business. when he talks about this, it drives home even more to me the fact that apple is still kind of behind the 8-ball on this story, trying to explain how software is different than handing over the keys to your house or car. trying to explain why the precedent is something that they're concerned about. i wonder if tim cook can get ahead of this at this point. >> well, for a company that has historically been stingy with media, right, and access, they're rolling it out. because i feel like there aren't too many choices. it's a complex nuanced argument to make, as cara swisher has said in the past. and that is going to require explanation over and over again in some cases. >> indeed. we'll be talking about it a lot.

a great interview, apple's lawyer in its case against the government will join us in a first on cnbc interview later on this hour. and up next, some life in the tech sector, still down more than 5% to start the year. one top investor still bullish on tech for the rest of 2016 tells us why when we come right back.

there have been recent signs of life, but 2016 has proven to be rough for the tech sector. heavy weights alphabet and apple down 7% for the year. our next guest whose top portfolio include both companies says he's bullish for the rest of 2016 in tech. joining us now, rad slingerland, portfolio member of janice. thanks for being with us. >> thanks for having me. >> so i want to ask you, your optimism, where is it rooted? because yes, we're in this cloud transition, but at the same

time, we have seen some software as a service names, sales force included. really hit hard thus far this year. do you expect consolidation to sort of benefit these companies? do you think something else is going to happen to really trigger an upswing in those stocks? >> well, it's a great question. my optimism is really rooted in the valuation pullback. so coming into the end of last year and the beginning of this year, many stocks had good fundamentals, but were trading at very high valuations that were sort of prepricing in the growth for the next couple years. we have seen a very dramatic pullback, though, anywhere from, you know, 15 to 20% in the low end up to 40% or more for some of the smaller software as a service and cloud software companies. when you match up the fundamentals with this great valuation opportunity, that's what makes me so optimistic. i haven't really seen valuations line up with fundamentals like this since the 2008/2009

housing-led recession and before that, going back to the dot-com bursting. we're talking about a once in every five, six, seven-year opportunity here. >> huh. well, given what you just said, and looking at the top holdings of alphabet, apple, facebook, microsoft adobe, which is the most compelling buy? >> well, i think we're seeing a lot of interesting opportunities in the software as a service and cloud space. so you mentioned adobe, which is certainly a benefit there. google and facebook tend to be more on the consumer internet and the shift in ad dollars moving from television to online. moving down the list, we see great opportunities in companies like salesforce.com, service now, workday, ultimate software, a provider of payroll based solutions and many more opportunities today. >> brad, i would love to get your thoughts on the ipo market. there are some companies, despite the lack of ipos, a lot of companies looking at the ipo

as their eventual exit. we have seen how much valuations have come down and i'm wondering if you think companies going public from here on out, are they going to be so conservative with their valuation it makes it a good buy or do you think the market will continue to punish those types of stocks? >> well, we're hoping to see a lot more ipos come, and we're encouraging entrepreneurs at the private companies that we meet with regularly as part of our research to approach the public market sooner rather than later. i think there's been some bad advice simply that's been given out in silicon valley, mostly by venture capitalists which has scared companies from the markets. the reality is the liquidity in the public markets is much better than the private markets. we have seen that liquidity decline, particularly for late-stage opportunities in the private markets, and if you're still private, and you need capital, to fund your growth, you may face an extension threat when you're private. in the public markets, you might face some dilution when you need

to raise capital, but you will have that liquidity there for the employees. so we're hoping to see the ipo market open back up. we think right now we're seeing a lot of fear from growth investors. which is why some of these stocks have pulled back so much, including recent ipos. but i think if we look at the long-term and we look at the opportunity, we should see some ipos come soon. >> brad, along those lines, you mentioned workday, which i think is fascinating. a few weeks ago, it dipped under 50 bucks. today it's trading just over 60. the c can eo is going to be on with jim cramer on "mad money" tonight. what's going on with a stock like that which is so volatile you think it's a good buy -- despite the fact it's all over the place. it's hard to know why investors are reacting the way they are to workday. >> yeah. you know, it's a company that's been around for ten years or more. they are focused on the cloud-based erp software, competing against oracle and s.a.p. it's a much better mouse trap,

the business is very sticky. when they want a customer, it tends to be for a very long time, a decade or more. it makes sense to spin now to do that. a lot of ajaysencees they can go into are branching out into financials. and other opportunities down the road. so we think it's a great opportunity, because of that volatility the stocks come in, well more than 50% off its highs a couple years ago. meanwhile, the company continues to grow 30 to 40% or more per year. so the valuation has come in from, you know -- by almost 70%. even if the stocks come in by less than that. >> all right. some optimism on a monday morning. brad singerland from janice capital, thank you so much. >> thank you. when we come back, a first on cnbc interview you do not want to miss. apple's lawyer in its case against the government will join us in just a minute. dow is up 43.

hello, everyone. i'm sue herrera, and here is your cnbc news update it at this hour. countries backing the syrian peace process meeting in geneva. the french demanding information about attacks in breach of a cease-fire that went into effect saturday. the saudis claim that cease-fire was broken 15 times by the syrian government. an american student detained in north korea was presented to the media. it's the first time he has been seen since his arrest on january

22nd. north korea claimed the university of virginia student had perpetrated a hostile act against it. he has apologized for the alleged crime. meantime, workers continue to dismantle structures in the make shift migrant camp. the french are dell monthlyishimonthlyis monthlyishing the camp last week. a religious festival in southern india went very much awry when an elephant went on a rampage, smashing vehicles in its path, overturned that particular vehicle. the elephant was taking part in a holy ritual when it broke loose and started fleeing motorbikes, rickshaws, cars. it took several hours to get the animal under control. no one was injured, which is surprising, given the people who are sitting on that elephant at this particular time. they are very lucky indeed. that is the cnbc news update this hour. let's get back to "squawk alley." carl, down to you. >> thank you very much, sue

herrera. let's get to simon hobbs in europe's first trading session of the week. >> yep, absolutely. it's a relatively quiet session, this is the last of the month. the big news out of europe, the eurozone, a february print of minus.2. that's because oil and energy, it's falling. the price component down 8% year on year. the major concern is when you strip out energy, you've got a core rate, energy, alcohol, tobacco. you've got a core rate that's actually moving in a negative direction. it's gone from 20.7%. so it's 30 basis points lower. that is a concern for the ecb, feeds into this whole focus of the markets as to what the ecb will do march 10th. another reason why they continue to move into the bond market. yields move lower. this is where we are. we're now at 10.7 basis points. you remember the all-time low we have back in april with 7.9 on a

closing basis. so we're going back down to there. obviously, the people are so concerned about what the ecb might be do. in this instance, not boosting the equity market. let's look where we traded through february on the stock 600. and you'll see here the s&p has cut its losses. you're still losing momentum on the equity market in europe. a lot of that has to do with whether they're going to go further into negative rates and what the effect of that would be on the banks. into this, you also have potentially importantly the guy that used to run the bank of england in the u.k., which is not part of the eurozone notably, suggesting, predicting that the eurozone will collapse. in the new book that he has out. he has been a long-time skeptic. we kind of knew that. now he's saying the debt levels are so big and the lack of transfers to the rich and poor within the eurozone means its days are numbered. he'll be doing a book round which will generate some froth and feeding into ecb news

conferences. one story i wanted to make you aware of, amazon has done a deal with the third largest supermarket chain in the uk to boost offerings online. it's done a deal with morrison's up 5.6%. supermarkets in the u.k. are horribly competitive, as we have covered before. others, this is an online player, tesco, one of the bigger supermarket chains in negative territory. morrison's will supply fresh goods to amazon. guys, back to you. >> simon hobbs. the ongoing battle between apple and the fbi will heat up again tomorrow as the house judiciary committee is set to hold a hearing on encrypted devices. in a first on cnbc interviews, we're joined by apple's attorney ted boutros, and josh. josh, take it away. >> ted, thank you for joining us this morning. >> thank you for having me. it's good to be with you. >> so ted, the government's

argument here is, listen, we're simply asking apple for help with a single phone in a single case. is that accurate, ted? >> that is not accurate. they say just this one time, just this phone. but first, you have prosecutors state and local prosecutors lining up. sy vance, the district attorney in new york says he has 175 phones. he absolutely believes apple should be required to assist and create software and create a back door that would allow new york to access those phones. you also have the fact that the federal government is going -- has got ten other matters pending against apple alone. so it's just wrong to say that. and i'll add one more point. the director of the fbi, james comey, has said this is one of the hardest issues he's ever faced in government. and it's a broad policy question. it's not one legal case. it's just not appropriate to deal with this through an action

in court. this is a political and policy question that congress is going to have to face. >> and ted, at the heart of this case is the all ritz act, this centuries' old law that has been used to compel companies to assist the government. but you argue that the government's interpretation of the all ritz overreaches and goes too far. can you walk us through that position, ted? >> i can, josh. it's a very important point. the all ritz act was first enacted in 1789. so the -- no one was thinking about using it to compel a company like apple to write software in order to allow the government to hack into a device like the iphone. so it's really an outmoded statute. but it's only meant to allow courts to basically fill in the gaps of the authority they already have. it's not meant to allow the courts at the government's request to recognize a whole new power.

and the government in this case has said, we've done this before. we've used the statute before in this way. it's just not true. normally, the all ritz act has been used to allow courts to compel production and supply of information that already exists to the government. here the government is asking the court to compel apple to write new software that would -- has never existed that apple thinks is dangerous to have exist, because it would then be subject to hackers, criminals, terrorists and theft by them and misuse by them, which threatens the security of hundreds of millions of people around the globe. and so to use this statute for those purposes would be improper, would violate the separation of powers. it would have the court resolving this policy question about encryption that is raging across the country. that's something for congress, not for the courts to do -- using the all ritz act. >> ted, it's jon fortt here in new york. dig into this argument, if you

will, about it being dangerous to have this software exist. because a lot of people have said, well, just create the software, keep it in cupertino, let apple be the only ones with access to it. is apple concerned that the people who create the software, it's still in their minds, and they could recreate it somewhere else if compelled to? are they concerned their own systems could be hacked or might already be infiltrated, say, by foreign governments? what -- why is this so dangerous? >> well, our engineer laid out in his affidavit and the court filing we made last week, software and code is persistent. it's not going to go away, even if apple were to destroy it after the fbi had access to this iphone. and the other thing is that other governments, state, local, foreign governments, are going to come back and say, do it again. and so it's not going to

disappear. you can't make this software go away. and as you all know, data is under assault. criminals, terrorists, hackers, are trying to break into everyone's data. the federal government can't keep control of its own data. so there are all sorts of risks. it's -- tim cook has noted this would be like creating a master key that could then be either recreated or pulled off the shelf and used over and over again. and every time that happens, it's going to create a risk, a security risk. and so the government is trying to portray this as national security and law enforcement against other interests, but they overlook the security interests of citizens, their data. so we do think this is a very significant risk. and that we're better off protecting data and not creating this tool, which we think would be dangerous to everyone. >> ted, you mentioned the foreign government element of all of this. how much of the legal calculus

at the company is aimed at preventing a snowballing effect once this moves to the u.k. once this moves to china and other parts of the world? >> it really is an important point. again, the government says just do it this one time. just this one phone. but you know that the governments around the world will say, if you can do it in the u.s., where the protections of privacy and individual rights are really at their zenith, we have the strongest protections anywhere in the world of civil liberties. and if apple were willing to do this in this one -- this particular case, every other country is going to say, well then you have to do it for us. you have to create or let us use that software that you've created to access the data of citizens in our country. so that is a very serious concern. and, again, i think it's inaccurate for the director comey and others to say this is a one-time shot. they know that prosecutors are lining up here in the united states, and around the world.

so it's a very serious concern, carl. >> and ted, we have seen a lot of big tech companies now supporting apple, right? so microsoft, facebook, google. why is that kind of support from big tech important in this case, and do you expect other tech companies to rally to your side, as well? >> it's very important. i think, one, it goes to this point that isn't just one episo episode. that it's not just this one event. this request by the government, the order that they're seeking, has widespread global repercussions for tech companies and other companies around the world. so it's very important. i think it demonstrates that fact. we're very pleased that we're going to have a strong showing from an array of companies, civil liberties groups, others this week who will file briefs in court, supporting apple's position and saying you can't go

down this road. we have competing interests here. the interest in protecting the security of the data of millions of citizens is an extremely important interest, and i think that it will be important for the court to hear those voices, to hear from other companies can, civil libertarians, media organizations, and others saying this is a fundamental principle. it's part of our democracy, it's part of our system. we have to protect that interest, those interests, security, privacy of citizens, even in a difficult situation like this. and to the extent there are going to be changes and that the law is going to be changed to give courts the sweeping power, that's something that congress needs to consider, and there's going to be a hearing tomorrow, as you noted at the outset. >> and i want to touch on that point, ted. are you suggesting that these issues here are just so big, so complex and critical, that it shouldn't be handled by judges

that congress does, in your opinion, need to have a more active role? >> absolutely. and related to the all ritz act point you asked me about, josh, the separation of powers doctrine, which is really important here, says that courts are to decide cases and under the law, and under the powers that congress gives them. courts are not supposed to basically create new law. what the government is asking the court to do is to essentially amend the existing statutes, to give the government more authority to persuade courts to require that the companies basically do new software, write new software, to decrypt their own -- allow the government to decrypt their products. that would be a significant change in the law, and that's something congress needs to look at. we think that congress, when it does look at it, will say that authority shouldn't be granted. but that's something that

congress needs to look at, and deal with it through the legislative process, not the judicial process. >> in that judicial process, though, ted, you know, a bill date to circle is march 22nd. when you'll be back in court in riverside, california. what should we expect that day? >> it's going to be a very important day. we'll be before the magistrate judge, and both sides will have the opportunity to lay out their arguments, and talk about the evidence and talk about the law here, and we obviously will argue that the law does not extend this far. there is the fact that the courts are not allowed to order individuals to speak. this is a form of compelled speech, writing code is a form of speech. and here the arguments will be laid out by the government as to why they think they need to access this information and why they think the government has the power to do this. and we're going to argue that

the court simply does not have that authority, and that it would be dangerous to go down this road. >> ted -- >> i'm sorry, go ahead, john. >> do you expect this to go to the supreme court? does it need to reach that level because of the lack of precedent in so many of these areas that we're talking about here, the fact that software has become such a prominent feature in american life, and these issues of data security have taken on global import? >> these are big issues. and the supreme court has looked at issues similar to this. and has recognized in a recent case that the government cited, actually, that it's inaccurate to just think of these as phones. these devices. the iphone. because it has every detail of a person's life. it's who you are is on the phone. and the supreme court has shown a great sensitivity to protecting the privacy rights of citizens. and that cuts across the

ideological spectrum, too. so i think these issues could well under up in the supreme court. from our perspective, we're in the ninth circuit court of appeals, which has very strong case authority that supports our position, both in terms of the reach of the all ritz act or the lack of reach. and it's very protective of civil liberties. so we feel that the courts are going to be log looking at these issues, and we're creating a record in this case that will put us in good position if the case moves forward and the government keeps pressing these issues. >> ted, a lot of people still ask, you know, technology always evolves. why can't law enforcement's ability to leverage it also evolve? in other words, you can't have wiretaps until the telephone came along. why can't we have the kind of code the government wants now that, in fact, encryption has become so pervasive? >> well, that is really the issue, i think, that the congress will need to address. and you're right, that as

technology develops, congress amends statutes, enacts statutes to adjust to these issues that arise through evolving technology. that's true. but i want to make one point clear. apple has cooperated and supports law enforcement efforts under the current law. in this case, in the san bernardino case, the company worked very hard to respond to the government's request under the law. so there's no question that companies like apple have an obligation to help law enforcement when it's required under the law. but here this is really extraordinary. the government wants the authority to require the company to create a degraded version of its own product. that is something it shouldn't be permitted. but those are the kind of issues in terms of the intersection of technology, civil liberties, law enforcement, that needs to be looked at by lawmakers. it's just not an issue for a

court to decide in one particular case, which could have significant ramifications for all citizens everywhere. >> and final question, ted. i want to give you the chance to address this argument. i've heard some argue that, listen, ultimately, what the government is asking for is a lot like when the government asks for e-mails or for phone records from a company like at&t. is that a fair comparison, ted? >> that really goes to the heart of the problem with the government's argument. it's not a fair comparison. apple produced information like that to the government in this very matter. and so what the leap forward that's being taken here is the government is asking the court to order the company to write new software that would allow the government then to create basically a different iphone so it can hack into the iphone. that is -- it's light years away from the kind of authority that

normally is exercised by courts and the kind of requests the government makes. so that's why it's completely unfair to suggest, well, this happens all of the time. it's never happened before. it is an extraordinary request. and it would have an impact on the security and privacy of every person who has an iphone or other device. and so that's why we think this is such an important issue, and everyone needs to know the full story. >> well, ted, thank you so much for your time this morning, sir. we do appreciate it. >> thanks so much for having me. >> thanks to you, as well. >> back to you guys in new york. >> thank you, josh. and on to a different sort of legal issue. the next step in the lawsuit against red stone by his girlfriend, starting moments ago. our julia boorstin is at the courthouse. julia. >> that's right. a hearing is going on right now in this case against redstone. redstone's lawyers have asked for a judge to dismiss the case, and a tentative ruling on this

to dismiss was handed out to reporters before it began. it stated the court denies the motion to dismiss without prejudice and to strike supplemental declarations. it says the courtin tends to now schedule a prompt trial after conferring with counsel as to what further discovery may be taken to prepare for trial. this was a tentative ruling. we're going to be monitoring to see if anything more happens in this hearing going on right now. but if this court -- if this case goes ahead in court as it now sounds like it may very well go forward, then we would expect phillipe doman, ceo and also redstone to be deposed. so certainly, a very interesting case to watch. we have been seeing both sides, manuela herzer and ex girl friend, filing various things back and forth since the case was first introduced last fall. over to you. >> quite a case. thank you, julia. coming up, governor chris

christie shocking many after throwing his support behind donald trump. that's upsetting many christie supporters, including hp's meg whitman. what she said, when we come back.

coming up, "shark tank" vest for kevin o'leary joins us. and is corporate america afraid of donald trump? and what should investors think? plus, mooring is back as

high divdeny players are out. and warren buffett sticks with the banks. should you follow his lead? john, we'll see you in five minutes. >> sounds good. looking forward to it. our next guest has said the first year at his company was bigger than fit bit, go pro and drop cams. and app powered security camera. it's required several rounds of funding and partnered with verizon and state farm. adam sager is co founder and ceo ofcanary. good to see you again. >> thanks for having me again. >> so a lot of these companies you're mentioning, particularly fit bit and go pro are under a lot of pressure these days, not living up to the growth expectations. is there a particular reason why you think your company is different, going to have a different trajectory? >> we are a software-first company. so most of our team are software engineers. we build a subscription model that connects people to your home.

and what the hardware is, it's important for us. we have former apple, motorola engineers building the hardware for us on our team. that's absolutely critical to get into homes around the world. the software experience, user experience, is first and foremost what our company is about. >> is it -- you're highly leveraged to new household creation? what are some of the macro wins you have to serve? >> you know, a lot of it is lifestyle. so we're seeing when people get married, when they move into a new home or new apartment and think about security for first time, it's a real personal need. it's like that'so's hierarchy of need. people are always thinking about security and that drives them to look for a solution. in the past, solutions like adt which hasn't been effective for most people. >> do you need to get beyond the camera that sits inside the house? nowler doorbell cameras, et cetera, to really make this software message and service message work to get beyond that device soon? >> the old way of thinking about security, let's put sensors everywhere around the home, the doors, the windows, et cetera. and really, what we're about is

information. so you want to know who is in your home, that is supposed to be in your home. are the bad guys out of your home. and if someone is there, how do you know about it and what do you do about it. so that transfer of information to you and from yourself to the world. so the police or neighbor or spouse. that's what we build. and it's the most critical part of security. >> security is something that everybody cares about. we have been talking about it. >> yes. >> a lot. >> yeah. >> adam sager, co founder and ceo ofcanary, thanks. when we come back, harsh worst for donald trump and meg whitman. was engineered... ...to help sense danger before you do. because when you live to innovate, you innovate to live.

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ahead of tomorrow's super tuesday primaries, hp enterprise ceo meg whitman blasting chris christie for endorsing donald trump. she had been a national finance co chair of christie's presidential campaign. she writes, chris christie's campaign of donald trump is an astonishing display of political opportunism. donald trump is unfit to be president. he is a dishonest demagog who plays to our worst fears. trump would take america on a dangerous journey. a conversation that's going to continue as we head into a big day tomorrow, politically speaking. >> yes, indeed.

meg whitman also ran a self-funded campaign for california governor, some people might remember. different message for donald trump, though. >> we'll talk to her later in the week. in the meantime, let's get back to headquarters. scott wapner and the half. carl, thanks so much. welcome to "the halftime show" with super tuesday less than 24 hours away. today's top trade is what a trump-clinton race for the white house would mean to your money. with us for the hour today, joe terranova, pete najarian and "shark tank's" kevin o'leary. tomorrow's results could all but seal the deal for the donald and his democratic counterpart. which is best for the markets? that debate begins now. kevin o'leary. >> first of all, i'm agnostic to party. i'm going to make a statement that i have believed since the beginning of this whole campaign started for both parties. the old crusty brands aren't going to work. bush brand, gone. clinn