squawk alley, and we are live. ♪ ♪ the only thing i will ask of you ♪ ♪ you have to promise not to stop when i say when ♪ ♪ she says welcome to the "squawk alley" for friday and joining me as always is jon fortt and kayla tausche, and kara fisher as well. good porning to you. and goldman is saying that facebook is the most important stock for hedge fund, and 113 funds are long fb and shares are up 45% in the past year. a far cry are from that ipo that

we were talking about the four-year anniversarile earlier in the week, kara? >> yes, that is a disaster, and remember that? that seems so long ago. yes, it feels like most people in silicon valley agree, it is the most powerful company, and cohesive management, and doing ip novations, and fascinating m&a, and hitting on all cylinders except for the recent conservative backlash from the trending area, but from the stockholders point of view and investors they couldn't be happie happier. >> and kara, this is ap al year ago. >> yes, it could. absolutely. this is a little different business, because that is a hardware business really, and it depends on the latest hot topic, and people are vested into facebook, and they have their lives there, and the facebook live video is pop ular ashs son ta have to keep innovating like other company, and cnbc and like anybody else, you have to keep

innovating to be relevant to the consumer, and so far so good for the consumer. we will see if they supplant it with the latest trends, but they are trends like v.r. and other things. >> and kara with the week of diplomacy, you have are tim cook out of china, and india nashgs and mark zuckerberg working with the leaders after the the dust-up, and did we learn anything about mark zuckerberg that sheds light on what we expect with the hedge funds being in the company, and perhaps a control company, and the hedge funds will have less of an impact, but is this a chief executive and co-founder who is more prepared than typically to handle that kind of pressure from the market? >> well, i think that he doesn't have to, right? because of the way that the stock is, obviously, but he is a measured person. i spent some time with him recently, and he is more mature

than ever. it is an interesting growth for the ceo of anybody i have seen in silicon valley. you know, i think that this meetings with the conservative groups was a little bit of the show just to assure them that, you know, they react quickly when people have problems with them. he is down the middle. you know, he is not going to be doing something like tim cook did with the federal government, and you won't see something like that from mark zuckerberg and maybe he is too young or careful and considered, but i like what tim cook has done at apple in terms of opposinging the government on encryption, and other issues, but he is a well behaved ceo, and so he is very aware of the public perception. >> i will tell you that sometimes the people will tweet his first appearance on cnbc, and i think it is '05 where he was on with dylan ratigan talking about this thing that he had facebook, and the evolution of him along with his company over a decade, and you are saying that you have not seen anything like that in tech? >> no, he is a learning organism. that is what i call him. he has improved himself where he had problems of peeking, and

improved that, and problems of seeming, and it is not young, really, but it is seeming kind of, you know, he is just changing himself, and he is growing into the role. we had a back and forth about that photo in china, and he had a good explanation for it, but when he was running through tiananmen square, and all of the ceos, he has evolved, and a lot don't or they get stranger, and he is less strange, i guess. i am thinking larry page or something like that, and i mean, they have gotten more unusual and i should not say strange, but unusual, unique. >> we know what you mean. quirky for sure. >> and yahoo shares are falling in the journal after verizon and others are expecting to bid around 2 to $3 billion for the core business which is less than expected, but our david faber say it is not to be and the bids should be in the higherer range, and so it centers around which round of bidding and what do you

take? >> second. i think that david fab ser an excellent reporter and he is 100% right. they won't go that low. and i'm not a bull on yahoo and even i think that is insane. they won't sell at that price first of all, and why would t y they? it would make no sense. >> and one of david's conspiracy theories this morning is that maybe it is a verizon leak to get the shares to fall so they could pay less than they had previously planned to, but they did pay $4.5 billion for aol, so it is not like they are in the business of getting deals. >> that is not tim armstrong's m.o., and he is straight forward and he does not play games. you can imagine that we talk to all of the bidders, and i don't see that he would whisper that to the journal, and that is not his manner in any way. and it is probably, you know, one of the issues is that i have been hearing 3.5 to 4.0 for the core when you minus out the patent and real estate. so is you can add a billion or

so in for those, and it is closer to five and so david is spot on with the inclusion of the patents and the real estate between 4 and 5 you can see that, but below that, the company won't sell. i don't think that jeff smith will sell. they won't, and they will move ahead and do something else. they are not certainly selling at, you know, they are not going to be selling at the bargain basement prices even if the business is totally troubled, and it is, so i don't see it. >> okay. the apple store is getting a makeover, and the vp erin an dress calling it a new makeover, and they are saying things about this, ra, regarding the public space, and the free wi-fi and is this a canary in terms of what they have in mind for the future? >> well, i don't know. i think that they had to re-do the stores. i go into the apple stores at lot, and they feel dated at this

point, even thought at the time they opened they were super fantastic, and in great public spaces, and they are not going off that much, but sut a slightly updated version it seems to me. they already have free wi-fi and people hang out there, and use their computers, and they are making it a more comfortable space, i think so that people can make the apple store what it already is which is a gathering spot for people. maybe it will spur them to buy more. but i think that there is -- it looks good. it is a handsome-looking store. >> and it does strike me that when the apple stores first opened, and we remember that, and it is about the mac as a digital 00 and the ipod had not come out yet, and it is about growing hardware sales and inspiring people to switch, and is the purpose of the store different now? first of all, the whole fight with san francisco over the exterior of the store and what it is for and how welcoming it would be and they have figured that out, but now does it need to be more about the service, and getting people more engaged

in the ecosystem so they end up paying more for services on top of the hardware they have already bought? >> well, it is already about that. i go in there and i don't go in there to buy as much as i do to get it serviced or the problems or looking at the new software or things like that, and they are addressing how people use the stores which is as a hub of activity, and you know, you have that all over san francisco, and the new linkedin building has a l lobby to hang out. a lot of that is going on in san francisco. i think that it is a nice, and these places have become gathering spots, and at some point they will serve coffee or something, but it is just, i think that it is addressing the way that the stores are being used, and they needed a refresh. all retail needs a refresh, and the stores, and remember the clear stairs were so cool at the time, and now they are not quite sole cool, because you have seen them. >> now we all have clear stairs in 2016. >> they are still cool. >> and the wooden tables and now

everybody has got. >> yes, the wooden table, i mean, come on. >> and the first major rollout from erins herself, and expectations? are they easy to hit here? >> well, i don't know, they have kept her under wraps. she has not been out and about very much, and she has been there for quite a while. so i think that they have to redo the store experience and how people buy. they have had a huge success, and it is one of the most successful retail operations in terms of existence of sales per square foot, and they have are to do something, and oalso, by the way, shopping has changed, and people don't shop the way they used to. you don't go to stores and consumers are doing it online and so they have to create a different experience and it is a smart move, and we will see how it works for them. >> before we go, kayne went on a rant on facebook on ellen yesterday, and he said that he had wished he had contacted zuckerburg on facebook instead of twitter. you took a picture with his wife

on twitter earlier in the week, and how did that happen? >> e o, we are close friends, and we talk all of the time. we are -- no, she is love ly actually, and we were at the webby awards which is like the golden globe award shows and everybody is drinking and laugh laughing and i gave her something called the break the internet award which is i don't know what that means, but she breaks the internet all of the time. and so, she is like, let's take to a picture, and i put my phone up, and she said, no, no, kara, that is not how you do it, and she is giving me lessons and given that she is the best selfie taker in existence or one of them, i felt that i should take lessons with her, and she is showing me how to do the face and the angle and the place to put it. >> but you kept the clothes on. and she was -- >> yes, i did. you don't want to see it, but she has the lieumy case which i am going to get, because they make a better picture the lumi

ca case. there you have it. >> a lot of the social media power. >> social power between the two of you. thank you for that. thanks a lot. >> and kara fisher from ricoh. >> and now, after several days the of sell-offs, 5.8 billion came out of equi tes today, and you are seeing the dow up 17 and s&p 500 up 2 and nasdaq 4. and deere is rallying and so is tesla after they raised 1.5 b l billion from a secondary stock offering. the company wants to use that o money to finance the model 3 and this time, elon musk was selling more stock instead of buying it. >> and this time, the cdc with new numbers of the zika virus, and what do you have there?

>> yes, the new number of pregnant women they are monitoring in the united states, and 279 women in the u.s. and territories, and it may seem like a big jump, but it is because they are changing the methodology of pregnant women with zika, and they are reporting who are showing symptoms and have not showed symptoms, and this is local and health organizations. and so they are monitoring the pregnancies still ongoing at a few than a dozen outbursts reported and we should note that currently in the u.s. states there is no local transmission through the mosquitos of the se zika virus. thank you, carl. >> and at cdc.gov is a important twitter account tole follow, and the first verified account on tw

twitter, jon. >> yes, and that is when they verified it, because wasn't it swine flu? >> yes. >> that is when they follallowee following. >> and nasdaq after closing of the lowest level since mid march, and king of amazon, king of retail, and we will get you some numbers that might surprise you when "squawk alley" continues. ♪ there's a lot of places you never want to see "$7.95." [ beep ] but you'll be glad to see it here. fidelity -- where smarter investors will always be. if only the signs were as obvious when you trade. fidelity's active trader pro can help you find smarter entry and exit points and can help protect your potential profits. fidelity -- where smarter investors will always be.

>> the retail roller coaster continuing this week as gap announced they will close 75 stores, but the retail sales are up, so is the e ecommerce part of the business where the retailers should be focusing? with us is the retail analyst at oppenheimer and also with us the co-emeritus of global sales. so tell us how much of the company is investing there, and we know that amazon is king of the hill, and wo is number two, and why? >> well, in terms of the total online sales, ebay is two, and

amazon has a 20% share, and ebay with 13% share. both of those retailers i think they really figured out mobil at a early age, and both of them are generating significant sales from the mobile sales. mobile is 20% of all digital saeldz, but it is up 40%. desktop spending is up 11%. but it is pretty clear that the channel shift to online is just continues unabated, and it is posing the challenges for the traditional retailers who both have to try to get their share of the channel shift in terms of the sales, but what they are finding is that when they get the sales online, the cost of those sales are probably higher than they would like to see, and i think that comes back to amazon, and amazon prime and free shipping, and now we are seeing 70% of the transactions involved online and free shipping, and there is a real cost to that and that is hurting

some of the retailers in the transition. >> and anna, how much of say gap the's troubles have to do with the e ecommerce and amazon and how much of it is bad retailing? >> yeah, a great question. we are in the campp that certainly online is the way to go. certainly, the amazon prime lure to the today's consumer is something to be weary of the traditional retail models out there, and no surprise, our retailers have been investing aggressively in the mobile, a the retail channel has been a worry are, and for gap, we worry about the brand's relevancy for the gap brand and banana republic in particular. intere interestingly this week ceo art peck mentioned the possibility of selling on amazon which

remains to be seen, but certainly, indicates that gap is thinking the about that. >> and walmart has said in the last week or so, that it is going to be trying the testing of the two-day shipping out as well, and jeff bezos says that everybody else's margin is my opportuni opportunity. when you see a retailer giving away the margin to invest in a logistics to take to compete with amazon or saying, i will el sell my stuff on amazon? >> well, for a specialty retailers the differentiation of the model comes to the fact that they sell their own brands primarily. you do want to do that in your own channel. although being cognizant of the fact that there are other distribution channels out there that are obviously closer to the consumer, so it is going to be a combination of the two. again, for traditional retail models being closer to consumer and making sure that the consumer can return the product, and very easily either back to a d.c. or to the stores, and they

have been the bulk of the investments being made, and i think that we are realizing now that, yes, they do come at the cost, and it is the way to go in retail nowadays. >> and jan, it would be nice if you could keep everything close to the vest, but in this case, beggers can't be choosers, right? >> yeah, i mean, it is the real challenge to try to maintain all of the costs associated with physical stores while at the same time, you are investing in all of the infrastructure needed for online. then you have to deal with the price pressure, and the prices seem to be lower online as well as these costs of free shipping. you know, as we pointed out in apparel, you have the return issue where a number of young start-up companies started to offering free returning forcing the established retailers to do the same thing, and that takes another bite out of the margins, so it is a big challenge.

>> yeah, and if you have not figured it out mobile and all of that business as a retailer, makes you wonder if it is worth it to dive in now. thanks to both of you now, and gian and anna. >> thank you for having us. and the latest on the disappearance of egyptair flight 804. we are live are from paris in a moment.

egypt says it has found wreckage from the flight that went missing. we have the latest. >> operations are undergoing in the med triterranean and we understand that three american planes are helping with the search and rescue operations, but they are absolutely sure that pieces of wreckage found off of the coast of alexandria were in fact a part of the egyptair flight that has gone missing. the big questions is surrounding

exactly what happened to egyptair 804 and one of them is the weather prior to that flight's departure here at charles de gaulle, and whether or not anything happened to the plane to make it a possible target of terror. we understand that the plane flew through the brussels airport and eritrea and tunisia, and so the big question is whether or not in fact this is a terror plot, why there has not been more chatter amongst the terror groups like the islamic state, itself, and in the sinai and al qaeda and there has not been any word. and so, there are authorities trying to determine what happened, and egypt is a city in mourning. we understand prayers are offered throughout the the day at one of the city's central

mosques, and this is a big blow to egypt, and certainly the presidential of abdelle el sisi, and also if this is going to be having implications for the future of the president of that country. >> thank you, hadley harris. going to what we can expect for the next few days, let's bring in the drirector of the counter extremism project, and former cia analyst. tara, good to see you. >> thank you for having me. >> we got word that the u.s. officials were looking at the satellite imagery, and the greek officials are trying to to use radar information they v and what resources do officials have to go on as the search for the black box continues? >> well, one thing that is key is coordination, intraagency, intercountry coordination and communication on the intel jns sharing front.

what they need to do to piece it together is to recover the wreckage to find out anything on the black box and the forensics to see what coutype of people cd have made that type of a bomb, and then look at the passenger and contact list, and in all of the airports that you mentioned. while the french airport has high security, they have had problems getting rid of employees there because of the france extremist group ties. and also, there is a big problem with extremism from france. but it is weird that we have not heard any group claiming the attack, and that is the one big question mark surrounding this. >> what is the time frame that you would expect a terror group the comeer forward to accept reare responsibility for this? >> well, usually it is going to happen quickly, and not immediately after, but the terrorist groups like to use the media-grabbing attacks as

propaganda, and we can see them using the footage from the training, and see them taking the media coverage and using it online which is critical, my organization, counter extremism project to fight the groups online, because they use the attacks as propaganda, and so it is a little bit strange that we have not seen an attack claim, but we are not so far out, but if i did not see a claim in the next week or so, it is a little bit strange. one hypothesis could be if it is a group, and they don't want to claim it, maybe it is because something else is under way, and again, completely speculative at this point, but usually the groups want to claim these attack, because it helps them recruit new members. >> and i am sorry to cut away, but we are to go to phil lebeau who is giving an update on the tsa. >> and you have chicago mayor rahm emanuel, and u.s. senator der b durbin a few moments ago and we expect to hear from the head of

the tsa peter nefinger, and they met in a terminal here with congress members of illinois and other ceos including doug parker discussing the long security lines. was it a dog and pony show? it is hard to tell, because there was no offer for for more changes than announced by the tsa and the senator dick durbin is continued cooperation, and the same from peter neffinger, and as we were leaving for the live shot, i caught up with doug parker from american airlines, and i asked, is anything changing, and he did not have any comment, but he is clearly frustrated with the situation involving tsa. and american has committed $400 million more personnel to run

things back and forth from the bins, and guiding the people through the security lines. the tsa is doing the screening, but american is hiring people to assist the tsa, and the bottom line of the meeting is that the chicago's mayorm rahm emanuel, and dick durbin and other elected leaders are saying that you have to fix things here, and peter neffinger saying that we are committed to fixing the situationment back to you. >> phil lebeau at o'hare, and that story are and the egyptair story not unrelated. back to the tara. you mentioned a claim of responsibility, responsibility, and is the simple claim these days enough or does someone who makes that claim have to back it up with evidence that they were involved in >> well, usually the intelligence officials have a good idea of the voracity of the claim, and they track them online and know the legitimate sources, so absolutely, you have the look at the source. if a random person were to claim

it, officials could quickly dispel that as false, but ways that isis and affiliates release the claims in certain publicati publication, and affiliates online, and we have not seen it. so it is one thing to see in the next week or so, and usually, you would see it soon, because there not a reason that they would not want to take credit for the attack, because they like to do these attacks, and it el helps to the amplify the message to are recruit to have something to garner attention this high profile. and that is what i would wait. once they do recover the wreckage, there are ways to look for the bomb residue, and the black box is critical as well for law enforcement to see what actually happened on that plane. >> still so much about this that we don't know, but tear rashgs we appreciate you putting some of it into perspective. >> thank you. >> tara maller, former cia military analyst. >> and the work week is not quite over here in the united states, but it is coming to a close here in the united states.

simon is at post 9. >> yes,london is outperforming, and two stocks, the unicredit is rising to the top size on talks or suspicion that it is going to sell-off some of the bank stakes to plug what could be a $9 billion capital requirement moving forth. the biggest loser is rishmont which is the owner of cartier and carte blanche. they say that the sales are stro strong, but now buying back inventory, and destroying it w which is so bad in the area of luxury goods. and some of the uk stocks have gained in the session, and notable that the home builders are there, and front and center is the uk's underperformance because of the threat of brexit june 23. and importantly, the britains are living if spain or say the south of france have lost their

appe appeal, but if they have been outside of the country for 15 years, they can't vote in the referendu referendum, and that is crucially important and it is up to 2 million people, and most of them are resident around the european union, and if the vote is going gaiagainst the part ofe european union, the residency of the homes goes into question, and that is a hard core stay in vote that could be lost, because the supreme court will look at that in the emergency session to effectively see tuesday, and astounding admission in brussels over brexit, and pictured wednesday as he chaired the commission, and jean-claude warning the voters that the deserters from the european unib yon will not be welcomed back. they have to understand that if they leave, they are a third-party country, and it is important, because ut says to the leave campaign, you will not get the trade deals with the rest of europe that you believe that you will if of course, he is ultimate ly telling the trut.

back the you. >> simon hobbs, and when we come back a nice rally on the nasdaq after it closed at the lowest level since mid march, and semis are having a good day, and amat with the best day since '08, and we will talking about that after the break. this might look like a zero-gravity drop... but it's actually a triumph of predictive analytics. because of optum. through population health data, they provide insights so doctors and hospitals can identify high-risk patients. like me... asthma... potential hospital visit. so now thanks to optum, this asthma thing's under control. gravity not so much. this is healthier, powered by optum. from health plans to providers to employers. we connect all parts of health care. healthier is here.

good morning, everyone. i'm sue herera, and the cdc says fewer than one dozen infected pregnant women in the u.s. and puerto rico have had lasting effects as a result of the zika virus. and in okinawa, there is a murder that is outraging the president abe shinzo and demanding a response. and today n a paris court, salah abdeslam invoked his right to silence, because it is the first time he has been questioned since his extradition last month.

and the japanese are asking the public to come up with ideas of what the humanoid can do, and offering a software program for the robot to get creative. the robot is pepper, and he can laugh and get coffee, and they want programmers to develop some new tasks. he is cute, too. ta the cnbc newshour, and back downtown to squawk alley. >> get used to it, sue. >> yes. thank you. and now, the nasdaq is in positive territory for the week, and where is the opportunity if in fact there is some, and walter price is the portfolio manager, and the sunova portfolio manager joining us, as well. and carl, we are watching the names spanked for the last few weeks, and is this enough damage? we didn't get into the so-called correction territory? >> we are in good shape in terms of the correction and expectations in particular are

set pretty low at this point where they can be beaten. >> how much does this name like say for instance this amat today, the best day since november of '08 and seen as a leading indicator of where tech is headed. is that a big canary? >> well, it is showing the reason that they had such a good quarter is that you are starting to see the builds for the iphone 8 on the allied side, and so that is a positive lift for the whole tech sector if apple starts to get healthy again. >> and daniel, is that what needs to be showing improvement first? >> well, it, obviously, semiconductor e equipment is preliminary to, as the other person was commenting in terms of the common terms of order, and obviously, the spike up is good, and the applied materials, carl, as you know, has not done much in a long, long time, and it is a sideways stock, so hopefully some momentum behind

this, and we can start to get some traction in the semi equipment space. >> and daniel, what is your take on the news that google is working on its own chips for artificial intelligence, and we have seen nvidia on a nice run in the past year, and beyond, that and the likes of amd and the names whose graphic chips have been used for the purposes in the past. are we entering a phase where the big cloud players are going to start to disrupt even further than they have already vertically integrate deeper into the stock? >>le well, it is interesting, jon, because my understanding of the chips is that they are very specialized. they are not the standard, you know, the server chips that intel would build. so, you know, at this point, i think that they are more of something that google is trying to gain the traction, and especially with the android software, and things that they are trying to do to try to, you know, build back into the phone

or into the server so to speak by developing the highly focused specific chips. is that something that all of the sudden, you know, if you are intel or one of the big manufacturers or so forth that you have the rup for the hill or tex -- that you have to run for the hill like the texas instruments or that, but they are trying to push in the innovation, and grab mo morph the pie in terms of controlling the destiny in the hardware and the software side. >> and walter, let me try you on this one, and they are not cpus that google is building, and at the same time, we are seeing the intel move into the fpgas and the graphics players that are doing well to build on top of the cpu and delivering extra capability if the likes of google is working on this sort of thing for the artificial intelligence and apple is in that game, so is amazon, and might we not see the big cloud enabled players to really start to damage the semi players down the road if they don't need them

for the value added type chips that add to the growth. >> what is driving invideo is the deep proliferation of the technology, and google has put a lot of the work into the public domain and so has facebook and so a lot of companies besides google and facebook are using the software from nvidia and the software chips from nvidia to analyze the data to see how they can apply deep learning or the artificial intelligence to things like controlling appliances in your house or analyzing advertising on web sites. you know, i think that there are lots of applications, and yes, google may be trying to create some advantage, but what is really driving nvidia is the spread of the deep learning to companies that are not google, and that are not facebook.

i think that you will see the usage of the nvidia chips spread broadly over the next couple off years. >> as charlie munger said, i'm a fan of a/i, because there is a shortage of the real thing. thank you, walter and daniel. we will talk to you later. >> and elizabeth warren is taking a shot at uber and the gig economy in a major speech. and plus, imax and google are teaming up for some virtual reality. we will talk about that next. medicare doesn't pay all my medical expenses, i looked at my options. then i got a medicare supplement insurance plan. [ male announcer ] if you're eligible for medicare, you may know it only covers about 80% of your part b medical expenses. the rest is up to you. call now and find out about an aarp medicare supplement insurance plan,

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coming up on the halftime report, the technology is in the rally mode. and the old guard is leaving the new pack. and now, we will have a top three picks for a volatile market. and where is the money flowing, and what stocks are being bought and shorted. that is at the top of the hour, kayla. >> thank you sh, melissa. and meanwhile, senator elizabeth warren is taking a slot at uber and the so-called gig economy. eamon javers is live in washington with that, and she is not the first. >> that is right. she is offering a detailed critique of what she calling the dangers of the gig economy including losing the pensions and benefits for ordinary worker workers, and this is what she had to say yesterday. >> much touted virtues of independent and kree creative od

by gig work may be true. for some workers in some conditions, but for many, the gig economy is simply the next step in a losing effort to build some economic security in a world where all of the benefits and wealth are floating to the top 10%. >> and kayla, in that speech, she put the gig economy in a detailed historical context arguing that just like after the industrial revolution when the policy was implemented in order to protect the workers and ending things like child labor and enacting the weekend and she said in the u.s. information age, the u.s. government needs to enact certain policies to allow the gig workers to the create wealth from the industry they are creating. >> interesting. thank you, eamon. speaking of uber, a majority of the oamericans have not jumped on board, and pew says that 85% have not used uber or lyft, and one-third have not heard of them.

a and the people who do use the services are largely made up of americans who are college aged or make more than $100,000 a year, and i would venture to say live in new york or the coast s a and in the areas that people are looking to run out and maybe grab a drink for the night, and they don't necessarily want to drive. i have to say that elizabeth warren has a point. i talked to uber and lyft drivers ow they like it, and they like the flexibility. >> but you are the one who talking to them about the job. >> and my rating is still high though, so i have some interview skills in the car i guess, but they do worry about the lack of the safety net, and what is going to be happening if if they get into the accident, and if they have a need. so there is a big question there as that grows. >> i have had drivers ask me to where they can buy the uber shares, and i have to tell them, no, you can't. >> talk to travis. >> up next, we will talk about

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imax is making a big bet on virtual rereality, and teaming up withing google to develop a new vr camera, and they are planning to open up six virtual reality theaters this week. and welcome from imax richard

gelfo gelfond, and tell us why they want to partner with google and not say oculus? >> well, we thought about the strategy for a long time, and virtual real tity made sense, because if you are looking at the core cmpetencies, and the relationship with the filmmakerers and the studios and the exhibitors and so we cast our net wide in the vr space, and coincidentally at that time, google approached us, and said, are you interested in developing with us, a vr camera for professionals that could create this high-end experience. once we started to negotiating that, we decided to put together a broader strategy that in fact encompassed the locus-based entertainment. >> and so it is not often that google asks for help on something, and so what did you tell them about the camera? >> well, google did not need our help, but we have specific

technology, and it had to do with two other thing, because the brand plays well in the vr space, because if you are thinking of imax, is it is the closest to vr that exist, and it is the relationship in the ecosystem in hollywood with the filmmaker s filmmakers and the studios, and for all, we are better positioned to unlock the positions, and they are bringing technology to the table. >> and rich, what is the angle here for google? that i have the camera that is working on youtube, and this is cinematic quality and that is not something that you would necessarily do if you were looking to expand the advertising business. are they pointing towards a cinematic business that is either more immersive such as in the home or where do you see that? >> for them, it is all about content. google wants to create the vr content, because they believe it is content to benefit the value

chain, and whether it is in the home or out of the home, and they see it as a big part of the strategy, and to the extent that we can help to create more contact, that is in their interests. and now, with that said, we have mention mentioned to google, hey, we are doing this location-based, and is thatting something that you could be interested in, and they have said, kind of, yeah, let's talk about that. >> i am curious, spielberg gave an interview to the "guardian" this past week in which he said that vr is dangerous for the filmmakers, because you take some of the creative control away from the filmmaker, and the viewer can look wherever they want. will the creative types push back? >> i don't think they will. i ti that steven was probably referring to the vr where you watch a whole movie, and maybe in that area, they will, but what we are talking about is a segment of the experience. so if you will see the last "star wars" movie, and then in the imax version and you go to the theater next door and you fly the millennial falcon, the

creators won't pushback because it is ancillary and helpful, and we did "mission impossible iv" and if you can climb the side of the building like tom cruise did, that is what it is. and i think that steven is talking about people who are wanting to replace the mov movie-going experience and then there would be pushback on that. >> and the a la carte complimentary experience, and how much demand from consumers who say, i want to stick around and pay $10 extra to do that? >> well, a lot. the partner in this starbreeze, they have tested it out with some portable units and four or five-hour long lines to do it. i don't know if you have had a chance to try it, but it is really quite amazing, and the target audience is not 60-year-old people, but it is more like the people in the 15 to 30-year-old range. it won't only be the movies, but it is gaminging. so think of the advent of gaming that has come off of the movies, and think of the competitive

nature, and think if you can after you see the movie, you can go to play a related game or the another game, and get to the next level and get prizes. as a matter of fact, carl's question is interesting, because steven is making a movie called "radio player i" which is about virtual reality and people who are hooked on it. so maybe he was referring to his own project, but from the commercial point of view, the gamers could find it enticing experience. >> it is going to be interesting to watch. thank you, rich, for coming by. rich gel fond, the ceo of imax. >> and now, on wall street given where we are this week, we will look at some of the biggest movers this week on wall street. [ beep ] but you'll be glad to see it here. fidelity -- where smarter investors will always be. if only the signs were as obvious when you trade. fidelity's active trader pro can help you find smarter entry and exit points

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pretty nice rally today, and the dow is close to the session highs, and the s&p 500 bounced right off of the 2040 level to lead the rally this morning is applied materials, and getting some love finally, and laggards are campbell's, and deere, and foot locker whose basketball sales were softer than expect and has some people talking about the sneakers. and nike is the second worst dow stock. >> and ram research and tech

names deep in the weeds are getting a nice bid. >> and tech and financials are the top sectors f. we get a fed hike, it will be good for them. >> and speaking next week, bullard and parker, and then yellin at harvard. over to headquarters and melissa lee at the half. ♪ thank you very much, carl. welcome to the "halftime report" i'm melissa lee in for scott wapner, and the what's old is new again. for the hour, steve weiss, jeb lebenthal and jon and pete najarian. and now, leading the way is cisco and qualcomm and others outperforming, and this is your bailiwick, and these are the value names? >> yes, i like the names, cisco,