reconciliation between gap and nongap. the gaap results not as strong as non-gaap. >> looks like a slight upside because of microsoft tomorrow. >> thank you for joining us here on closing bell today. that does it for us. "fast money" begins now. here it is, this is "fast money" starting right now on cnbc. life on the nasdaq market, overlooking new york's times square. our traders on the desk are pete najarian, karen fineman and garen adame. we have a top marketwatcher who says trump will be a disaster for the banks. plus netflix shares having their worst day in almost two years but the analyst who says the stock is a must own is here to defend it. what does he that others don't. microsoft, the stock surging

after hours. this comes as some of the biggest names in tech have been solid gainers since the brexit lows. take a look at the performance of facebook, google and apple since june 24. with stocks, of course, overall near record levels, is big tech where you now want to be? pete najarian. >> i think it's where you've been wanting to be for a while but brexit opened up that door even wider because everybody started looking. we all know about the utilities, we all know about telecom. they had to go somewhere else with money because they saw valuations getting extremely stretched. where did everybody start to look, simon? they started looking towards tech. look at all these various names. even look at something like seagate. you look at yield, you look at valuation and suddenly people started saying, hey, look, not stretched, haven't made a move. but i would warn you right now, tech has been on an absolute tear run to the upside. this run off of the brex it lows to where we are right now, look at the way microsoft has moved.

>> are you saying it's too late? >> i would either start taking something off and do a stock replacement strategy. i bought cisco, for instance, on that dip. i would start thinking about a stock replacement where i'd sell my stock, buy upside calls, still be involved in case there's upside. but at any moment we could see some selling. >> i think he's 100% right. i'm not bullish on ibm, i'm not bullish on a lot of these names, although microsoft was a beat. if you look at the yields, that's what everyone has been chasing. the fed has pushed people back into risk. the fed has pushed people into the market, and the market has been forced to look at multiple expansion. you can look at xlus, xlps. everyone talks about them being overvalued. we've never seen an environment like this with yields as low as they are. you're going to look at multiple expansion and you're going to look at the market repricing. >> look, i think the microsoft quote is very good. we just mentioned right before

we came on the difference between gaap earnings and non-gaap earnings. he makes a good point except the market hasn't compared about that for the last couple years. pete says it's right, 56.5 on microsoft was resistance last year. it's imperative that it breaks through the upside. but what you're seeing now to me is the reason why microsoft trades at 18, 19 times forward earnings as opposed to ibm with 11. people say why the disparity? the disparity is because microsoft made the turn in their business five years ago. ibm is trying to do it now. ibm is late to the game. >> what about the broader point about big tech and valuations and multiples? >> i think cisco is very reasonably valued. if cisco were to get through this $30 level, which has had difficulty quite some time, it's off to the races on the upside. the good news with cisco is the market is bailing you out number one and they don't report earnings until all 14th, give or take, so you have a lot of room

for that stock to run. a lot of people played microsoft long side into earnings. but cisco specifically sets up interesting to me on the long side in earnings next month. >> well, i liked google this year. i think that the thing i like about google and facebook which i'm long is the brexit situation didn't have much effect on their business and shouldn't have much effect on their business. >> you're talking gross. it's a different take to the conversation we had here. >> definitely. that's a risk that i find more attractive. apple i've been long and really has not had a stellar year at all. but i'm going to happening on to google. maybe i'll think about pete's, sell some upside calls. i don't like stock replacement because then i have a gain. >> yesterday we talked about why the market can go higher. i would not say that you should be a buyer at these levels because i'm still really 70 to 75% in cash. i'm placing my bets, i'm

shrinking the size of my holdings. i still am out of disney and apple. i got into j.c. penney. >> why are you 75% in cash? >> because i think that the market is topee here. there's no real volume. >> you just told us that the multiples were going to expand because people were forced into it. >> i said they can go higher. >> right. >> it doesn't mean that they should and it doesn't mean it's going to stay there. the volume has been atrocious. this was the second lightest volume day outside of the thursday before easter. that's not conviction. people are not buying into it. >> there's no panic. you're consolidating for the summer. >> but people are not buying into it so they're not covering short. yes, it can go higher, but we get one blip, one sniff of weakness on the earnings front and this market comes in as quick as it went up. >> the one thing i would like and i would not necessarily disagree with what you're saying, karen, we have to understand we do have growth, it's in old tech and there is growth there. you look at cisco, that's the company in the midst of a transition, a new ceo taking

them in a different direction. intel is the same story. >> how can you say there's growth when revenues are coming in the likes of ibm? >> that's a different story and i don't like the path in which they're moving right now and they're not moving to growth fast enough. you look at the transition of a cisco or of intel or of microsoft, very rammed transition as they're moving themselves away from where they were old tech into the new tech and into the growthy world. >> let's get more on microsoft. joining us is colin guinness. would you agree with what you've heard now? >> simon, it's a nice, solid quarter to end their year. june quarter is their fiscal year end so they have a lot of skin in the game to hit their targets. they came in at the high end or above for each segment on revenue. that eps beat, half of that was just because of a fabled tax ralt but the other half is because of good cost control so

it's a nice, decent quarter. even with the gains in the after hours, the stock is still flat roughly for the year. >> and your recommendation, therefore, is what? >> we still have a hold on it. we have 700 bips lagging the s&p and there's nothing that's really changed in our view to this report as we look to the back half of the year. >> what about this commentary coming from pete about redesigning the company, moving into cloud, growth in those important areas. do you buy into that? >> absolutely. but it's like one of those old ebay situations where you've got the paypal component and the marketplace component so you've got nice growth businesses and you've got some businesses that are lagging. they're legacy businesses. i mean the phone revenue dropped off a cliff. of course that all got shut down but it's still a sore area for microsoft. if they could have carved this business up into two, you'd see multiple elevation happen on the more desirable parts of the business, but that's not happening. i wouldn't be jumping into it necessarily right here.

>> colin, it's karen. what is your read through to amazon and how competitive will this business get when you have google entering and microsoft and amazon? >> that's a fantastic question -- >> thank you, colin. >> all right. because are we going to be valuing the cloud businesses at too great of a multiple right now, which today's excitement over the cloud could be tomorrow's utility provider. and so is aws in particular the investor excitement around that overheated because that 28% margin and jeff bezos, your profit margin is my opportunity. you know that everyone is gunning after aws and price is one of the leverage that they can uses. >> colin gillis, $60 price target at microsoft, is that what you have on it. >> that's right. >> i'm a math guy so that looks to me as if it's trading -- that puts it like 23 times next year's earnings. is that accurate?

if so, how do you justify it given everything you just said? >> yeah, well, you know, it's a garp name, growth at a reasonable price. so it's dictated by the market. if you want to invest in this space, i think there's more upside in google. but certainly you can just phi -- justify it by the growth rates. office 365, growing 59% year over year, so there's good parts of the business in there. >> good to hear from you, colin, have a nice evening. let's trade it, karen. >> that was a fantastic question too. >> i appreciate that. >> it's okay. it's sort of no man's land for me here getting to his point. it's not cheap. there is some risk there. they do have linkedin coming down the pike when they have to integrate that, so it's kind of lukewarm and i have no position here. still ahead breaking within the hour, reports of a major shakeup now at rupert murdoch's

media empire, notably fox television. roger ailes, the powerful head of fox news, is under fire but his status is still unclear. our own david fabert is working the story and will join us shortly. plus you're looking at a live shot of the republican convention as day two, of course, is now under way and donald trump has found a new enemy, it would appear, wall street. if elected, the gop is saying that it would go through with some of his threats to break up the banks, a top analyst will weigh in. later netflix losing a whopping $6 billion in market cap after its dismal earnings report, but one widely followed analyst says it's still a must own. he'll be here to explain when a busy "fast money" returns.

the end appears near for the powerful head of fox news. david fabert has been following the story and joins us now with the latest. is roger ailes out now? >> it does appear that is the likely scenario at this point. as we reported earlier and many others have been reporting through the course of today and yesterday, a decision is expected in the near term, that's according to people that i have spoken to who are familiar with what is the situation, let's call it that, at fox news at this point.

they do expect that that decision will be forthcoming shortly and will involve the departure of mr. ailes. of course the man who built fox news into the powerhouse that it is culturally and financially as well. don't forget a very important engine of the growth that 21st century fox has seen over the last decade and of its current earnings and cash flow and revenues. this, of course, coming out of an ongoing investigation that is being conducted by the law firm of paul weiss into his conduct in response to charges that were brought by a former employee at fox news, who alleged that she was sexually harassed by mr. ailes. it does not -- it's not clear whether or not fox is going to wait until the judgment is in from paul weiss before making its move or whether in fact that is something that will actually happen sooner. these investigations typically do go on for some time, but again sources indicating that a

decision they feel needs to be made in the near term. that decision, of course, shared in some ways by foxes chairman, lockland murdoch, its ceo james murdoch and of course the man who founded the overall company itself, rupert murdoch, who is consulted i'm told on all of these decisions. but again, a significant change in leadership seems to be in the offing at fox news. i would share a statement that they shared on twitter, essentially saying moments ago, roger is at work. the review is ongoing. the only agreement that is in place is his existing employment agreement. you can see the time of that tweet. i guess, simon, that's the way now major corporations like to communicate, via tweet. >> it is, as you rightly point out, an extraordinary -- it's a phenomenon what ailes has managed to do both editor kael, right or wrong, and as a profit center. the inevitable question is, is

this like apple without steve jobs moving forward. do we have any idea who might replace ailes and the degree to which the business could be impacted? >> those are key questions, of course action and i don't know. speaking to a number of people, some indicate there is a plan for succession. it may involve internal and external candidates. others say there has not been as much of a plan as one might have thought. don't forget mr. ailes is 76 years of age. the idea that he would be continuing a long period of time is not one entertained by many. in terms of the investment implications, near term i think many expect that fox news will be run the way it has been for over the last 20 years and that very little will change. but over the longer term typically when you have new leadership, things can change. although i would say in speaking to a number of significant media investors, some of whom own shares of fox and know it well, there seemed to be very little concern for any real change at the top of fox news, despite

what is its significant contribution. you're talking about last quarter 1.375 billion in operating income before the company's cable networks and a lot of that was from fox. that's a significant percentage of the overall numbers at the company. >> david, it's karen. let me ask you something. with that statement, that tweet was hardly supportive of ailes, so i would think there's a lot of pressure to get him out as quickly as possible. also, would you think they would settle the carlson suit together? >> you know, i don't know the answer on the carlson suit. i do sort of stand by my reporting and i know there's a lot of other stuff out there right now. as you might imagine, this is a broad news story, not just a financial one, karen. and i think that there is a sense that when you have this kind of instability to a certain extent, or at least a lot of questions being asked within an organization like that, you do want to move fairly quickly to address them. in fact somebody who is involved said this needs to be addressed in the near term.

and again, it does appear that that will result in either retirement by mr. ailes or his resignation or perhaps something that may be called a firing, even though we all know those terms can be interchanged to a certain extent, even though in a press release it will all be very kind. >> nice to see you working the evening, david. >> and you, simon, and you. don't push yourself too hard. >> no, i won't. don't fear. i'll see you tomorrow. thank you, david. for more reaction on this developing story, let's bring in rich greenfield who covers 21st century fox. good evening. what's your reaction to this? i mean we kind of knew that there was trouble here. on the one hand it's not a systemic problem because it's one person. on the other hand, he appears to have been the creator of this phenomenal profit center. >> there's no doubt that he's larger than life as a character in terms of creating something and doing something that i don't think you'd find anyone on wall street when fox news was first being launched who thought it was a plausible idea.

in fact i think most research reports basically looked at it and investors thought it was basically flushing money, that it was impossible, literally impossible to compete with cnn. so roger ailes essentially has done the impossible in terms of building fox news into the size of the business that he's created over the last 20 years. i think the real question, though, is right now we're at a critical juncture that no one is talking about. fox news has just filed a lawsuit against one of its largest distributors charters. there was a major lawsuit filed where basically charter is in process of digesting time warner cable. charter is basically saying that our rates now apply to all of the acquired subscribers. fox news is basically filed a lawsuit literally just this afternoon claiming that that is not in fact true. so it's a really interesting timing that you're losing potentially, again potentially, losing your leader just in the middle of what is a very, very important legal process that's going to play out. >> can you give us any idea of

the scale of what the figures are here and the degree to which the stock might be impacted? this is a very big company overall. it's a very profitable center within a very large company. >> simon, you're raising a great issue. cable networks are the life blood of this company. there's no doubt that if you look across the regional sportsnet works, the fox networks but cable networks are the life blood of overall 21st century fox. the fox news network has been a huge growth driver. it's hard to separate fox news from the other cable networks of the they really leverage the combined broadcast -- >> because you're selling the whole package you're bundling. let me ask you one important question. i mean is fox without roger ailes like apple without steve jobs? >> you know, i think you would probably put that far more into the rupert murdoch category. >> so it's murdoch, not ailes. >> rupert built this company, the whole company from nothing.

he allowed someone like roger ailes to come into the company. he allowed someone who is essentially more of a maverick to do something that at the time again seemed investor reckless. but i don't think you can say that just happened without rupert. rupert allowed talent like that to basically flourish. look what rupert has been able to achieve over decades of a career. >> with a relatively hands-off approach, as i'm sure the legal case will confirm. we have to leave it there for the moment, rich. i know that you're going to be coming back. let's trade this, steve. >> you know, when you look at biotech and you look at financials, the political cycle is a headwind to both of those spaces. when you look at media, to me this is going to be the largest covered election that we've all seen in our lifetime. i think that all of these media companies are buys. cbs, fox, i think all of them are buys. >> wow. >> here's a stock that topped out at $40 at the beginning of 2015, let's just say, spent all

of 2015 going south in an environment to steve's point where it should have been really flourishing, it didn't. finally at $28 now. i can make an argument that maybe the environment there, and i'm not an insider at fox, but maybe he created a toxic environment. with him leaving, if he is leaving, maybe they'll flourish and do better. so this might actually be a buy the news type of event. i'll say this, though, valuations in the entire space have been ratcheted back since that disney earnings call about six months ago or so. >> we have to take a break, guys. let's have another look at microsoft rallying on the big earnings beat this evening. we'll hear from the coo on the quarter and the competition on the conference call that begins in eight minutes time. i'm simon hobbs, you're watching "fast money" on cnbc, first in business worldwide. here's what else it's coming up on "fast." ladies and gentlemen, this man could be your next president. >> listen you [ bleep ] --

>> and one marketwatcher says it could be doomed for one group of stocks. he'll explain. plus, netflix shares are tanking. >> and the butcher begins. >> and that's really bad news for the analyst who said this. >> this is a must-own sglauk to >> so is netflix' biggest bull ready to throw in the towel? find out when "fast money" returns.

welcome back to "fast money." we have a news alert from the republican national convention. >> reporter: we're walking down euclid avenue in downtown cleveland right now. we have a protest going right now, a group against trump. they're carrying signs saying

stand against white supremacy. we've got a line of police officers, this is interesting what they're doing here. you can see the bicycle police on one side of us are working in concert to keep this protest penned in to just one side of the street, so right now there's a lot of people, but this is pretty peaceful and pretty well organized. you can see the police in a very organized race along the march route here. this is unplanned. we don't know exactly where this is going to end up. simon, this is the kind of a thing that we were going to expect here at the republican national convention. a lot of anti-trump sentiments in this country. these people are protesting against the killing of innocents by police officers. so far -- [ inaudible ] >> we seem to have lost that feed there from eamon.

in fairness, guys, we knew that this was going to be the scene of demonstrations, the cleveland police prepared for this. there was a suggestion that actually would suspend the arms from actually being visible in this environment. i guess this is not a market phenomenon, is it? >> it's an open carry state, which allows people to -- listen, the bottom line is what you're seeing here. democracy is messy. that's what's going on. like it or not, this is actually the system at work so in a lot of ways you have to be e encouraged by what's going on. this is exactly what you want. you want peaceful protests and people point out their point of views. >> still ahead on the program, we showed you what's happening outside the rnc. now let's get a quick check on what's going on inside where we find our very own john harwood. john. >> reporter: same on, the question is going to be are there protests going to occur tonight inside here when donald trump has a roll call vote on his nomination. that as we shift discussion from

security to the economy. we'll talk about it after this break on "fast money."

. warriors gun and money. who sings it? begins with a warren. >> one quick question, if i run for president the next cycle, can i count on all of you guys? i know simon is in my corner already. >> simon is behind you.

welcome back to "fast money." from melania trump's speech to breaking up the banks, the republican convention is stirring up a lot of controversy. our own cnbc's john harwood is live in cleveland with the very latest. another very busy day here, john. >> reporter: simon, it's been a crazy day at the republican convention. melania trump's speech devouring most of the media's attention, questions about those passages lifted from michelle obama. everybody quickly forgot all the discord on the floor of this convention yesterday when anti-trump delegates were booing. we're going to find out in a little while whether that's going to be repeated tonight when they have a roll call vote on donald trump's nomination. of course he's going to win that vote. the question is how much noise that anti-trump dissidents make.

the theme for tonight's speeches is the economy, make america work again. we'll hear from paul ryan, the house speaker, and others. one of the things that's interesting about the platform is that donald trump has moved to get to the left of hillary clinton not only on trade but also on banking regulation. the republican platform is calling for a revival of glass-stegall. hillary clinton is not for that but bernie sanders and elizabeth warren are for it. donald trump wants to tie hillary clinton to wall street. he thinks this can do it. we'll see if it can work. >> we should also note that he's promised to repeal dodd-frank. is that going to get broad support in the gop? is he pushing to move it to that side of the business agenda? >> reporter: i do not think so, simon. i think this is widely seen within the party as a political tactic to try to get some bernie sanders' votes for donald trump.

don't know if that's going to work, but we've gotten a cool response already from the top republican on banking regulation in the house. he was not embracing that proposal. i will be shocked if paul ryan, the house speaker, embraces a revival of glass-stegall in his remarks tonight. we'll be listening for those. >> it will be interesting if he comes out publicly to say just that, john, for the most, thank you very much. if trump wins, our next guest says the banks will face significant challenges. ed mills is fbr's financial policy analyst. what do you make of what you're hearing out of the gop now? >> well, i think a lot of the big banks are probably wondering do they have any friends left at all? because i think what you're looking at is absolutely a political ploy. you're trying to get the bernie voters by saying we're going to reinstate glass-stegall, but if you look what other republicans have proposed, in jeb's repeal

of dodd-frank is saying he can repeal it, but the biggest banks, they need even more capital. so what we're seeing out there is a huge populist wave that makes banks extremely unpopular and it's never hurt anyone in this environment to beat up the banks. >> oftentimes people will say of trump, don't be too worried, the more extreme ideas that he has won't get through congress. would it be your belief that here given the strength of the banking lobby as we know sponsoring so many events on capitol hill, to say the least, do you think that it would ultimately be blocked by the house? >> yeah, i mean reinstating glass-stegall is absolutely not going to happen. but this is all about the messages that are being sent. i mean the big story from my perspective has -- is that dodd-frank passed six years ago this week. what we have seen is the regulators have implemented the rules much more strict than

anyone would have thought at the beginning, and it is statements like let's reinstate glass-stegall, statements like elizabeth warren or the strength of bernie sanders that give him a ton of political cover for him to do what they're doing. so you don't need legislation necessarily to move on the hill for there to be a big negative impact to the banks. you need this populism and this rhetoric that gives rise to candidacies like donald trump to allow them to be much more onerous than anyone would have initially expected. >> it's karen. going to dodd-frank for a minute. if the volcker rule were to be repealed, how does that weigh in? are those two things mutually exclusive? >> i think it's -- the volcker rule is one of what i consider about 25 different provisions that have fundamentally changed financial services regulation. so, you know, it's nice to remove something that has been net negative, especially for

bond market liquidity or some of the profitability. but if you're repealing the volcker rule but adding even higher capital standards to these guys, net-net i don't see how they win. >> we'll leave it there. thank you very much. let's trade it around the horn here. let me kick off with you, pete. >> well, ed made something very clear. it sounds like this is just a political ploy by donald trump. this is just something to attract those voters. it's pretty interesting. i don't know that that's going to happen either. i actually agree with ed, i don't think that's something that's going to happen. but you can see why this whole political process is posturing and moving things around. i wouldn't be worried and start selling all my bank holdings -- >> if you look at it, if they break up the banks, why wouldn't you get a higher multiple on some of the businesses. >> you would. >> ultimately if this conversation -- even if it doesn't take place, this

conversation gains traction, it could be a buy the bank scenario. >> but i think the analysis that we're getting there is actually it's more a form of harassment that might come through red tape and regulation. you don't get to the end game -- >> wall street doesn't need to get to the end game. it's people posturing what happens if. if you start talking about breaking up the banks, there's more profitable entities inside the banks that actually get higher multiples instead of being a conglomerate. >> if that were true, wouldn't the co's being offering to break up the banks? >> no, they want to manage everything. >> right. they want to manage everything. but i don't know that they would -- >> when people start establishing higher multiples, i think that's bullish for the banks. i would be a buyer of regional banks because they're not in the focus like goldman sachs, jpmorg jpmorgan. >> there's also a conversation -- who knows, we may get some of the fed members

replaced as well if we go through this election as we think we might. there is also conversation about that interest margin coming down and the need for these banks to consolidate anyway. there's a rollover effect on m & a. >> listen, karen knows a lot more about this than me. one of the reasons why you might not get the higher multiples is you're able to lercverage the banks' balance sheets with these businesses. if these businesses go on their merry way, then they can't leverage them. i hear what you're saying about the higher multiple. >> they're never going to leverage the balance sheet again. that was the biggest problem. they're not going to lever their balance sheets regardless of what happens. if you start breaking up the banks, there's certain entities inside the banks that get higher multiples. >> the lower level maybe. >> maybe some of the regionals, that was a lot of the analysis. do you not buy that? >> that actually makes sense to me. but i think it's all just fluff and it's not going to change

things. >> and you can understand why now ge did what they have been doing over the last couple of years and jeff emmel has done a good job of shedding the financial things and that stock hits 52-week highs and the banking stocks continue to struggle. i think there's some great opportunities out there. >> don't you have to wait essentially for the net interest margin to come back? who knows when they'll raise rates. >> you make a good point. that's why i think it's a longer hold. we can still go back on this desk and talk about jpmorgan when jamie dimon started to buy into his own stock at 53 and we're trading over the 60s. this last earning reports -- >> and jpmorgan is down 3% year to date. >> simon, i know you've got to go to break. can i ask you a question before we go? >> on live television? please. >> you started this thing with john harwood with the word that i've never heard before.

can you say that again? >> controversy. >> i know pete looked right up when you said it. >> there's a lot going on. what can i say. netflix suffering one of its worst days of trading ever after subscriber growth got crushed. one of the biggest bulls on the stock is here to explain what the street is missing. that's next. plus netflix may not be the only big earnings mover. we'll tell you which stock could be in for a similar fate after it reports this week. that's next on the show. more "fast money" ahead.

welcome back to "fast money." traders are betting on some sharp moves for a number of dow stocks reporting earnings this week. mike coe is in austin breaking it down. >> sure. so we've got axp, ge, intel and visa all reporting this week. we're expecting moves of 4% from american express, 2% from general electric and 4% from intel and 4% from visa. now, these moves may not sound like a lot but collectively when you think about how big the market capitalization swings on these four companies could be, we're talking about a change in valuation of $24 billion or so. now, it's interesting that both american express and intel are seeing moves that are larger

than they historically have and that's probably because both have had a lot of news out lately. american express has been very bad news generally speaking and intel, with the release of the iphone 7 coming up, hearing their chips might be in there, that might be the good news that people are hoping for coming out of their. ea earnings. general electric looks like it's breaking out. i think it's five years too late but look at what honeywell has done and ge has done just on a minor catchup basis, general electric should be a buy here. >> look at intel, you look at intel, you look at valuation, you look at yield and cash on the balance sheet, all those things and they have been moving themselves toward growth. add in apple and the potential that they're in the 7, there's a lot going on in intel favorable for them. >> and think of dow, the dow

stocks, we don't even think of them. >> this is television, we live in a different world. we praise the dow and the dow is terribly important, no? >> i'm an s&p girl myself. >> when you identify a group moving very quickly. for more options action check out the full show at 5:30 every friday here on cnbc in deference to mike khowu. netflix having their worst day in almost two years. disappointing results we brought you last night. >> this is a must-own stock for investors. consumers are shifting their behavior. we're moving from watching the big cable bundle to watching on-demand video. the best way to express that is to own netflix. they're giving you exactly what you want at the price you want it. >> that will be january the

13th. days later the same analyst doubled down and said this. >> what investors need to be looking for is the belief that this company can continue to grow subs robustly in the u.s., meaning 5 plus going forward on an annual basis and that overseas subscribers, especially now that they have launched everywhere in the world other than china, that they can grow 10, 11, 12 million subscribers overseas, that type of robust growth internationally in terms of the guidance is really going to be the focus. >> now, since that initial january call, the stock is down nearly 24% according to yesterday's report. rich greenfield joins us live. very unfair that you should be pulled out in this way, i have to say. >> no, no, no. >> but it's the nature of the beast. >> we don't hide from our mistakes. there's no doubt -- >> was that a mistake? >> there's no doubt the stock is down 23%. i would call that a mistake to any investor that's looking at owning a stock. >> unless you believe we're going to recoup these losses and

this is an aberration. the train is still running full steam ahead. >> you pulled the quote where we talked about domestic needs to be 5 million and international needs to be 10 to 12. domestic will fall short. they'll probably do right around 4 million subscriber adds. next year rebound is closer to mid-4s. internationally we do think they'll do 11 million this year and more than that next year. when you look at this magnitude of the decline, the market is obviously having a vicious reaction to netflix short falls. you mentioned just as you were introducing the segment this is the biggest move they have had in a couple of years. two years ago we first put a buy on netflix was two years ago back in that october -- it was the third quarter, 2014, earnings report. the stock just cratered. right after we put a buy on it, the stock cratered. it was definitely a mistake to go in front of the quarter and be excited. if you look over the next two years, owning it over that period of time was tremendous.

yes, it's had its volatility. this is a very high beta name. but where is the business going? people are cutting the cord. you walk into walmart right now, and they are advertising cut the cord, ditch your cable company, get an antenna and get a streaming device. >> why do you think netflix is going to have an easy time internationally? that was the growth story. but talking about content, that's a hard process, cultivating the right content. >> absolutely. >> so why do you think they're going to be able to do that? >> i think it's not easy. i think the market is learning it's not an easy linear progression. if you look at latin america myself and if you look at most analysts or most investors looking at latin america, they really deemed it a failure. when they launched within the first 18 months, everyone thought latin america was a disaster. more -- you know, people had credit card problems, they were having trouble marketing, it just wasn't working. you look now, latin america is the star of their international portfolio. one of their earliest markets to launch. they probably have 8 million subscribers in latin america. so the bet you're making is that

the rest of the world will look like the rollout of latin america over the next three years. >> karen has a question. >> but you have a different set of competitors now. it's a very different competitive landscape than you had two years ago, so how much does that factor into your analysis? >> i don't think they're missing because people are signing up for amazon prime or for hulu. i think if anything, bundle that you're going to start to see over the next 12 months, the big cable bundle, whether we're talking comcast, charter, i think we're going to see declines in subscribers accelerate. there's a lot of money. when you cut $80 down to 40 or even nothing, there's a lot of money to go around that you're going to spend on hbo now, hulu, netflix. the reality is it's a competition for great content. if you can make great content, the stock will work. if you don't think netflix content is good and that it's getting better, you shouldn't own the stock. >> i notice that you're addressing that fund nejts problem that they only had 160,000 additional subscribers in this country and as a result of one or two dollar price increases, people were deserting

in droves. >> they weren't deserting in droves. that's where i would disagree fundamentally. i think the model shifted by 20 basis points. you're looking at a relatively moderate shift. remember last quarter domestically they blew it out. this company has been horrible at giving guidance. the last four quarters, four of them they missed their guidance and one quarter they blew it out on the upside. >> got it. >> so the reality is, yes, there was definitely elevated churn in the quarter, but despite raising their price by 20% on half their sub base, they're continuing to add probably 4 million subscribers this year. i wouldn't call that subscribers departing in droves. >> that's a fair comment. and the price target now? >> the price target is $130 down from $150. we took down our subscriber targets, which was prude gichntn the amount of the miss you quantified. >> they shouldn't be providing guidance because they have been so off and missed three out of the last four. that's one of the issues that has to be looked at a little

closer as an analyst and we all have to look at those numbers. but i think you have to look at this. this stock has been hammered. when you look at the international growth, yes, they'll have to put money into it but at these levels, it looks appetizing to me. ahead on the show, microsoft shares are jumping after its earnings report. we'll hear from sasha nadela after the break. you're watching "fast money" on cnbc, first in business worldwi worldwide. hey gary, what are you doing? oh hey john, i'm connecting our brains so we can share our amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswim's chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders? i know. your brain told my brain before you td my face. mmm, blueberry? tap into the knowledge of other traders on thinkorswim. only at td ameritrade.

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i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. welcome back to "fast money." i'm josh lipton. $6.7 billion, that is the big number analysts are calling out in microsoft's earnings report. it refers to their revenue. the company generated its so-called intelligent segment and ceo satya nadella taking a moment to do a victory lap on that loud business. >> overall the microsoft cloud is winning significant customer report with more than 12 billion in commercial crowd annualized run rate we're on track to achieve our goal of $20 billion in fiscal year '18. nearly 60% of the fortune 500

companies have three of our cloud offerings. >> nadella also point out as the revenue popped 102%, that is the company's cloud computing platform, microsoft trying to keep up with amazon which is still the leader with cloud infrastructure technology, but microsoft has advantages of its own, big sales force, long-standing client relationships. simon, back to you. >> josh lipton joining us there from san francisco. let's trade it, pete. >> it's all about speed and movement. nadella has done an outstanding job of getting the focus and he's gotten everybody's focus pack on the cloud. they're up 100%. these are incredible numbers they have been able to produce and they're doing it as we watch the pc world start to go towards that drain. so because of that, i think this is a name that we talked about $60 maybe being an area, that's one of the price targets for colin gillis. i think that's an interesting level. i think that does get to a multiple where we really start to wonder can they continue to grow from there. >> very halfful. >> no, i don't think he's half

full, i think he's being prudent in his comments about microsoft. >> i thought you were talking about pete. >> no. >> pete is always full. >> i'm full up, baby. full up. >> no controversy with him. >> listen, it's got to break $56.5 on the upside. you should be taking profits and ride the rest. up next on the program, the traders tell you what they're watching tomorrow, right after the break. more "fast money" on cnbc.

final trades are pressing but before that guy has a small announcement. >> "fast money" family grows once again. maurice, veronica was born. >> those are great stats. that kid is beautiful. >> that's a three cone. >> okay, final trades. pete najarian. >> going after intel. i think they'll beat this number just like microsoft did today. >> steve grasso. >> macy's, look at the yield there. it's getting interesting on a technical -- on a technical level. macy's. >> karen. >> yes. the airlines. a few of them. sticking with them. i think there's more room to go on this one.

>> guy. >> simon, you're rounding into form on this show, brother. valero, looks like the refiners have finally turned to the upside. >> catch "fast money" again at 5:00 eastern tomorrow. thank you, my mission is simple. to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere. i promise to help you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i'm just trying to save you some money. my job isn't just to entertain but to teach and coach you. call me at 1-800-743-cnbc. or tweet me @jimcramer. today may not have seemed that difficult on the surface dow advancing 28 points, another new record. s&p dipping