good morning. it is 58 a.m. at oracle headquaters and 11:00 a.m. here on wall street and squawk alley is live. ♪ carl is out on assignment but i and john forte are here at post 9. mike santoli here as well. markets have gone lower on a gdp revision but tech is helping the nasdaq higher. >> big news to get to this morning. facebook of course reporting a big earnings beat ahead of amazon and alphabet tonight. the stock is up 3% this morning.

also some tech m&a. oracle buying netsuite for $9.3 billion in cash. that makes it the second biggest acquisition ever. that's behind the 10 plus billion dollar acquisition just over ten years ago. just had a conversation with people familiar with oracle speaking on this and i was wondering right now because larry and his family organization connected to him own about 40% of netsuite. this deal looks more expensive than oracle has been paying for cloud acquisition. so why do this now? it turns out if you look at what oracle has been up to over the past couple of years, they have been building out cloud infrastructure. paying a lot of money for the data center resources needed to become the cloud company that they want to be. they needed to get there before they could do this netsuite deal and make it flow and work and

create the company and similar to if you're building out hotels you need to build the hotels before you can have the tenants actually make money. that's something behind this. also netsuite, because larry ellison invested in that company early on and had a close relationship with them, they used a lot of oracle technology over the years so part of the thinking is as part of oracle they won't have the cost to pay anymore for a lot of the infrastructure and the other technology that that suite has been paying for and overall in this cloud environment, we saw microsoft, linkedin. we're going to get amazon's result tonight. we're seeing companies that are big in the cloud already trying to press that advantage. not only through spending on capex but now trying to accelerate that growth through the certain kinds of acquisitions. >> if there is a master in integrating big companies after deals it perhaps, mike, is

oracle but people soft which is the only bigger deal that they did took a long time to get approved because regulators love it. >> there may be scrutiny. wasn't there a case two years agatha these companies agreed to operate in separate areas. did things become too crowded as this space developed for them to maintain that kind of arms length. >> that's a good question. oracle intended to deal with larger customers. netsuite but they do have them working on the same type of technology when it comes to resource planning and one could imagine that if oracle is looking at expanded internationally and domestically, maybe looking attackeling some industrial verticals. we wondered does that make a lot of sense? >> i would point out that tech m&a in general, $360 year today

and it seems to me that it's one of those tail winds allowing this month to catch up to sectors. >> it also operates in a similar space and do you think that's the next one to get snapped up? >> workday because it's run by the people running people soft before oracle took it out in a hostile take over they have been careful to structure the company in such a way and it's very difficult to take it out. they're very close with mark of sales force so that's one that you might look toward microsoft digesting linkedin. it's hard to see who is big enough. >> certainly. on the heels of what has been a challenging year to say the least. the stock is moving higher by

how much and let's go to san francisco and he has an exclusive interview. >> thank you for joining us. >> it seemed like the pressure now is really on go pro. you have to deliver big hit new products for the holidays. so new camera, new drone. that's a lot on your plate. why should investors believe, nick, that you're going to be able to pull this off. >> well we have been doing it for 14 years. 13 of those 14 years and we didn't have enough new products and didn't have enough innovation and advancement proposition to consumers and we paid for it.

and the back half of the year is loaded with the largest new product. >> given the year you guys had a lot might have lost confidence in the ability of this management team to deliver now on the promise of all of these great products in the pipeline. >> it's like any sports team you can win every single championship every year. so when evaluating go pro it's important to recognize we have been at this for 14 years. we have been successful. the brand is known for innovation. the customers love us the solution we deliver helping us capture and create and share compelling personal stories and our track record proves for itself. one year doesn't define a company or a management team. we'll just have to wait a little bit longer until later this

year. >> talking about cameras there's an argument out there that this is becoming a saturated market. if you have a gopro and want one you already have one. is it saturated or expanding? >> it's definitely expanding. and best buy target and walmart and the rate that our product is being off the shelf and suffered and we admitted last year we had too many products and we weren't strong enough and we just now sold through that product and we should see revenue starting to rise. >> john, you had a question for nick here? >> have you done what you

planned to do when it comes to software to improve the user experience and make gopros overall easier to use or is there a lot more to come? >> there's a lot more to come but i think that we're right where we hoped we would be this year and our acquisition of replay and apps really helped us accelerate our mobile strategy and in terms of desktop and cloud development all coming together for the 4th quarter and turn to software development we're where we want to be but the experience today is not what we have planned for our customers later in the year. >> nick, talking about other products in the pipeline, obviously lots about that drone but it's interesting because you're entering a market here. it's an early market but a market with big names and clearly names with a lot of brand recognition already. what do you do to up end and redefine that? what's your competitive advantage there? >> we so early days in the drone

market. it's only been a couple of years that drones have been pop culture and one of our strengths is that gopro is a household name i don't think you can call them a household name so we have an advantage there and in terms of the user experience how easy a drone is to use, there's so much room for improvement and that's our sweet spot and i think that gopros ability to deliver karma as an easy out of box experience that customers can have success with right away are well positioned to be positioned with karma out of the gates. >> when you talk about the improvements you need to make to the drone from the time it launched this year what feedback, what have they told

you about the price of the product that will work this time around? >> this year we changed our go to market strategy a bit in terms of how early we share information about our new products with retailers. in previous years gopro was more secretive about our new products and we didn't share any new information until right before a launch and this year we changed that because we have to be a better partner around the world and work together with joint marketing plans to have the biggest possible launch for our new products later in the year and we're doing that this year and the feedback that we're getting about our new products whether it's karma or our hero five line of cameras has been fantastic and validated our own believes about how these products are going to do in the marketplace. >> and especially in asia,

china, japan, india, in the second half how do you keep that momentum going? >> when we went public in 2014 we shared that we were anywhere from 1 to 4 years behind internationally. far more advanced than europe and asia and latin america for example and we said we needed to go and build teams and get people on the ground locally in those regions and begin localizing our marketing efforts and that's all bearing fruit this year and that's why we're seeing the growth rates we've got and now the teams are starting to be effective in their home regions. >> all right. thank you for your time today. we appreciate it. >> thank you so much. >> back to you guys in new york. >> thank you josh. meanwhile, markets are sitting near the lows of the session. the dow is down 96 points and the s&p is down about 6 points

and the nasdaq has gone into negative territory. lower down by about 5 points. cut to the atlanta gdp. estimate is in focus in the markets as are earnings and continued central bank disecti n digestion. ford down nearly 10% and sales are down in china which is a huge market for the company and lowering it's as well. the stock has come off of its high with the rest of the market. currently up 1%. the company, like other companies saying, brexit brought uncertainty but that transaction volumes will continue going up despite that. >> coming up we have to talk more about facebook. we just had a monster quarter beating on earnings, sales and user growth. google and amazon have their turn after the bell. we'll look at who comes out the

winner. plus a deal in tech. buying a company 40% owned by larry ellison. and it's the busiest day of earnings season. marriott ceo is going to join us to break down his numbers. we're just getting started on squawk alley. stay with us. ♪ [announcer] is it a force of nature? or a sales event? the summer of audi sales event is here. get up to a $5,000 bonus on select audi models.

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>> and here is the ceo on the conference call last night talking about what's next for the company. >> ten years ago most of what we shared was online and most of it will be videos. we see a world that is video first. over the past six months we have been particularly focused on live video. >> how it compares to the other tech heavyweights and daniel morgan senior portfolio manager. gentlemen, thank you for being with us this morning. start with you, facebook, the way i see it and and it's a high bar for google which is the other big dog in digital

advertising and this is like apple in the hayday of the iphone. what do we take away from this? >> just a staggering quarter. staggering. and the amount of the advertising spending that facebook is capturing of all that is moving online, advertising spending doesn't grow that quickly and a company of this size, growing 70% in the u.s. and the other thing is we're just beginning at the end of the video and we're talking about ad load and there's so many levers. they had instagram and just a spectacular performance. trying to get people not to expect this performance the rest of the year. given the fact that they were so sound in this quarter, do you buy it? are they trying to sandbag at this point? or are they really going to see a gross slow down at the back

half of this year based on the tough comps? >> it gets tougher going forward. if you look at advertising revenue expectations in terms of total growth you look at a 14 to 15% growth rate. and obviously and maybe we're not going to go 73% or 76% growth in ad revenue in terms of their mobile going forward so i think they're trying to cast those down a little bit just because they're hooking at the overall situation and they don't want to get the street too far ahead of them. and it's like what apple used to do i guess. >> starting to look at the ad revenue against what the new york times reported today. decline in print and digital revenue. digital falling for the second quarter in a row.

wasn't facebook supposed to lift the advertising boat for print with instant articles? is facebook now an enemy of publishing? >> not an enemy but you have two dominant platforms. google and facebook, snapchat is emerging. linkedin is doing fine but twitter is solved but a huge percentage. something like 85 to 90% of all spending is going to google and facebook and so ultimately, if facebook can share some of that advertising revenue with publishers and producers which they have started to do, then you start to evolve toward a cable and cable network model which is the model that most media had. facebook is not an enemy and that is the future. it is huge. so lots of opportunity there. >> oracle making a $9.3 million cloud bet announcing this

morning purchase of netsuite. that's a 19% premium to yesterday's closing price and the deal is the second largest in oracle's history. i wonder what your take is on all of this. oracle likes to talk about not plead guilty willing to pay a premium and just where we are in the m&a cycle overall. you see a lot of action across lots of different sectors. semi-conductors, microsoft, linked in. all kinds of stuff. what is the importance of this? it's oracle is playing catch upright now a little bit compared to let's say work day or sales force in term of trying to acquire their way into the cloud. they were not as aggressive as maybe microsoft was with office 365 initially but they're kind of growing into it and trying to take a commanding position there

but you're right. we had a tremendous amount of acquisitions. you mention linked in and microsoft. that's giving buoyancy to tech underall that's been slightly underperforming compared to s&p. >> you can see this coming from a mile away. given the ownership stake allison had made sense. there is one report out yesterday that there is a cold water here. >> plead guilty an analyst is hard and handicapping the intention of certain buyers threw some cold water on the idea that oracle was up 9% yesterday. and exten yin you waiting circumstances but it does point

out the concerns and risks to oracle of paying up at this level. and it goes along with it. and having to pay up for the future and buying the future and paying a good premium for that. this is the way they bought their way into the ad market. they did well in that. and now they're moving into cloud. it's a good deal. and then for work day and the cloud upstart on the other either who maybe don't have the scale or don't have the cloud momentum to compete. >> well any time there's a pig technology wave shift like this you have both the old companies buying up some of the new ones and some new once get to the scale where they are the consol day tos and acquirers and the industry is going to

consolidate. there's no question about that. they both have great positions. sales force is so big it could consolidate as well but there will be more combination. >> a quick last word for dan is knowing that, do you buy into this space thinking that there are going to be more deals or do you get worried that valuations that acquirers would have to pay for the companies are getting into that territory? >> well, we own a lot of the stocks that we're talking about today. sales force are extremely interesting because of the fact that they're probably next on the table for one of the big players to scoop them up so again you're right. valuations are an issue with those two stocks. it's sometimes hard to substantiate where they're trading at. sales force became profitable last quarter put we're definitely taking a hard look at those names because obviously they're extremely positioned well and probably one of the fastest growing areas software and service compounding the growth rate is 34% so you want

to be positioned in that group if you're an investor trying to get in the cloud. >> right. tech looking like a game of hungry, hungry hippos these days. thank you so much. >> meanwhile, i want to direct your attention to crude oil. it's down another percent and a half. down 20% from its highs and that's all come in the last month. trading at 3134. it was just about $50 a month ago. this has been this quite pressure on the overall market. it has not really spilled over into being a broader point of weakness in the stock market although now you're starting to see the high yield market give up a little bit of that strength it had for the last couple of months. that was where crude oil meets the stock market is through the junk bond market so it softened up a little bit here. definitely worth watching. conoco phillips disappointing again today.

it's one thing that was working after the february 11th low in the markets and backed off steeply here. >> 45 to 50 in the sweet spot and we have come away from there. when we come back, marriott out with solid earnings. a look inside the quarter with the ceo in a cnbc exclusive and take a look at the bio pharma company that fell hard on its debut yesterday. today it is up slightly but we're keeping an eye on it. squawk alley will be right back. eligibility? e you may think you can put off checking out your medicare options until you're sixty-five, but now is a good time to get the ball rolling. keep in mind, medicare only covers about eighty percent of part b medical costs. the rest is up to you. that's where aarp medicare supplement insurance plans insured by unitedhealthcare insurance company come in.

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>> shares in ford taking a big hit and phil is in chicago with more on that. >> what we saw a week ago with general motors. gm beat the street and raised it's guidance for the year and is having a tech of a time now and then this morning ford comes out and tumbles after reporting

two profits that fell 9% and also issuing a soft warning that it's 2016 earnings guidance is at risk. slower sales in china and there was very little in this report that make people say this is a one time thing. and up a billion dollars. that comes out to an increase of $430,000 per vehicle here is ceo mark fields talking on the conference call earlier today. >> we have seen a tougher pricing vierlt this quarter and we will face one going forward. and look to it. >> this is for it because compared to last year, that may

be but relative to your competitor gm up to 1.9%. that's why you see shares of ford under pressure and also ford credit seeing much more this morning and as a result shares of ford down almost 10% guys. and fwrks m, i know people are saying well what happens with gm? it almost always trades in tandem with ford. it's down not to the level of ford today but certainly in tandem with people wondering is this when it comes to pricing in the auto industry. >> steve, thanks for that. let's bring in simon hobbs. >> west european stock markets are lower. they extended their losses during the course of the session. the rest of europe is effected by the brexit vote. the euro zone confidence is there in the wake of that vote and unploilt remains at this record low of 6.2%.

within the u. k. itself still the questions are very open. today you saw what we call the guilt, the ten year bond in the united kingdom. the euro might actually fall to a record low. look how guilt has rallied and the yield has plunged in the wake of the brexit vote. next thursday the bank of england meets and will cut rates. working through some of the companies that reported today and it's a huge report ding dayn europe. they're going to cut an extra 3,000 jobs. an extra 3,000 jobs as a result of the brexit vote. deutsche bank continues to fall. they're saying they don't see a fall out from brexit yet and looking at the other movers today the big french outdoor advertiser is going to cut it's spending, it's investment in the united kingdom as a result of the brexit vote. that means less plasma screens

advertising, bus stops, and latin american currencies. and many stocks though have done well in the wake of earnings today. logitech is a big gainer. and rolls royce. five profit warnings in two years. new ceo cutting costs. it's done well today. thomas cook which had been plagued by it's exposure to turkey as a holiday destination has been able to rise and anglo american is very interesting. it's coming very close now to its debt reduction target of 10 billion and that's encouraged a lot of people from the streets of new york. more adidas doing well and damone is benefitting from higher prices. brexit is a big issue. >> have to keep a closer eye out for all the adidas on the floor. >> maybe not at your gym. >> i have a pair.

when we come back arne sorenson joins us for an exclusive interview. cutting it's forecast like hilton did yesterday. as we have been discussing all morning, making a big bet on the cloud to the tune of $9 billion. much more ahead on the cloud wars. squawk alley will be right back.

good morning. here is your cnbc news update at this hour. angela merkel standing if i recall saying the fact that two men that came to germany as refugees and carried out attacks claimed by isis has not changed her stance on accepting migrants into her country. footage released by syria showing intense fighting and humanitarian quarter let them lead. and back here at home democratic vp and taking it on to support hillary clinton. >> quite a few times. la's one-on-one freeway.

the 101 and in fact, six of the top ten worst highways are in los angeles. that's the news update at this hour. donald back down to you. >> thank you, sue. now slightly in the green after it followed hilton's lead and it will now close in the next few weeks. simon joins us now. >> he joins us from the bethesda program. welcome to the program arne. nice to see you again. >> good to see you too. if you were to look at a common story coming out of the results, it's clearly the un hilton and you both decided to downgrade this. it's not huge but for many people it's a story that's

emerging and you thought it might grow in this country 3 to 5%. and more about three. why have you made that decision. what have you seen in the industry? >> well, i just think gdp a quarter ago and, you know, in a way we were thinking gdp might grow in the 2 to 3% range and we don't know of course what the official figures were going to do and we're in the 1 to 2% range. >> and it's still strong and the groups are still strong how does it break down for you. what do you see at the moment. >> we have relative strength. the american consumer is actually doing quite well.

and spending money in other places. i think the group business is also quite strong. often the group business is forward looking. it might be an annual meeting or a product launch and it might be pulling together a group of customers and companies are still investing in those kinds of meetings but when it comes to individual business travellers which is what they are, i think companies are a little cautious. i think they are experiencing a bit less profit growth than they hoped for. i think they're a little bit worried about the future. not worried in the sense of 2008 when we thought the world was coming to an end. i don't think people are necessarily talking about a recession but they are being more cautious and that caution i think is directed at gdp which is kind of sliding along. it's not very exciting. >> your stock is obviously recovered from the january lows that we had about $60 as everybody obsessed as to whether

the cycle was turning. you all faced those questions from meful that's been the narrative if you like for the last year certainly. has that now impacted the business? because if i look at your hotel pipeline t hotels to come on stream from the developers, you're reducing that by 50 basis points so some openings are being delayed or contracts are being delayed. is that having a material impact? >> well, no it's not. it's a very interesting quarter for us. this one so let's just use it as an example. we reported 2.9% growth around the world. now that's not currency adjusted. when you adjust it for real currency it's 2.3%. and it's pretty aknee mik. that's our growth and with the unit growth that we generate into our system, the new hotels that open and with good cost management we drove 18% earnings

per share growth and in the sense when you ask the question about are we peaking, we don't think we're peaking at all. we think we have the levers of same store growth, cross management and return to shareholders. to say nothing of the acquisition that would close in the next couple of weeks but those should continue to drive more meaningful growth. >> and presumably we'll get further details on what you'll do when it does close. last time we spoke a lot of people were taken by the criticism that you made of the tenor of the current election campaign and in particular the things donald trump was saying. you were clear that you were not in support of that. i wonder several weeks later if your analysis of what's going on from a business perspective has changed? >> i'm not here to endorse any candidate but let me make just a

couple of come mens. it's one of the most fascinating elections that we have had obviously for a long time. it is -- too often we hear from folks that they are not inspired by either candidate and a consequence maybe they won't vote. obviously that's a cop out in a sense. the job of president of the united states is a really important and very real job and we ought to be picking the person that seems to have the medal, the experience, the interest in governing, and doing the things that have to be done and every one of us has to challenge ourselves to say who is that person in my judgment and get out there and vote. and it's going to be very interesting to see what happens over the course of the next couple of months. >> good to see you. arne joining us there, the ceo of marriott from their headquaters. >> thank you, simon.

marriott stock up now almost 1%. coming up as book knocks it out of the park this quarter, are there any clues suggesting how google and amazon might do tonight? that's coming up but first rick santelli, what are you watching today? >> jim and i are talking about the fed. you know, was it doves? hawks? >> trying to get their ducks in a row. >> it's all about foul language. we'll talk about that and m&ms. why? you'll have to turn out after the break to hear.

>> one big name company in a key industry surprising many investors today and analysts with a weak number. does this show the market has really come up too far too fast. plus the analyst who downgraded facebook loost week is back. that after solid numbers. stocks alt an all time high. we'll see if he is still confident in his call. and how you can still play the cloud stocks. straight ahead on the half. we'll see you in about 15. >> meanwhile let's get to the cme group. rick santelli with some foul language. >> yes. foul as in doves, hawks, maybe having your ducks in a row. i find it very interesting yesterday all i wanted to watch was the dollar index and the dollar index did a reversal down. i don't know how you can peg that as a hawkish statement but everybody is entitled to their

own opinion. a lot of that had to do with how they looked at the labor market. your thoughts on this. >> i agree with you. if you look at the markets, all of them in total. the stock market went up after the number. interest rates went down. the fed fund futures right over our shoulder here reduced the chances of the fed moving in september and december. the market sent a message. the fed is now further away from a rate hike than they were before the number even though all the economists are saying the opposite. >> m&ms i talked about it in the tease it's basically markets versus models isn't it? and markets, their message and their signals in many ways can be considered broken and that doesn't mean the reaction can be observed, correct. >> if you look at the markets there's been 86 fed meetings since 2006. 10 days and 100% of the time gets it right. so if this market doesn't have a

fed rate hike it's not going to happen because the markets at 100% track record right now and a lot of people move past that. >> i call it stockholm syndrome with regard to the marketplace and how it's sending messages back to the fed and the accuracy is based on the notion that investors like to party, is it not? >> absolutely. because the fed will look at that. the market has us pegged because we have good communication. but august of last year the market tanked when the chinese said don't hike and then international developments. may of this year the fed did a very big disservice to their credibility. they came out with a campaign and june is a light meeting and then they didn't move. the markets figured it out. it will tell the fed what to do. the fed is too afraid of financial market reactions so it

will follow what the market wants and right now the market is telling them i don't care what your language was. you're not raising rates this year. >> the last first quarter gdp was around 1%. half of that. 50% is five tenths. >> and yesterday 2.3 to today's 1.3. that's pretty shockingly large. >> to a second quarter rebound supposed to be where the economy mobilized. it's 1.8. that's a rebounded economy. that used to be a bad economy three years ago. now that's good and we're in deep trouble if that's the case. >> it's election season. we're going to grade on a curve like no other. thank you. john fort it's all yours. >> all right. thank you. amazon and alphabet sent to report earnings after the bell today. we'll talk to a top tech investor next about what to expect plus can facebook keep going higher? squawk alley is going to be right back. just about anywhere. r business

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the separated a second but still take a look at amazon, facebook. we're watching tech because it's one of the best performing sectors today.

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big week for tech earnings. facebook delivering a steler quarter last night trading near all time highs. we'll here from alpha bet and amazon and companies like twitter. let's jump in. any read through from facebook

to what we'll see tonight? >> i'm sorry could you repeat the question. i had a hard time hearing you. >> any read through from the strong numbers that we saw facebook put up from its mobile advertising segment that you can extrapolate for alphabet tonight. >> if you look at facebook right now 84% of the revenues are coming out of mobile so mobile is a huge driver of growth and facebook's made a transition from a desktop to mobile application. if you look at google the vast majority of the traffic comes from desktop. i'm not sure this makes the decision on what happens today but if you look at google longer term their biggest challenge is a tremendous amount of growth from their mobile platform and search but the rates around mobile are significantly lower. i think the challenge for them over the next few years is bringing up modernization on the

mobile size as the increase amount of traffic comes from the mobile platform. >> people keep saying there's room enough for facebook and google. at what point do they start to bump into each other in this digital advertising market. >> i think that bump is definitely happening. that being said, if you look at just the dollars, they're still invested in tv by brand advertisers relative to the amount of time. there's such a radical shift that's happened over the last two years that there's still a very large amount of dollars that are going to continue to move. i think the other question is you've got new platforms, you've got instagram owned by facebook, you have snapchat so i think google and facebook will have competition with each other and emerging platforms as well. >> wa that being the case i guess the question right now is how much credit has facebook

been given for effectively p becoming the new tv down the road at $360 billion or whatever it's worth, do you feel as if the market is pretty much got it right in terms of the pace of its market share gains? >> i'm not a hedge fund investor but if you look at facebook you still have some very large platforms within facebook and instagram and messenger that are still very early stages of modernization. so they've got the core business that's driving a significant amount of revenue and profitability and they've got emerging platforms that are at scale for 70% of the user base. so i think there's still a tremendous upside in facebook's both top line and margin. >> we'll see what we get after hours tonight. we appreciate you joining us today.

>> thank you. >> looking forward to amazon and alphabet, these are two companies that aren't known for their ablility to help wall street forecast what they're putting up but they're getting better. >> i think amazon because the fundamentals of the story are so pur swasive people are comfortable with that story when there's not a lot of guidance but they get to the report. i think it's a fascinating question what you asked about google and whether it's kind of -- whether the pie is big enough, whether there is room enough for both. right now there seems to be but these companies together are pushing $1 trillion in market value so how much do they have to swallow up. >> from what twitter said about advertisers and then facebook comes out and says they're spending more just not with twitter. >> those two stocks tend to be very volatile.

alphabet was down 5% but they tend to be rather short lived drops for that stock. very subtle hamilton reference there. >> you caught that. >> the world being wide enough. with oil now in bear market territory that does it for us. let's send it over to the half. thanks. wat the top trade this hour the one stock some say could be a in a naer in the coal main for the rally and it is ford. the auto maker's shares getting wrecked today on weaker sales in china and a sobering of outlook for business this this country. it calls into question what's been a pillar of strength for the market and it has us wondering if stocks are at risk if