welcome back to "squawk on the street." i'm courtney reagan. markets are mixed with health care standing out as the best performing s&p 500 sector, and by a wide margin most of the gains are in biotech stocks with biogen, gilead and celgene leading the way. now down for the start of "squawk alley." >> good morning. it is 8:00 a.m. at uber headquarters in san francisco, 11:00 here on wall street. "squawk alley's" live. i'm jon fortt. welcome to "squawk alley." with me, sara eisen and mike

santoli. >> carl has the morning off. we begin with our coverage of hurricane harvey, which continues to wreak havoc on texas and louisiana. the houston area alone receiving 20 inches of rain already with more to come the president is set to travel to texas tomorrow. we have team coverage for you. jackie deangelis is live in corpus christi, angie lasman monitoring the storm track at hq jackie, over to you first for an update. >> reporter: hi, there, sara it appears, at least for the moment, that the weather has calmed here and some of the dust is settling, but now there are a lot of questions with houston under water how corpus christi is going to get back on its feet, get power restored, get the plumbing going again some of these coastal towns were really hard hit over the weekend. we were in rockport. we spoke to some folks who were speaking to the solidarity of the texans and praying for those in houston, but we spoke to some who said we need help and we need it now. >> i don't think so. this is pretty bad

if we're not first, i don't understand what's -- there's something wrong. it's devastated. >> reporter: and i can tell you firsthand from driving around rockport, texas, it was devastating. but remember, you're talking about a town of 10,000 people versus potentially a lot more stranded and in trouble in the houston area but in rockport, no power, no sewers working at this time, no cell phone towers operating in any way. we were up there, and we couldn't even broadcast as a result of that so, these folks are really stranded there you've got shelters housing people at the same time as well, and they're trying to figure out how to get out of it the devastation in terms of the structures, we literally saw houses blown away, and it wasn't just one or two, it was blocks of them. so, you have texas as a state right now very hard hit. back over to you guys. >> jackie, a question for you just about corpus christi. so, about 3 1/2 hours from

houston. we know corpus christi itself has a port that is one of the biggest in the country, i think the sixth biggest. houston is the second biggest. what other impacts are you seeing locally, and what sort of refinery and energy infrastructure is located there? >> reporter: it's going to have a huge impact. there are five refineries here, three of them that we know of are shut down. remember, when you have flooding, when you have power outages, it becomes very tough to operate a refinery. back to your point on the ports. the ports here have been closed since friday that's a main way of getting the oil and also getting the refined products out of here so, those will be closed for a sustained period of time the other thing to watch for is pipeline operations. that's the other way to get product out of here. so, right now the concern is not even just the refineries' shutdowns, but it's how do you get product out of storage and move it around right now it's probably going to be difficult >> jackie deangelis, thank you from corpus christi, texas, this morning. let's get over to headquarters,

angie lasman now tracking the storm for us angie, what can you tell us? >> sara, we're continuing to, of course, see heavy rain building back into the houston area we've seen a flash flood warning go up for portions of south houston. you'll notice just south of the city where we see all of the reds, the oranges, the greens are a little bit lighter, those, of course, widespread, but where you see the heavier rainfall from baytown to south houston, big problems heading into those areas that have already seen plenty of rain this is the trend that's going to continue over the next couple of hours and as we head into the evening hours, it looks to continue into the overnight as well. here's a look at where our rainfall totals have been through the past couple of days. you'll notice we're talking 20, 28 inches in north houston, nearly 30 for many parts you can see the highest amount on that map, baytown, 34 inches, which as of right now is, again, dealing with the heavy rainfall. we're talking anywhere from 10 to 20 more inches of rain. and by the time this system is over, which by the way, isn't for a couple more days, we will

have reached record-breaking historic levels of rainfall, talking 50 inches of rain here as we go through the next couple of days. so still flood watches, flood warnings, of course, and those tornado watches in effect for the next couple of days and a system that we're going to have to continue to watch through midweek. sara, back over to you. >> all right, no letup angie, thank you joining us now, former fema deputy administrator from the obama administration, rick serra serracertai cerino thank you for joining us given the fact this is pouring rain and angie outlined, flood and tornado warnings galore. >> good morning. it's very difficult to continue doing the rescues while it's still raining, while the search-and-rescue is still going on and one thing i've seen that's been impressive is the leadership that has been shown, both at the local level, the state level, and the federal level. and bringing in and looking to see how neighbors can help neighbors, locally asking for people with boats to come out

and help save people's lives and we've seen that all throughout this entire event, and i'm sure we're going to continue to see it at the same time, we know that can only go on so long, and fema's bringing in the urban search-and-rescue teams as well as texas bringing their search-and-rescue teams. so, it's a cooperative effort. right now the main priority is saving people's lives. >> rich, it seems like this disaster is unusual in a number of ways. huge urban area. it's a lot of water. i'm not sure if you have insight into how long something like this would take to drain after we have search and rescue, there will be food and shelter issues, and possibly, i would imagine, health and disease issues as well how much of that is fema positioned to take care of >> fema working in concert with the state, they support the state, along with the locals, but also bringing in the voluntary agencies that are going to come in to help there's no one agency that can do this alone. as we look at these events, these are very complex events,

looking at how to bring together the voluntary agencies to get the right people to the right area at the right time, the federal agencies, the urban search-and-rescue teams, the teams are going out working where they're needed most. and looking at the first responders, the heroic work that the first responders have been doing for the last few days, and people are getting tired and realizing now that they have to look at, you know, bringing in people to relieve them as well as looking at others that you can fwling bring in to help out but one of the key issues throughout will be the leadership, the communications, the coordination of all of these various aspects. but also one thing we've seen is the compassion that's been shown at all levels. >> no doubt about that, rich i wonder, once we get through this sort of rescue phase, how quickly we can start turning toward things like figuring out exactly what the scope of the power problem is, for example, and what the government role is in trying to move that process along and getting electricity back to some of these areas. >> well, once lifetime safety is

taken care of, and again, that's the first priority, and that's still going on in some areas and is going to go on for days but as that's going on, also looking at what the assessments happening now. a lot of assessments are being done to look and see at getting power back up where you can, in the areas that have lots of water, it's going to be difficult to get power back up and this is going to be a process that's going to be a long haul, getting power back on it could be three weeks in some areas. then after that, looking at how you start to house people and how to start to look at people in shelters, and that's, again, a multifaceted, coordinated effort fema's there to assist the red cross is there to assist voluntary agencies to help rebuild and clean out houses, such as team rubicon, are all agencies that are lining up, being coordinated through the state. you have great leaders there, nim kib, the state leader in texas for emergency management, has lots of experience, has relationships built already with the administrator of fema as well as all the various county and city emergency managers as well

>> yeah, as we understand it, fema's sort of the central nerve center, putting all of these local and federal agencies together the coast guard, department of health and human services, the energy department. just how much of an undertaking is this for the federal government, and how big of a test is it for the trump administration >> well, this is a massive undertaking for any administration, bringing together all of the federal assets, and the administration has said that they're bringing together all the different federal agencies in the national response coordination center there is the -- you mentioned the department of energy, the health and human services, the assistant secretary of preparedness and response. they've been leaning forward trying to get a lot of resources out there. but this is, they can't even get into certain areas now, but laying the groundwork in order to do that going forward is key. >> some of these images are just unbelievable rich, thank you for joining us with your perspective. the former fema deputy

administrator, rich serino. >> thank you. >> when we come back, much more on hurricane and now tropical storm harvey's impact on the country's oil refining capacity, plus, uber has a new ceo recode's kara swisher weighs in. and later, amazon officially takes ownership of whole foods what does it mean for customers and prices find out when "sawaly" tus.quk le very nice girl... you never got the brakes looked at? oh yeah. no. at cognizant, we're helping today's leading manufacturers make things that think and do automatically. imagine that, a world of new digital products and services all working together for you. can i borrow the car when it's back? get ready, because we're helping leading companies see it- and see it through-with digital.

hey you've gotta see this. cno.n. alright, see you down there. mmm, fine. okay, what do we got? okay, watch this. do the thing we talked about. what do we say? it's going to be great. watch. remember what we were just saying? go irish! see that? yes! i'm gonna just go back to doing what i was doing. find your awesome with the xfinity x1 voice remote. uber is choosing expedia ceo dara khosrowshahi to be its next

ceo and ending months of speculation about who would replace travis kalanick. joining us now, kara swisher, executive editor at recode kara, we were glued to your twitter account and to recode over the weekend you were the first to break this story. a number of scoops along the way. just take us through what happened this weekend and how surprised candidate dara khosrowshahi beat out jeff immelt and meg whitman. >> well, it was a tumultuous weekend and, in fact, it hasn't been officially announced yet, but we're pretty certain he's the candidate and the person they've offered the job to and it's a done deal but it was interesting, because going into the weekend, it looked like meg whitman had the strength of that job, and i think a lot of people thought that she would get it, and it was reported a lot i was writing that it was a little more sketchy than that because she had a lot of demands for the uber board that were pretty complex, including changes in governance, what the involvement of travis kalanick would be, and a whole -- and she wanted that lawsuit between

benchmark -- that benchmark waged against kalanick to be stopped. and so, i think she was a more problematic candidate because she was demanding a lot of things, which seemed entirely reasonable at the same time, jeff immelt, i think, who was the front-runner once meg entered the picture became not the front-runner. he pulled out of the race on sunday morning as the votes weren't quite there for him. but really, what it became was meg whitman was benchmark's candidate, jeff immelt was travis kalanick's candidate, and dara was one that they could all agree on >> kara, between a fractured board, a founder who's been troublesome, employees in turmoil, a reputation that's tough for uber right now, this is a really tough situation for dara khosrowshahi to go into compare it to yahoo or anything else you've seen in silicon valley have you ever seen a ceo coming into a job tougher than this >> no, he's got a lot of problems there's also no management, as

you know a lot of people have left. there's a lot of open jobs so he's got to do a recruiting job. there's a regulatory issue there's a big lawsuit with alphabet that is very frightening to a lot of people inside of uber there is, you know, cultural problems, a toxic work culture that was reported on in the holder report. there's travis, who's also very talented, and you've got to manage him properly. there's a board that's got -- should be seeking therapy among and between each other so, it's a, welcome, dara, thanks for coming, thanks for playing. we'll see how he does. he's got a great reputation, though and it's interesting, because he's run expedia very well i think he's got a great reputation on wall streets, so there's also a potential ipo that he might have to manage so, a lot of things for him, and he's certainly up to the challenge. he's got a technical background, very interesting personal background, an immigrant from iran he's related to a lot of different entrepreneurs in silicon valley, which is interesting, and he's also very

outspoken. he's spoke out against the trump administration on the travel ban, and he's been trained by barry diller he was the ceo, so he knows a tough boss, terrific boss, but a tough boss so, it's just, it's an interesting choice, and we'll see if he can cobble together what's needed to fix what is a very, as i've said many times, a great product and a business that's super promising >> you have to imagine, kara, that a new leader would come in and see that stack of challenges that we've been detailing and say, well, there is the opportunity right there. have a company -- >> sure. >> -- with a great franchise, but it's been so consumed with its own personal issues. and you have somebody who's run a public company, dealt with constituencies, say we have drivers, we have customers, competitors to deal with, and maybe that's the chance for a new start. >> yeah, it is, but at the same time, they've left behind some real damage. i mean, i think immelt and whitman are probably not very happy about how this was

handled. obviously, on the way out, sources close to him were talking about the dysfunction and the toxicity i think whitman probably feels the same thing and so, i think there's -- you know, how they handle this, even though they're all pleased, you know, this board is pleased, i think, just, it's still, there's the lawsuit with benchmark continues until they announce that it's been cleared up. that continues that's not a good thing. and so, it's a question if they can stop focusing on themselves, and as i've said many times, focus on the product and the great employees of uber. this is a very typical -- it's almost like a greek tragedy in many ways. some of it's quite ugly. there's a lot of personal stuff that went on that we didn't report on that they were trying to lob at each other, and it's an interesting -- it would make a good book, i guess, or a movie or something, but we'll see if they can get it together and he's certainly a very -- got a sense of humor he's dynamic again, he has technical skills,

which is critically important, software skills. so, we'll see what happens once it's announced it has to be announced first, and he's got to meet the employees, too >> he also reportedly took home $94 million last year, was one of the highest paid company ceos in the s&p in 2015. >> he'll make more he'll make more here he'll make a lot more. >> do you know anything about that do you know anything about what they're offering >> not yet no, it will be disclosed but you know, if this company goes public, you're talking similar to how meg whitman went to ebay and made a fortune, billions of dollars. i think there's a potential if it goes public successfully and it gets turned around, he could make a lot more than $94 million, so, which seems like a huge amount, but you know, this is a very highly valued company. >> absolutely. kara, we'll look for your continued reporting. thanks for joining us this morning from san francisco >> thanks. >> kara swisher of recode. meantime, amazon officially closing its deal to buy whole foods today. our deirdre bosa has the latest on that. >> reporter: good morning, mike. well, it's day one, and the

amazonification of whole foods has already begun. stores are just opening here on the west coast, and customers are walking in to see lower prices, and amazon devices now, in the window of the upper east side store in manhattan, where you guys are, and displayed inside, amazon's smart speaker, the echo, which is being advertised in a nod to whole foods' pick of the season product. seems farm fresh right there and guys, there are price cuts throughout that store and here in san francisco as well bananas, take a look they're now 49 cents a pound versus 79 cents on friday. free acquisition there's also rotisserie chickens not a lot here because it's early in the morning, but they're a few bucks cheaper. you've will the got organic milk, 50 cents less than it was prior and over the weekend also, the price of bottled springwater has been cut nearly in half. also, check out the new branding on the website it's not just changes at the brick and mortar level whole foods, plus amazon, toute

online, and check this out, with a new leafy green logo last friday when amazon announced it would be closing the deal today and making changes, right away shares of competitors were hit hard. today, though, less of a reaction, though you are seeing farmers down nearly 7% for amazon, though, some analysts are bullish on the deal, morgan stanley saying the partnership will be a goon in the long-run, generating more prime subscribers and market share gains. and it's positioned well in the $700 billion grocery category. guys. >> yeah, certainly an aggressive response out of the gate from amazon with this deal. thank you very much. when we come back, the ceo of vmware with a new cloud announcement for us. and then fitbit unveiling a new smartwatch today we're going to speak with ceo james park in a first on cnbc interview. "squawk alley" back after this ♪ there's nothing more important than your health. so if you're on medicare or will be soon,

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welcome back vmware announcing expanded products and services for managing the hybrid cloud at its vm world conference. the company is partnering with microsoft, google, ibm, and most notably, amazon's aws. pat gelsinger is joining us now. >> good morning, jon great to be with you this is becoming a bit of an annual ritual for you and i. >> it is, indeed, and i'm happy about it want to start off with vmware on aws. you finally launched in the region in the case of "the enterprise strikes back" when it comes to cloud, whether it's oracle or others we're hearing, enterprise companies kind of from the traditional era repositioning for the cloud, coming back in a bigger way how do you expect this amazon partnership to change the way your cloud customers understand what you do? >> well, we're very excited about it and since we announced late last

year, the coming together, the leader in public and the leader of private, the response from our customers has been really quite overwhelming we've gone through our lighthouse program, and today making the availability of that service, and as you said, starting in the west, but over the next year we'll be making it available globally across all of the amazon availability zones. and even though we're just making it available now, we have some 20 customers who are reference customers with us here, and a lot of enthusiasm. as you say, sort of "the enterprise strikes back" in the sense that enterprises have struggled to go to just public cloud, and this ability to seamlessly go from their private to the public cloud, but also to seamlessly access the leader in public cloud with amazon services. >> right. >> it really is the best of both worlds. >> pat, you've also got a security announcement as part of vm world with your app defense product. what i'm wondering here, dell, who's majority owner of you guys through emc, also has secure

works. and there are all these other companies who are talking about a nontraditional way to do security, why you should listen to them. are you now arguing for being the first point of contact when it comes to security, or is this more kind of an add-on specifically for your customers who are already in the vmware ecosystem? >> yeah, really what we're doing here, jon, is you know, so much of security has been, we'll call it chasing bad amongst the millions or billions of things going on, finding those few bad things and what we're announcing here, it's called app defense. it's using the virtual machine, really the core innovation of vmware, to now enforce good, determine what good behavior is and make sure that that virtual machine or that workload or application only does that, and it really changes the entire security industry. and our job is, we see it is to integrate more of those functionality into the infrastructure it's no longer infrastructure, it's secure infrastructure but then to work with the

players in the industry, like rsa and dell, but also palo alto, secure works, and we have ibm here at the show with us, to leverage those capabilities to deliver an overall secure capability and finally, cyber hygiene -- >> but pat, as somebody who's covered security for a while, i'm hearing this from so many different players that it's not about finding the bad guys, it's about understanding the overall system, being smarter. how is your approach going to be that much better than what i'm hearing kind of along a similar line from the taniums and palo alto networks and all the others out there? >> what we're doing is we're using the virtual machine that is essentially running 80%-plus of all workloads that are already there, so nobody else owns that container like we do, and we're introducing machine learning into that to be able to enforce the good that's a footprint that nobody else has but we're also opening up api so all of those players can give us better machine learning and

insights into that player as well, and that's a place vmware with only do for our customers and huge excitement about this new capability. >> pat, give me your assessment of kind of where the battle lines are in the cloud right now. all of the numbers i see show amazon, especially when it comes to infrastructure as a service, public cloud far ahead we've also got microsoft, we have got oracle making some noise, google trying to get some things going i mean, i know you're dealing in the private cloud right now, but as you look at the landscape, how do you see the battle lines drawn? who's got the most power >> yeah, clearly, amazon's number one that's why this partnership's such a big deal. everybody sort of says azure, microsoft has made an extraordinary leap forward to be number two behind them, google, ibm, a huge partner of ours, and we're seeing great momentum there, and then others like oracle and alibaba as you go to asia are clearly in that game, but it definitely is a big boys' game

and vmware's role inside of that is make all of those cloud services available to our customer it's really a multicloud strategy -- leveraging our position in private, partnering with services like amazon service today, but also new cloud services, any cloud is available to our customers and that's what we're trying to provide to the vmware clientele, the ability to access and secure across any cloud. >> are we in a new era of concern about vendor lock-in i mean, it used to be before the cloud nobody wanted to be locked in to get everything from one provider, but now in the cloud era, it seems like that has reversed, or at least it had somewhat you are arguing vmware's technology is the answer to avoiding vendor lock-in. is that something that people really care about anymore in the enterprise >> well, clearly, i mean, as people are looking at these cloud services, they're finding more and more value from them. but everybody likes choice, and they like to be able to have different alternatives so, clearly, our proposition for

customers is give them the best of those services, like amazon, as we're doing today, but also give them choice so, we really are trying to bring those two buying behaviors together in a powerful and effective way for our customers, and the response, jon, has just been fabulous. >> big day, busy day for amazon. they've got whole foods and andy jasey, head of cloud, is there with you at vm world, so thank you for that pat gelsinger, ceo of vmware. >> thank you, jon. all right, european markets just closing seema mody is here with us at the nyse to run through it for you. >> hey, mike wuns again, the currency market that's getting a lot of attention, the persistent rally in the euro, now spiking to a fresh 2 1/2-year high. just look at the chart 1.19 against the u.s. dollar many analysts now calling for 1.25 when looking at the euro/dollar. an active discussion on european corporates after draghi did not talk down the strong currency at

jackson hole on friday also helping the euro is italian economic confidence is at its highest level in ten years as unemployment has been on the decline in italy in fact, italy now the best performing g7 stock market in 2017, up about 13% or more but busy day on the economic front for europe, or weak, i should say german inflation on wednesday. we'll get the broader eurozone inflation number on thursday, followed by a read on european manufacturing on friday. markets in the uk are closed for bank holiday, but the third round of brexit negotiations kick off today prime minister theresa may trying to carve out a special deal with european leaders in the meantime, the pound continues to weaken. lastly in terms of international impact of hurricane harvey, analyst john kilduff says he's expecting demand from european refineries to pick up if the storm in texas persists. some names to look at is royal dutch shell, bp, total and eni

spa. >> thank you so much. fitbit out with a new product lineup we'll speak with the company's ceo in a first on cnbc interview. plus, the latest on harvey's impact and the country's oil refinery capacity. "squawk alley" will be right ba ck

good morning, once again, everyone i'm sue herera here's the latest on hurricane

harvey the corpus christi international airport resuming commercial air service today. two other major airports, george bush intercontinental airport and hobby airport in houston, do remain closed. nearly 300,000 residents remain without power. 13 million people remain under flood watch. health and human services secretary tom price says the federal government is doing all it can to support south texas. speaking on the "today" show this morning, he says they are still in a rescue phase. >> we're not to the recovery phase yet. this rescue phase means that we're trying to make certain that individuals who need assistance are getting that assistance, individuals who need water are getting that water and the kind of assistance to the local and county and state officials. >> more than 3,000 national guard troops and coast guard have been called in to help rescue those caught in the floodwaters. the coast guard alone has rescued nearly 1,500 people so far. another 20 inches of rain is expected in parts of that

region that is your "news update" this hour on hurricane harvey back downtown to "squawk alley." jon, i'll send it back to you. >> all right, thank you, sue. fitbit, meanwhile, introducing three new device this morning, including its ionic, a brand-new health and fitness smartwatch with payment capabilities shares moving quite a bit higher on the news, up about 6.5 mers% at this hour for a first on cnbc interview, we have fitbit co-founder and ceo james park with us here at post 9 james, i've got the ionic with me on right now. >> okay. >> i'm not a big smartwatch fan. i tried a couple different iterations of the apple watch. it didn't measure my heart rate accurately, especially when i wasn't either running or on a bike is this going to fix that? >> we think so so, the most exciting thing about today is we announced fitbit ionic, which is our ultimate health and fitness smart watch. it has new sensors, so improved heart rate accuracy, so it will help you out a new sensor as well, detecting

relative oxygen levels in your blood. it has gps, you can swim with it, third-party apps powered by our acquisition of pebble and payments as well, all with four days battery life. >> you have apple to run up against in a holiday season where it spends a ton on marketing. people are going to be going to apple stores for the new iphones anyway they're going to try to upsell them the watch how are you going to be able, even if your product is great, to move beyond that kind of marketing onslaught? >> fitbit is the number one wearable brand in the world, so that's going to power our growth we have the largest health and fitness social network in the world, over 50 million registered users we're cross platform, android, ios, windows and we have the world's largest database of validated health data so all these assets we feel make ionic a unique product in the market, and it's going to power a lot of incremental growth for the company. >> can you talk about your new parner shaship with adidas

apple has had a longstanding partnership with nike in release of the apple watch is this an answer to that? and what does it entail? >> we're focused on our own strategy adidas is an amazing sports and apparel brand. globally it's incredibly strong with amazing distribution, so it made total sense for us to partner with adidas to launch a special version of the ionic along with apps and contents to come later so, this is a really big deal for us it's a multiyear partnership that we're excited about. >> i wonder what the mix you expect might be in terms of the buyers seems pretty focused on performance and fitness-oriented folks. yes, it's a health monitoring device, but is there also a market for people with health issues we know that's a tremendous market, monitoring of various other things like diabetes, glucose levels i mean, is it all one market or do you have to slice it up >> we think it's one market and we feel ionic's the product that addresses both if you look at one of the sensors we launched, it detects your blood oxygen levels, and through that, we can see if you have conditions like sleep apnea in the future, and that's a major health condition and

problem for a lot of americans >> when you look at the different segments, there is the premium segment that this addresses. this is $299, i believe, is that right? >> it's $299. >> but then you've got a lot more affordable fitbits. in the high end, you've got some competition from the apple watch with the mainstream user, but also from garmin a lot of the harder core athletes, i know people who like to swim, you know, are comparing between you and garmin how is your messaging going to break through that and identify what fitbit is better at than, say, garmin? >> i think we've already been successful with that we launched fitbit blaze almost two years ago. right now it's the number one android-connected watch on the market it's the number one best-selling smartwatch on amazon so, i think we have the experience and credibility to really make ionic truly the health and fitness smartwatch for everyone in the masses. >> can you talk about your stock price? we are seeing this little bump today, but the stock is still down 60% over the last 12

months how do you plan to reverse that? and has it been surprising to see these reactions, particularly to some of your earnings >> well, we beat guidance the past two quarters, so we're on a positive trend i think we've demonstrated to investors that we've stabilized the financials of the company, and if you look at our guidance for the next quarter and the rest of the year, i think we're highlighting a path back to growth and profitability, and ionic is a big part of that story, so we're pretty excited. >> the market sort of implicitly suggesting that there might be a challenge to sort of have a company focused on these smart devices that's not integrated in with like an apple, with a broader device-maker how do you make that case, that, in fact, this is going to be an enduring category? >> smart watches today are a $10 billion market and projected by idc to double over the next four years, and this idea of improving everyone's health and integrating for the health care system, that's a huge idea, and there's going to be opportunity for many different companies to succeed. >> want to ask you about flier real quick as we close these

bluetooth fitness earbuds. you've got i think a four to six-week lead time on these. you can preorder now what is it with bluetooth ear buds why are they so hard to get out? apple still hasn't caught up with demand, able to make its air pods fast enough. >> headphones are an incredible piece of technology. you've got to integrate all this sensors and audio into a super tiny form factor i think we've succeeded with that in ionic, and i think it's going to be the perfect companion with flier and to ionic when it launches. >> all right, james park we'll see how this tracker does, ceo of fitbit. stock up better than 6% this morning. when we come back, uber naming a new ceo this weekend. we'll speak with an early vest t inorn e mpy onhat choice more "squawk alley" after this whoooo.

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uber tapping expedia ceo dara khosrowshahi as its next ceo, ending the company's long-awaited search and drama. for more, paul hall is general partner of foundation capital, an early investor in uber. paul, welcome. >> thank you >> so, we know that this was a hot ticket, jeff immelt, meg whitman, different constituencies on the board favor different candidates i guess dara khosrowshahi, according to kara swisher, was the compromise pick. how does it seem to you? are you pleased with it? >> well, nobody asked my opinion, and they shouldn't from that perspective

but when i look at the process like what they went through, it's amazingly complex they did this under tremendous pressure and scrutiny. and yet at the same time, they wanted to reach out to some of the best business leaders in the world, or certainly in the country and in technology. and it seems as if they were able to do all those things. i will say one of the things i was impressed with is the speed of which they were able to bring this to a close. and i suspect this notion of, you know, there were different choices among different factions, and then dara emerged as the candidate that was going to work for everybody, or at least for most of the people, and i don't know him at all, but from everything i've heard about the great work he's done at expedia, it seems like it's a very good choice for the company. >> paul, in the first few weeks of dara's tenure as ceo of uber, presuming that that announcement comes soon, do you think the most important thing is going to be the sort of tone he sets and the peace he makes, or what we hear or don't hear from travis

kalanick >> yeah, that's a terrific question, jon. i think that's, you know, everybody's going to wait for that other shoe to drop, given all of the personality issues that have happened there and the founder's still very, very much involved and a significant shareholder. you know, uber's an amazing business i mean, it's one of the things that we found so exciting about the business, it's one of the best businesses we've ever seen in terms of growth, scale of opportunity, ability to disrupt several different existing multibillion-dollar, and in some cases, trillion-dollar marketplaces so, all those things are still existing, and the company is doing very, very well from a performance perspective. i think all of the distractions associated with the company have been unfortunate, and it seems to me from what i've read and from what i've seen from other people covering this that dara is the type of person that's going to come in and institute a culture that's going to kind of take away some of those distractions and probably put them on a more professional business path. and i think to that extent, as a major shareholder, whether it's

stratus or anybody else, they should all be pretty excited about this, and i suspect folks will get behind him to drive the company towards, ultimately towards an ipo and towards what i think will be very, very strong liquidity over a long period of time >> paul, you applaud the equality of uber's business, which obviously, you know, is pretty hard to dispute, but i do wonder if that means that a new leader doesn't have to make big strategic decisions that are going to be very consequential there has been a thinking like, boy, isn't uber lucky that they can go through all of this drama and it doesn't necessarily seem to impact the business or customer perception, but what do you think the new ceo has to do on the business front, on the competitive front, to actually sustain the path that it's been on or improve it >> well, i think on the competitive front, uber is more or less swept the field. i mean, nothing against lyft they've managed to kind of stay alive through all of this, but they've been a juggernaut. >> really? you still feel that way? >> yeah, really. yeah yeah i mean, i look at it as, you

know, when you look at the kind of things that have happened, we see these kind of markets where you get a first player and a second player and a third player, and in this case, lyft has done a terrific job of kind of hanging on. they got that big influx of capital from general motors that kind of kept them going, but at the end of the day, in terms of what i've seen, uber's executing at an amazing level. so, you know, this is going to be a very, very large, very valuable company as it comes out into the public markets in the coming years, and i think dara's responsibility and his opportunity is really to take it to another level of sophistication as a company, not just simply internal culture, but execution, public market execution, all the other things that are related to a company that's going from kind of late adolescence to early adulthood, and i see nothing but promise in terms of what's going on ahead of them. what i don't know, and i'm just not close enough to the company from that perspective to understand things like, you know, how are they going to think about acquisition

strategies and, clearly, dara's get a very strong background there, and other things that will occur over time, but this is a company that has tremendous potential, and his opportunity and his challenge is going to be to realize that potential and get this company to the place where it's going to be worth what people think it should be worth over the period of the next five or ten years. >> well, let's talk about what this company could be worth, paul how do you think about the valuation and what's happened to it amid all the executive drama and dysfunction on the board >> well, the company has still managed to be able to raise tens and tens of billions of dollars of additional capital, and they've always seemed to find a way to raise it and increasing values and in terms that are very favorable to the company. i don't think that's because people are kind of uber cheerleaders i think it's because people, once they get a chance to see what's happening under the covers and the scale of growth, the scale of opportunity, and as i said, disrupting five or six major industries at one time,

you know, we just don't see these type of companies come along very often in the silicon valley or in american business as a whole and so, i think that's one of the reasons why they've been so successful in terms of being able to do that. and now they have to turn the page now they have to go to another level of maturity, and i think with that, that brings a number of challenges. and with that, that brings another level of challenges. >> paul, it seems to me like uber might have to make a choice between aggressive global expansion, which they're already scaling back somewhat on, or multi-purpose transportation are they going to use this memory to deliver food or furniture or whatever? do you see it the same way and which one do you think is more important for the valuation? global or multi-purpose transportation >> i think that's a terrific question, john when one of the things we had, as you guys know, reed hastings is one of our ceos at netflix, he spoke at our ceo event, and he made one comment that stuck with everybody

and he said that strategy is what you choose not to do. and i think that's one of the things that uber's gotten better and better at. they could have stayed at a death march with dd in china, instead they cut what was probably a great deal for both of those companies and i suspect over time in these other markets, they're going to make similar sort of strategic decisions. they'll decide where they go long as their own player or whether they do a significant partnership. and i think in terms of the multimo multimodal aspects of what they're doing, they're probably at the first inning of approaching some of those things those of us who are out here for a number of years, we use it for food delivery and package delivery we use the time feature. i use all of those different things and it's made a big difference for me. and can i get a regular delivery of things from berkeley down to where i live for about $42, and i don't have to have anything to do with it and that's a concept that just wasn't around and if it was, it was around at ten times the price. imagine that being rolled over into a bunch of different industries, and all of those

uber has a chance to win >> we'll see what happens, if dara does take the job paul, thank you for joining us on this story. early uber investor from foundation capital >> thank you still to come, airlines already feeling the pain from tropical storm harvey. the latest when "squawk alley" returns.

air travelers facing delays and cancellations across the country as harve continues to

batter southeast texas phil lebeau is monitoring the situation for us >> we're going to talk also a little bit about what's happening with the auto industry but let's first of all talk about where things stand in terms of air travel into or out of houston and remember, there are two airports there houston international as well as houston hobby. both of them are shut down, and it's easy to see why when you look at some of the images that are coming out of houston. they basically say what few planes that were still there or were in position, you're not going anywhere in some cases, you have swamped runways, as a result, the aircraft is closed through wednesday, although this is fluid. if it improves, they could potentially open up before then. but nobody is expecting that a little over 1,800 cancellations today. the two airlines hardest hit, united, which has a hub at houston international, and southwest, which has a big presence at houston hobby. let's talk first of all about the number of flights canceled out of that area look at the misery map from flight aware this says it all it's a big bull's-eye on the city of houston.

and this shows you that big red dot there or that circulation, that circular red dot, that shows you, there's no flights coming in or out of houston right now. for united, they sent 130 additional personnel down to the houston area to assist with their crew and their staff down there, to get that airport back up and running and when you talk about southwest, one other interesting story, guys, there were enough passengers and some crew that were stranded at houston hobby who were flown out last night. now, these were not scheduled commercial flights, but southwest worked with the faa and got them on these southwest planes that were already in position got 'em out of houston, put them up in dallas and moved them on to their final destinations, if it wasn't in houston it's a pbad situation down there at least for the next couple of days >> all right, phil, we'll have to circle back on the impact on the auto industry throughout the day. all right, "squawk alley"

will be right back with technology and biotech helping the s&p and nasdaq stay green. the dow is down three point, partly pressured by travelers group. we'll be right back.

and as we head toward noon,

some of the stocks we've been tracking this hour, higher fitbit still up 6.5% vmware as pat gossner gets ready to take the stage, up about almost 2%, as well and snap up 3. >> i would just note, also, with the dow, just some of the movers are related to the impact of the storm. travelers is the biggest loser home depot is the biggest gainer >> indeed. well, mike, sarah, thanks. let's welcome over to the half polic melissa lea back at headquarters >> south texas underwater. the rescue and recovery operation still underway, three days after harvey makes landfall this is video of houston from a drone, shot just a few hours ago. parts of texas getting even more rain today, as this history-making storm keeps lashing out at the lone star state. welcome to the "halftime report." i'm melissa lee in today for scott wapner we'll get the forecast and the virtue latest on what could be another major storm in just a few minutes. but first,