good morning it is 8:00 a.m. in santa clara, california 11:00 on wall street "squawk alley" is live ♪ ♪ ♪ happy wednesday. welcome to "squawk alley." i am jon fortt with carl quintanilla and julia boorstin intel naming a new ceo our david faber breaking the

news gelsinger started his career at intel as a teenager, will be its next ceo we'll talk about that plus tech prepares for a new presidency with youtube and airbnb. among the names taking extraordinary measures they say are intended to head off further violence and affirm, the consumer lending startup led by founder and ceo max levchin, having a new beginning today going public we will talk to him when that happens. we start with that intel news. with us now more insights and strategies guys, good morning >> morning >> pat, two and a half years ago there was some rumor that intel might be talking to pat gelsinger about this role. he said, no thanks now, apparently, he's saying, yes, please. so why is this a job that so few people seem to want? i mean, when bob swan came in,

he did my podcast and said, no, i don't want the job then he took it. pat gelsinger said, no, i don't want the job now he's taking it it's a good job, right >> i mean, look, this is the biggest job in semiconductors. one of the biggest turnaround stories. if you can pull it off, that's a legacy event for yourself. certainly a challenge. maybe he feels like he's up for the challenge. >> pat moorhead, give us a sense of the significance of this moment intel is facing challenges from amd and the pc landscape, challenges from apple making its own chips at the high end, perhaps setting the bar for others, and buying the 5g modem business so what does pat gelsinger have to do? >> so, first off, i'm not expecting any major strategic shifts at intel.

i do expect them to continue making their own chips, but looking to founderies for extra added capacity i think what we'll see with gelsinger is get to go a real focus on an engineering culture. he still has a huge following at intel. he's known as an engineer's engineer i think it's going to be a cultural shift and a shift right now what the company needs is execution. so not a lot of strategy shifts. it's going to be all about execution for the foreseeable future >> stacy, i'm curious your thoughts what we will see next you've mentioned in your notes that it will be many years before any changes that gelsinger makes now or in the next several quarters really bears fruit, but do you think we will see strategic changes

obviously the past several years have seen much impact on intel from the competition, from, say, apple deciding to break that 15-year partnership. what are the immediate things that we're going to see that could have an impact on the company? >> yeah, and so i actually do think the next two to three years are probably mostly baked. there's not a whole lot that pat is going to be able to do to steer that near to medium term path, strategic choice that is will impact the company over the longer term. a three, four, five-plus year. the way that the road maps work in this kind of a business you always have to be skating to where the puck is going and you have to make these decisions years ahead of time. those have all been determined what pat hopefully can do, and no offense to bob -- i like bob. bob is a very good cfo and i think a very good executive. by his own admission he doesn't have the same kind of engineering background

he's less able intrinsically when presented with numerous potential choices for where to go, how to make that choice. pat can make those choices and understands the issues ideally he'll be able to steer the ship maybe a little clearer to where it needs to go versus what bob can do. i don't think there's a whole lot pat can do to change the near to medium term trajectory in terms of the things you mentioned. share losses, other customers going internal like everything else that will happen >> yeah. although, pat, if you're gelsinger and you take stock of the influence so far from amd, the moves by apple, obviously the challenges internally in terms of execution, where we are in the cycle, i mean, now would be a pretty good time to take the job, right isn't the bar extraordinarily low? >> it's a great opportunity, and pat is super competitive

and i think what he saw, listen, i can potentially do what, say, a steve jobs did, and come back and just completely reinvigorate the company. as some executives take stock on their life and what they want to do, he likely said that this is going to be his swan song. he wants to come in to intel and turn the place around and be the hero that gets carried on on everybody's shoulders. >> pat, i'm curious what your thoughts are on third point pushing intel to divest from what they called failed acquisitions, the pressure for intel to explore strategic alternatives with that in mind, how will that influence gelsinger's approach going forward? >> yes so first off, this decision made at a board meeting likely today had nothing to do with third point. this decisionwas made a long

time ago i think it likely exacerbated the situation and put a fine point on it. the one thing that lobe was going for was splitting up manufacturing. and i think stacy and i both agree that, yeah, if you want to lower margins for intel and make it less interesting, that would be the right thing to do obviously i'm being sarcastic. one thing he was spot on if intel doesn't pull out a turnaround there are issues to national security. because essentially it means more u.s. chip manufacturing leaving and going to taiwan, korea, and even china. >> stacy, there's talk about moore's law having hit a wall. pat gelsinger is a unique ceo in that, yes, he's a technical

person who has been a cto. he's also been a ceo but not only has he worked in the chip industry, he's worked in software. and right now a lot of the way that intel is trying to kind of squeeze more performance out of its platform has to do with software so i understand that the process technology stuff, yes, would take a couple years to play out. but if you have a software ceo in place at intel right now, isn't there the possibility that he can do more in the short term than we might have seen in other areas of intel >> i don't know. process technology was never the end all be all obviously the story intel used to tell was that it was because they had a genuine massive leadership position. many of the things are important and they talk about process and software and packaging and they talk about ecosystems and all of these other things and they're all important and they always were important the issue intel has from this is

that their moat or their leadership position was never to the same as in process technology they're good at all those things and maybe pat can make them better intel's software, they used to have a software division that was always a little shaky. maybe pat can do something better there there are plenty of other players out there that are good at all the other things. pat's going to have to take a holistic view. process software, everything else customers don't buy little envelopes full of transisters, they buy chips that do what they want to do that's appropriate. that's all customers care about. >> they do indeed. >> whatever it takes to get that solution to the customer, that's what will drive the purchase decision >> pat moorhead, close us out here i think when i first met pat gelsinger it was at intel developer forum or around those events where they would talk about the deep technical stuff

with developers. you said that it's a return to an engineering culture, which i know intel has been trying to do already. but intel has also gotten mobilized, this ai stuff that it's been playing in do you expect them to continue to do all of those things and the embedded stuff in the drones, or do you think this will be a refocus on pcs, servers, ai enablement, some graphics, what do you think, pat moorhead >> yes we've already seen, i would call it, get back to what intel does best best known for its cpus but expanding the definition of compute, cpus and asics so expanding that they've dumped the drones. they've dumped manned and mobile i'm already seeing this get back to the basics. i think the only question in mind is how much of the edge do

they participate in? how far out to the edge do they go to reiterate he is going to attract the best engineers in the business i think that is a positive move for intel, and i'm looking forward to this. >> all right pat, stacy, thank you. intel up just over 8% at this hour intel and qualcomm both announcing ceo transitions just within a couple weeks. carl >> it's amazing. meantime youtube has become the latest tech company to ban the president suspending his account for at least seven days citing the incitement of violence in the capitol hill riots, its terms of service. tim cook was on cbs this morning" with gayle king talking about that company's decision to ban parler and the potential for its return take a listen.

>> parler has some issues with moderation there are some incitement to violence examples on there and they need to step it up on the moderation our hope is that they do that and get back on the store. >> so they could get back on the store? they could >> yes we suspended them. we did not ban them. >> because the ceo, as you know, is raising issues about his right to the first amendment what do you say about that concern? >> we have terms of service for our app store, and some of those terms of service he's in violation of all we're asking, gayle, is that he meet the terms of service >> apple did have some additional announcements today on their racial equality and justice initiative, julia, giving money to historically black colleges and universities, creating a coding academy in detroit. but it's that parler news that really got people's attention today. >> yeah, that parler news and,

carl, i think we'll continue to talk about that youtube news, that decision to suspend the president's account. that account reaches 2.77 million subscribers and that move by youtube coming much later than similar moves from facebook and twitter youtube has not drawn quite the same degree of criticism as facebook and twitter have but it certainly is dealing with concerns about its role, spreading misinformation and inciting violence. now the volume of content uploaded to youtube every instant is so massive there is really a wacamole situation. if it is reformed, we do anticipate an effort to reform it there will be a meaningful impact on youtube and we can expect the company to have to make many more changes to crack down on incendiary content jon? >> julia, we talk about youtube making its changes

airbnb also saying that it is essentially shutting down listings and saying it has been able to identify some far-right people who have been on its platform who were involved in the capitol riot and has beened them it does seem tech companies are trying to make some changes ahead of this inauguration i'm not sure how much is policy and how much is for this moment. >> we'll get into that with heath terry later in the hour. meantime, affirm is the latest company to be taken public by a member of what's nicknamed the paypal mafia max levchin joins us this hour a lot more "squawk alley" still ahead. st wh ayitus change is all around us.

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the work, play and learn from home trend raising demand for our next guest's products. out with several new products at ces aimed at increasing performance and speed as remote work ramps up. joining us now here on consumer and tech week is the ceo patrick lowe patrick, thanks for joining us i'm sorry we're not sitting on the floor of the las vegas convention center at ces right now. >> i know, i regret that, too.

>> so, patrick, tell us what the big new products are that you're unveiling this year for ces and why. >> there are many products that we introduced but i think the most important three are, one, a 5g mobile router for people on the go that would be capable to download speed a whole gigabyte per second or more the second is introduction of the newest wi-fi 6e router that would significantly increase the capacity and double the speed of wi-fi at home and, thirdly, i think to the heart of many parents a very valuable service that would have parental controls that would let parents monitor and their kids even when not at home. >> a very important tool for

parents such as myself patrick, to take a step back from the announcements you're making at ces, when you look at the shift in the way people are working and learning over the past eight months and to the next year or two, do you think we're seeing a fundamental change in the way people work and what types of tools they need at home and how is that changing the types of products you want to put into production for the next several years >> it is quite clear to us the world is not going back the way it was before regarding work in the office we're taking a survey, your own team members as we have heard all over the place most workers are going to be working from home at least one or two days if not three days a week. for that people certainly need

uninterrupted network at home as well as a secure separation of the work network from the home network. so we introduce add product in ces to have the capability if their internet would go down they will fail over to a cellular network and continue on the internet as well we have products in place that will allow them to segregate work away from the network where the kids learn and play games and all of that those are the products we will innovate plus we think people would like a virtual network so even though they work from home as if they're all together in the office they will be adopted going forward.

>> it sounds like there are features coming into the home. so i want to ask you where you see the bigger opportunity is it in honing and perfecting that home wi-fi network for this era that we're in and moving i into, or is it the 5g capability you were talking about at the very beginning >> both are important because, as i mentioned, people want higher capacity, better speed, higher reliability of the internet connection at home but the security and the protection when they're on the go in a way they would like to move the network along with them. so 5g not only as a fail over capability is affordable office network. people are going to vacation homes or even rent an airbnb in hawaii to probably break away for a week or month and would

like to bring the corporate network. it will be a trend going forward. >> patrick, a final question to you about gaming you produce many products for gamers what are the trends you are seeing right now and what is your strategic focus going to be pushing forward in that area looking at the next couple of years? >> correct gaming so far, the gamers have been focusing on increasing the internet speed and reducing the latency so that they could play better games but with the introduction of gaming rue router gamers want real-time display. all their latency versus the competitors, the ability for them to choose which gaming servers to compete against the other gamers and as indicated

also in some of the gaming service, to download and play games against gamers around the world gaming services gamers want and will continue to roll out those services across the platforms. >> patrick, we've certainly seen a surge in gaming of all types during this pandemic thank you so much for joining us, and i hope next year at the ces we'll be back on the show floor together >> that would be great thank you. the dow is in a tight range today, about 100-point swing back and forth watch twitter. gets an upgrade today. they go to buy price target is 60 stock is almost almost 2%. they say we believe twitter will have the greatest incremental benefit as advertisers accelerate their ad spend. gomas check in with ldn' heath terry.

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take a look at shares of gamestop that stock up 61% and back on track for its best day ever. on monday the stock rose 12% after adding investor and chewy co-founder to its board. from the lows last april that stock is up more than 1,000% we'll continue watching gamestop there's more "squawk alley" after this break so stay with us

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welcome back, everybody. i'm sue herera here's your cnbc news update this hour. google is reinstating a temporary ban on political ads and also halting any that reference impeachment, inauguration, or protests at the u.s. capitol google says it is part of its effort to block content that could incite violence. new york city is canceling its contracts with the trump organization following the riot on capitol hill. the move affects two ice rinks, a carousel and a golf course mayor bill de blasio says the city's contracts allow them to be canceled if the leader of a company engages in criminal activity >> let's be clear, inciting an

insurrection clearly is criminal activity the city of forknew york will no longer have anything to do with the trump organization >> eric trump responding saying the city has no legal right to end the contracts. he describes the move as, quote, nothing more than political discrimination you are up to date, carl, back to you >> all right, sue, thank you very much. let'sturn back to content moderation this week and the potential stock impact for investors. youtube the latest to suspend the president's account joining the likes of twitter, snap, pinterest and others, all of which our next guest follows closely. heath terry just wrapped up goldman's virtual tech and internet conference. heath, welcome back. it's great to see you. crazy days >> quite, thanks for having me, carl >> i don't know whether to take this stock by stock or whether

there's some value to be added in what you think is going on under the umbrella of your universe and whether or not we can look at affects across companies right now. >> well, i mean, i think there are certainly some things across companies. i think to the extent we're talking about the content moves of companies like youtube, these are companies that are dealing with hundreds of millions if not billions of people on their platform that have a relatively small group of people that pose a really big outside risk, the move taken by airbnb this morning, that have been taken by a number of these platforms to make sure that, god forbid, on the other side of something terrible happening that their names, their company names aren't in the headlines and they don't stand to lose more of

their users, to lose the hundreds of millions or billions of users because of that smaller group on the other side. >> how would you rank the risk, risk of less engagement and fewer daus risk of just negative publicity? is it legal liability? is it some combination of the three? >> i think it's all of those certainly legal liability depending on what company we're talking about. airbnb insures the properties. to the extent something were to happen in one of the properties it's a risk for them, to the extent you're talking about twitter or facebook or snap, for them the risk of losing users in engagement and losing advertisers we saw it with the facebook

advertisers over the summer where they came out against hate on platforms and targeted facebook for allowing these types of users on their platforms promoting hate so there's a financial impact to it as well and so it really covers a lot of different risk the question is what benefit is it to them do you get any benefit from allowing what for twitter was 70,000 users, at least in the most recent purge, out of 300 million on the platform that posed a risk for them. do you get any benefit allowing them on there? certainly the risks far outweigh the benefit. i think you're seeing them all make the same decision when weighing those two things. >> yes, and, heath, worth noting

the threat of another ad boycott should the companies not have suspended or banned the president from broadcasting from those various platforms. i do think it's worth noting, also, that you have buy ratings on facebook, and google, all three wo there were changes to section 230, the liability shield. what kind of reform do you anticipate there, and how much do you think that will or could ramp up the costs they have to bear >> i think reforming 230 will be incredibly complicated and it has ramifications that go far, far beyond just the internet space. the devil is always in the details and for us to really have any idea in terms of what kind of impact it's going to have it's really going to come down to those details. there will be costs.

there always are whenever there's additional regulation and moderation around this side of things. i think you're seeing a lot of that already i always go back to when jack dorsey first joined twitter and his first steps were around getting the troll problem, as we called it back then, under control when he took over. they were losing high-profile users because at the time anyone with that intention essentially had the ability to reach out and attack a higher profile, higher value user to twitter without there being any ramifications. they spent a lot of money investing in technology that made that more difficult not to suggest that they got as soon% of the way there but solved a lot of the problems

they were having when jack joined the company i think something similar to that here. >> heath, i wonder from the broader policy perspective do the events of the past several days turn the vilification of big tech into a partisan issue that to some degree benefits big tech right now the people who are most riled up about big tech are on the gop side. and they just lost the presidency and both houses of congress if it's seen as retribution for youtube having suspended president trump's ability to upload content >> well, you know, it's interesting. it's a partisan issue along certain parts of this. the idea there's some bias to the content moderation side of it the other side, the democrats

certainly have their own issues with big tech and were very vocal about that during the leadup to the election and have been in some ways since. i don't think the issue of regulating technology, big technology companies, is necessarily partisan i think maybe the direction that regulation goes obviouslyhas some partisan flavor to it it will be interesting how far they want to push this because it's an issue that we see as far more of an issue within political circles, thought circles, than with constituents. these are companies that average americans use. you look at the surveys out there. companies like amazon and facebook and twitter and apple and all of the big tech, these are very popular companies that

a lot of americans don't necessarily have the same sort of issues with when we talk to congress people and people in d.c. they're quick to point out they're not getting for the most part phone calls from their constituents about this this is not a dinner table issue, so to speak where they're really getting pushed about this nobody is marching on washington about big tech we'll see once things begin to calm down and we get into the actual effort of trying to govern around this whether or not this stays a priority issue it is once we get government focused on what people actually care about >> yeah, let's see if that changes, heath what a remarkable time for the companies that you cover, and i'm sure for you, too.

it's good to see you as always, heath terry, goldman sachs >> we are awaiting affirm's debut. founder and ceo max levchin joins us next. don't go anywhere.

that stock is up about half of a percent but citi says its run is over, down grade to go a sell and giving a $15 target

price. the company's deceleration and growth expected in 2021 and current overvaluation are the catalyst cited there

the first big tech ipo of the year is affirm, set to open for trade any minute now over at the nasdaq indicating as of now around 90 a share. founder and ceo, max levchin

welcome. great to have you back for people who aren't that familiar with affirm, it's consumer lending in the place of credit cards, sometimes with zero apr and without late fees how do you make money? >> it turns out that if you treat your customers right they will just pay you back we make money sometimes by telling the consumers here is the cost of money and ask them to pay simple interest expressed in dollars and has no late fees or any kind of fees, certainly not the yucky things like deferred interest. we stand for clarity and simp simplicity a lot of times half of our transactions are entirely interest free and in that case the merchants contribute to

subsidizing the cost and just pay for it consumers get to enjoy the product and pay for it over time while paying no interest at all. >> in q3, if i'm correct, around 30%, almost 30% of total revenue, was connected to peloton. what would you say to investors who are concerned about that level of merchant partner concentration and the ways that you are looking to grow and expand the revenue base? >> i think peloton has been an amazing story in and of itself we're proud to call them a partner and have had an amazing run together and lots of amazing things together. i can't apologizefor a merchan partner of ours building an amazing business, frankly, with our help it's sort of a highlight of, i think, in farther what it can achieve if you partner with a company like affirm that offers products consumers love. we hope more pelotons are born

and built with our help. >> certainly that partnership with peloton has been hugely profitable to follow up on that i wonder if you are concerned about a potential slowdown as people get out and about more and return more to gyms will that have a massive impact on your business and are you taking steps to diversify the types of companies you are partnered with >> we are a very diversified company and peloton is one amazing highlight and we're very proud of them and the partnership but we have a partnership with spotify that is many merchants well distributed in every kind of category and help buy everything from baby carriages to t-shirts. we have partnered with 6,500 brands and we are diversifying

successfully >> max, i think it's interesting that you have such strong repeat purchases, newly acquired consumers make two transactions within the first 12 months is your focus now that you're public morecreasing th number of transactions or bigger ticket purchases through affirm? >> our goal is to be a viable alternative to credit cards. we think that revolving credit is, frankly, not the best for consumers and the idea of making money while the consumer least expects it with late fees and other tricks and gimmicks will be a thing of the past our goal is to be there for every transaction our consumers would like to engage in. i think the fact we are able to ipo today is very much proof of that

we want to be there wherever our customers would like to help incidentally to make sure i speak to the other side of the network we're build ing merchant are embracing free financial products and gaining traction and the conversion and incremental sales. so we need to be everywhere and we're excited to do that >> max, a big part of the model involves earning interest income, and i don't want to get too macro and how you view a world in which some believe we're entering a period of dislocation when it comes to interest rates in aggregate? >> you know, i also -- i think that's a job for the economist, but i believe we are very well positioned for both ups and downs of the economic carousel

we saw a great performance in our product both during the pandemic and during the very long expansion that happened beforehand and we are excited to build the economy going forward. >> should -- should investors be thinking of this as a north american story or, i mean, what is the international opportunity here >> you know, it's very clear that there is a worldwide demand for this product the one thing that i think people everywhere can agree on that there's much to be desired in terms of transparency and simplicity in financial products and so it's certainly much more than just a north american story. i'm glad you didn't say a united states of america story. we have just announced an m and a transaction with a company called pay bright in canada, that expands nicely north world. we have lots of other opportunities and the most important thing to highlight, we

are a very mission-driven company and any time we look at a potential m and a transaction, we want to make sure the missions of our companies are aligned and that said we think the opportunity is plentiful and we intend to do the best we can for investors. >> max, about -- almost exactly 19 years ago you took another thintech company public before thin tech was a thing that we had, and that was pay pal, gives a sense of how financial technology is now versus where it was then and what it means to have the resources that you're going to have out of this ipo? i mean, you know, the valuation on a firm is so much bigger than the valuation was on paypal 19 years ago. indeed it's certainly -- i -- i very much see this moment in time and

there's a lot to do going forward and this is not an exit as slang will have it and it is fun to compare the two moments if i was an amazing story i am very proud of what we built and i still consider that my first child and i had two real children, but this is another one and i'm very proud the scale of the markets has changed and that's a different size and its had multiple tricks to the public market, actually, but the world has shifted. i think one of the things that paypal really delivered on is this idea that we can build a business and run it from anywhere because payments have been democratized. i think the next iteration, evolution of the idea of payments is bringing a little bit more to it, and the mission-driven approach and the fact that we stand for something very, very powerful, giving consumers and merchants a sense of pride of how we conduct these

payments is important to us and i'm proud about that. >> thintech is in the news today and the department of justice had opposed visas purchase of plaid and that transaction is now off. is that a good thing from your perspective? are there real challenges about large, established mrirsplayersn the space to get the influence they deserve >> i think we have regulators and legislators for a reason it's their job to watch out for things that might threaten the competitive market which is a good thing we want the competition to make sure that the best products win and no undue concentrations occur. that said, i've been very busy trying to take the company public, so i haven't tracked that story too carefully so i think it is important to

build companies that deliver value and it is important to try to keep them independent and go as far as you can possibly and that's what i'm doing here >> it certainly does appear to be what you are doing with the indications being where they are. we look forward to seeing affirm's stock open and continuing to have you on and we hope to have you on in the first quarter and not just the quarter. max levchin on ipo day >> thank you it's a pleasure. zoom video, moving on the upside stock offering and offering 5 million raising about $1.75 billion in the sale. last year's high-flying name has actually underperformed in the past three months as you met ably know, down 26% in tha ti there's more "squawk alley" after the break. don't go away.

it became obvious that i wasn't going to be the farmer and i'm the only boy and there was no farm to inherit for this son so i accidentally took a scholarship exam, won the scholarship and went to lincoln

tech and went the last year and a half to high school and got an associates in electronic technology and intel came recruiting and invited me to california i had never been on an airplane, john, so what do you think i said sure i'm going to california. a free trip! and that became a job offer from intel and 30 years later it's just been an incredible experience. >> i have to hit rewind. are you saying that if your grandfather had given your father a farm you might have farmed it? >> oh, guarantee you absolutely i'd be a farmer in pennsylvania. >> never know how great a farmer that was incoming intel ceo pat gelsinger with me in may 2019 from dell emc world on fort knox, julia, this is going to be his biggest job yet. >> certainly, a very big job, and it seems like you were really pressing in anticipating that he might get that offer john, i just want to point to

shares of peloton. we just spoke to max levchin about affirm and peloton generating 30% of its revenue and peloton shares up more than 7% today, carl >> remarkable price action and overall and some individual names, guys. even as the overall markets are very much on an inside day narrow range and the dow has hovered somewhere in the neighborhood of 100 points let's get to the judge. >> carl, thanks. welcome to "the halftime report." i'm scott wapner the big shake-up in intel and the fallout for that company, its competitors and of course, your money we debate and discuss it with your investment committee and john teranova, and sarat, and let's go to the wall the dow is not doing that much and down by more than four and the nasdaq the big winner and down more than one-half of 1%.