that are it should be owned. >> carter, thanks. i'll see you tonight on "options action." worth charting we're down on the dow in terms of where we stand at the open down 40 but we're looking at green arrows for the s&p and nasdaq helped by alphabet as well as netflix. it's been great, scott >> yeah. >> do it again some time. >> bye, mel. >> all right "squawk on the street" is up next have a great weekend good friday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david favor the market absorbs the netflix quarter, these layoffs at alphabet and before the blackout window begins. our roadmap begins with netflix. smashing subgrowth the stock is surging. >> plus, tech layoffs, they are spreading. alphabet is going to be axing

12,000 employees way fair cutting 12% of its employees. elon musk set to testify in the trial over the 2018 fun secure -- >> let's begin with netflix beating expectations by adding 7.7 million subs announcing changes in the c-suite. reed hastings stepping down as co-ceo and here's what hastings had to say about the moves on the earnings call last night >> i couldn't be happier to complete our succession process. it really started about ten years ago with the board trying to think through how could this work they both have such amazing talents and gifts and to find a platform where they've been able

to contribute is fantastic >> as he said, after 21 years. they've had a good start, jim. >> what a clinic they put on last night it was truly joyful. it was definitely super bowl worthy one of the things that amazed me, they've been working on the succession for ten years david, they know how to do a succession they are successful successionists >> it's not unimportant. something we talk about. number one on the responsibility of a board of directors you heard mr. hastings say, ten years. you want a long-term plan talking about what are we going to do and how are we going to execute it it does stand in contrast to disney. >> you had to bring disney up. >> just to mention it didn't go well there, we know that, and there are any number of other companies where it doesn't go well in this case certainly you would have to expect that they are getting praise for a well-executed plan. >> look, sarandos was doing a great deal of work

i always thought he was taking a little bit -- 1/8 of it more each quarter and peter -- i've got to tell you, he was doing the ad supported tier. that was his deal and i felt that one of the great story lines in this amazing conference call and then q&a was the ad tier looks like it's going to be big. i think that this is -- we don't have a lot of stocks anymore that are etherial stocks you have to make things, do stuff, return capital. your stock can't be way out of whack with the pe multiple this one be is the one that's defying that tesla, google layoffs, salesforce no this is the only one that the people who have no discipline and love the market and thinks it's great, they can huddle on this. >> there is a lot in there there's the free cash flow guidance, operating margin guide tans and the ad tier, even

entertaining the notion of an ad tier that's free here's what sarandos said about that. >> we're open to all of the models that are out there. we have a lot on our plate with our launch of advertising, and what we're driving to our customers. we're keeping an eye on that segment for sure. >> what do you make of these transitions, jim >> i think the transitions are going to work well overseas. i think people are not going to care you're going to sign up a lot of people that way. i'm going to offer a -- i'm going to offer something that i've been thinking a lot about that would help them they always talk about the idea that, you know what, there's still so much room this such a small percentage. no the no,s david that's -- no david, the secret -- you know how the secret with dustin hoffman was plastics

>> yes in "the graduate." >> what is the secret? >> titles. before this started titles were for losers now that that -- of course people criticize me for that we launched the top ten non-english series nearly every week before this i never watched sout colombia, japan. i never watched a lot of polish programming, german programming. they became a company that realized with titles you can go have fantastic estonian movies. >> you can you can. >> that was brilliant! >> they are -- they programmed to these local markets and they have scale they have scale unlike any other direct to consumer streaming company. >> but all on the western front. >> yes. >> german movie. >> yeah. led the -- and the bafta nominations. >> not everything crosses

borders easily, jim, when it comes to content some things do "squid games" being a great example of a hit that cost them virtually nothing and was made in south korea, but some things don't. you're right, scale is incredibly important. >> amazing. >> one of the reasons why they talk about 3 billion in 2023 and cash flow and this inflection point and 4 billion before 2024. >> do the other guys have a lot of polish films? >> no, i don't believe they do the they also don't have a lot of free cash flow coming out of their direct to consumer business. >> they also don't have metallica, kate bush the kramg ps i had the cramps this morning. probably too much information. >> thank you for sharing. >> probably a little bit too much information. >> yeah. it's good. >> stock is double from 170

the. >> on the way down people abandoned ship so many holes. >> i heard this morning it is not being quite as well received as you might expect given the numbers and the quality of the call because there is a question as to whether they're pulling forward certain revenues as a result, they're cracking down on password sharing you can only do that for so long and then the benefit is realized, that's it. so maybe it's a bit more muted response than we might have anticipated given the strength of the numbers because there is the belief of a pull forward to some extent. >> i don't buy that. the my avitar is jimmy chill on netflix. david, here's why i don't buy that i don't buy it because this was one of their old-fashioned calls where they talked about a plethora of content and that overrides anything. >> yeah. >> david, they have so much stuff -- did you watch "troll". >> no. >> i know you didn't did you watch "takedown from

france." >> where are you on "my name is bendetta?" >> everyone thinks he's being facetious. the netflix i love, i told ted serandos, the netflix dominated by content this was a content -- >> it is however, investors are also going to be happy about the fact that the cost for that content is not necessarily going higher, right? >> right >> they're still sticking around $17 billion. so rationalizing your content spend, and that's the story across the board here for this industry that we've been talking about for a number of years, whether it's disney, whether it's warner brothers discovery or paramount everybody has to rationalize their content costs a the this point because they do need to start to get to actual pre-cash flow on these businesses. >> are you perhaps eluding to the $1.5 billion loss that we didn't know about in the dtc

part are you eluding to that? >> warner brothers discovery has taken impairments on it. looking, not necessarily relying on that. the not having a wall garden and i'm talking about across the board, jim, this is the new world of streaming it's not about spend, spend, spend, subscriber, subscriber, subscriber, it's about let's make some money. >> no! no >> you don't agree >> it's about having the amount of quality programming as they said at the beginning of the call you come in on monday and someone watched wednesday. >> i'm talking about everybody but netflix. i'm talking about the rest of the industry netflix is the only one that talks about free cash frlow at all. >> it's the only one that watches things harry and meghan frost here sea beast. >> yeah, they put out a sizzle reel yesterday that has stuff all year long coming with chris

hemsworth, jonah hill. >> they have it for everybody. i did not watch young royals 2 i didn't watch alice in wonderland 2 they are producing something for everyone the other guys are producing stuff i already saw. >> it doesn't fit with your life is short thesis. >> no, i know. just before we said netflix is the one that breaks the old. >> interesting >> this is something you still want to stay home and watch because you learn and it's explosive. i mean, david, i've never seen -- it's like -- danish programming. i now watch mayor of kingstown with titles because if i don't have titles, i'm not watching. >> you mean subtitles? >> if anybody should understand that dialect, it's you kate winslet i said, oh, my god, someone talks right. it's a drama it was a drama. >> it was an hbo show.

>> what's that yeah, you're in the pocket of -- >> i'm in so many pockets. >> zas, zas. david zas lolov is the ceo if you read anything about entertainment, he's always mentioned. i think it's because his name is zas. say if his name were cram. jammer cramer. i was jammer for a year and a half of my life. there's a little data that you didn't have. >> thanks so much, jim things i learn here all the time. >> don't act as if you're tired. you want to talk about lily. >> i don't want to talk about lilly. >> no? >> i wanted to talk about alphabet but you talked too much now we've got to -- >> after the break. >> i talk too much why don't you just go -- why don't you -- >> say it. say it on tv >> i'm not i'm gandhi i think they had gandhi. no, i'm abraham. >> you are.

>> in what sense white nolotus or amadeus >> i thought -- and i was very glad -- >> a little bit like joe person xi. >> carmi is winning everything from the bear. >> that was a great show >> hulu. >> what did the kids get >> they want us to go. >> what was in the juice for the kids >> the money. >> xanax. >> anax, the kids. i thought you were talking about -- >> he has to have subtitles. >> why does he have to quiz me. >> i don't know. i like it though you're used to taking quiz questions. >> can i be vern thal. i told my sister i want to be vern thal. you can't? >> okay. >> we have the a block covered on netflix we'll get to alphabet and talk about the layoffs. the return of sergei and larry and what it means with some of the competitive threats on ai. futures on this friday busy session

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just look around. voya. well planned. this digital agevested. we're living in, it's pretty unbelievable. problem is, not everyone's fully living in it. nobody should have to take a class or fill out a medical form on public wifi with a screen the size of your hand. home internet shouldn't be a luxury. everyone should have it and now a lot more people can. so let's go. the digital age is waiting. just look around. this digital age we're living in,

it's pretty unbelievable. problem is, not everyone's fully living in it. nobody should have to take a class or fill out a medical form on public wifi with a screen the size of your hand. home internet shouldn't be a luxury. everyone should have it and now a lot more people can. so let's go. the digital age is waiting. google parent alphabet joining big tech large scale layoffs. it plans to eliminate 12,000 jobs or 6% of the global workforce in an effort to reduce costs. in a memo to alphabet employees, sundar said i take full responsibility for the decisions that led us here over the past two years we've seen periods of dramatic growth.

to match and fuel that growth, we hired for a different economic reality than the one we face today we have to make tough choices. >> that's how many people they added last year. 5 billion in cap ex. i think cap ex is the way to start saving money, not people they did have too many people and it turned out we never really thought how levered out it was to advertising. advertising is having a big turn down in this country, including them david, the spending is on ai spending on ai and they even referenced that in the googlers. >> they're spending a lot of money on ai. >> right well, we hear a lot about ai products we haven't heard that much from them yet in terms of what google -- we can expect they have something quite significant. >> all we hear is they're behind. >> really? >> yeah. >> seems hard to imagine that. >> i know. that's what i hear by the way, let's remember that

when the super bowl comes, waymo will be in full fours in arizona. waymo is going to be -- that's going to be the introduction for their self-driving and i think we're going to like it. >> your point on spinneding is good morgan stanley last week sai the ai risk, chatgpt risk could force google to push out the pushing out faster meaning higher cap ex. >> yeah. my travel trust has it. they reversed the buy. are they laying off sales? computer engineers is it computer scientists? i really want to know because there are people who -- computer scientists they hired who cost a fortune right out of school. >> yeah. yeah >> i often find these notes are opaque their rigorous review across product reviews, you don't get to hear what -- one of the things that was interesting is zuckerberg actually kind of

talked about how much these people were making -- >> at meta when they announced their significant layoffs. >> one of the reasons why that stock took off, i can put pen to paper. >> they're giving them 16 weeks, two weeks for every year there nice severance i don't know the answer. at the same time, there is this focus on the overhiring, so to speak, that took place during the pandemic but also how productive are people? and, you know, some people do come back to elon musk at twitter. others have reported this as well, i'm hearing. he's gotten rid of 6,000, 8,000 people at that company if that is a model that says, wait a second, person in the middle can stay but the two other people on either side, maybe you don't affect the product that much? >> if you get rid of 8,000. >> down to 400 people. >> it's being watched closely. >> advertising. >> this is nothing, 12,000 when you talk about 75% of your

workforce. >> the advertiser pulling out because of him i think that's a natural worry look, i know we're going to talk about the trial, but the fact is it's been a disaster and it's just -- it was an ill-founded flip thing that he did that will look back and say, wow i mean, did he really understand the way the corporate law works? >> we'll talk about that >> that's moving onto the trial. >> the journal about -- >> really? >> the stock and the pace of it. might take the stand today but as for brynn and larry and sergei coming back, does that make sense >> i thought that was very interesting. i don't think it's crisis. i think that they're actually intrigued. this is like an interesting time but i know there will be others who will say, wait a second. this thing is not -- they're not in command, they feel like they have to come back and exercise some sort of right to run it the like iger with disney.

like i said, i think they're kind of interested in ai the stuff with ai is really important because you know that you're able to do things that we've never thought were possible david, i could -- remember, i couldn't write -- people -- 30% of the execs in this country have tried it and they think maybe it's a way to give speeches, talk to their people, become more eloquent it's really rather amazing. >> yeah. it could be a significant advance, at least in some ways >> right. >> david -- >> in terms of the way work is done and we're in the very, very, very early stages. >> do you think the whole thing could end up being an existential crisis >> in terms of what, replacing people's jobs? >> replacing your thought pattern. >> yes i think that robot powered ai -- >> is smarter than -- >> we're all going to be -- we're all going to be in deep trouble. it's the matrix. it's the beginning. >> aaron levy at box, he said he

held a dinner in new york with 15 cios and most had already played around with it. i don't think i've seen a technology ripple this quickly. >> that's exactly. i think a lot of us have played around with it and it allows us to sound smart, and i think a lot of people are going to embrace it because it makes you smarter than you are makes you sound smart -- >> even if it's inaccurate 30, 40, 50% of the time? >> and expensive >> i don't know. i'm just telling you that they're using it >> okay. >> and i think that google is -- everyone keeps saying the same thing. google is going to be left behind. >> i find that hard to imagine, all of this time and effort they've been putting into it quietly is going to leave them behind. >> the zeitgeist i'm giving you the zeitgeist. >> thank you thank you. >> cramer's mad dash we'll count down to the opening bell a lot more to get to including earnings from consumer finance names.

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nasdaq 100 gainers going to be the ones in the news netflix and alphabet in the news opening bell in a few minutes. don't forget, you can catch us any time anywhere just listen to and follow the "squawk on the street" opening bell podcast back in a moment

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mad dash and then the opening bell you've got some credit suisse research you wanted to share >> the ask on apple. david stepped up and the strategy shannon cross on the conference

call for apple has always been a joy. asks great questions always to the point. now she's at credit suisse and she's saying top 2023 picks, core holding apple, likes ibm and then one of your favorites, flex. >> flex. >> you know why she likes flex >> why >> because of next tracking, the ipo coming, referenced it the other day. >> we didn't end up doing it the other day. we talked about it and we didn't do it on tv. >> i know. >> this is a solar business. right? >> yes. >> they are going to explore spinning it. >> exactly >> what's interesting is they had previously -- they stayed away from doing a spac deal, which was probably good advice >> yeah. so i just want to welcome shannon. i think she's fantastic and her picks are very good. very thorough and rigorous research from credit suisse. >> all right >> i like it. >> positive attitude never hurt

anybody. >> no. >> go hbirds. >> no, i can't say that. go blue. go giants. >> any feeling about tomorrow? >> no, i run scared. >> you guys are the favorites by 7 1/2. >> yes what do you, gamble? >> no, i follow it >> nfl did a tweet last night about hurts's speed. his speed when he exits the pocket huge power -- >> i'll have to hear endlessly about saquon >> daniel jones is pretty fast >> open space, north/south come on. >> your point about ibm is a good one yesterday moffitt upgraded to market 140. >> that was lisa ellis, the biggest detractor of ibm. >> talking about i.t. intensity, the percentage of expenses in tech among u.s. corporates. >> she did the spinoff of tindrel. i don't know, it's been the low risk high dividend stock that people

like in a period where we've fallen in love with the cyclicals and they don't like the etherials. what do you think of that? >> i love it, jim. is that what you wanted to hear? >> you heard it. >> there's the opening bell. city harvest serving the hungry in new york city i think at least jeffrey zakari is helping to ring the bell remotely they do incredible work. disc medicine, home ma t home mc disorders. >> lilly they didn't get the early nod. >> i looked at their study and they didn't do enough work they didn't have enough people and they didn't do it long enough they are eli lilly

you respect eli lilly tremendously so it was a little surprising that said, it doesn't change the numbers and i want to reiterate why people are in lilly. they are in lilly because of a drug called nujaro it reduces weight by 15% it's going to cost $1700 a month. it's a shot which you give yourself once a week the results have been spectacular. novo nordis. see what they've got let lilly come in. the this is what we're going to tell the club, let lilly come in you are not in it for that drug, you are in it for the spectacular launch when the fda says you can use it for o more than diabetes. that's going to do it for the last two months. i think what's going to happen is those who are going to afford it are going to pay out cash

i had a program where they give you an exercise program where they can get humana or someone to pay for it. right now they won't it's a diabetes drug and it's going to be, you heard it first, the biggest drug company biggest drug. >> biggest drug of all time. >> you believe even at $1700 a month? >> because they're going to have to pay. >> they being the insurance companies, the government? >> yes, because obesity is the biggest problem in our nation. i don't think they're going to be able to get away from paying. the initial will be remarkable by the way, i'm doing a drug trial for a drug that i have and the idea that i could submit it to the fda for 60 people would laugh at me. i'm not eli lilly, cramer co, that was just not enough people. i was surprised it got this far.

i could have told them -- david, i love him no, you have to put more people in the folder. because it reduced plaque so quickly the fda would go for it. the fda -- not everybody is in it. >> now you're talking about the alzheimer's. >> the alzheimer's drug i didn't think they were rigorous enough. they deserve to be rejected. you have to have more than a year and more than 60 people come on. it costs like $60,000 per person when you do a trial, a real good trial. you've got to get 100 people and you have to have them on for a while. that's why it was rejected it's in itfor majarable. we've seen what wygovie has done it's approved for weight loss. not a lot of side effects and it's used mostly to -- in conjunction with people who take drugs that add weight. >> while we're at it, regeneron

gets an upgrade at jpmorgan and dupixent. >> yeah, they're in a quandary they're out of jpmorgan. the stock got completely hammered and len, the ceo, reminded me, look, you're missing the whole point. people are missing that it's not ilea anymore, it's pixent. it's a wonder drug a lot of people take it if humira doesn't work. it's a wonder drug it's got something very real people who sold the stock made a mistake. i think the stock's very good. very good. >> bunch of consumer finance names today, jim aly i think is up double digits this morning on a beat revenue ahead. looking at assuming used vehicle

prices fall another 13% this year. >> shorted name. people felt they would be able to discover and cap one. cap one didn't come back the ones that everyone are really worried about, buy now, pay later. more familiar with the concept of buying something than paying for it. >> maybe they were familiar with that concept and they thought this would let them avoid that yeah >> and the companies themselves, nobody thought -- who would have dreamed that jay powell, i hope he's feeling better, would have raised rates as quickly as he did. a year and a half ago he was being called a simple ton who didn't know what he was doing. then he raised the rates so incredibly fast companies were going to discover we're in much more trouble than we realize because of the -- >> yes yes. that we're familiar with the move up in rates that's taking place over the last year >> what is with you and the snide stuff? >> sorry sorry. >> we actually spoke to discover

yesterday on the ten and barkleys today says i don't think many, including ourselves, expected dfs to be flat on the day after the net chargeoff. there's some appetite to get long based on the forward curve where looking at the prospect of cuts. >> i think that's a good call. look, they're not my favorite companies. i know capital one is very controversial. they're controversial because of what they charge people. yeah, i had eight credit cards when i got out of school and, you know, started realizing it's not free money but you do end up paying and if anyone's ever defaulted, i think you'll be surprised, they'll find you. they have a special skill. >> after a series of letters when the ink starts getting written in red. >> i got caught by southern cal, edison and exxon. >> really?

>> when you are living in your car, got no address, you feel like you'll get away with anything, especially home insurance. >> yeah, you only need your car insurance. think of how much -- >> i had home car insurance. >> guys, a few stocks that i wanted to mention this morning -- >> oh. oh, here we go i'll play you. see how it goes. >> good luck, david. >> liberty media series c formula one. how's that >> yeah. the yeah >> that stock is up as much as 4.5% there's a bloomberg story that indicates that they had at least attracted interest formula one is owned by liberty. great deal that they did some time ago that attracted interest from saudi arabia's private investment fund and that they had valued the company or were willing to pay at least over $20 billion for it now of course the market cap is right now above that. >> how much was that >> that was a good amount.

>> how much? >> over 20 billion but they're not in talks as much as i'm aware of bloomberg reported the same. what is interesting, you know this of course why has formula one become such a valuable series? >> because of the series. >> because of the series on netflix. netflix might consider buying formula one were it for sale i find that hard in some ways to imagine, but there are a lot of synergy between the two. netflix, that show has contributed to the enormous popularity of formula one. that does get us back to netflix. stock's up 7.5% now. >> david, that's because of subtitles. now i've got to tell you this. formula one is a story i think a lot of us missed except you. it's a game changer. a lot of people have tried to, i think, find something that's like that. don't find the next liberty

media. it's liberty media, right? >> yeah. >> did you give them a fake christmas card >> yes >> yes, of course. i'm in all of their pockets, every single one of them you mentioned the media executive and chances are i know them because i've been doing this for a really long time. >> okay. pelts. >> and then what gets them -- >> pelts. >> kwhe would prefer to interthem but i get them every so often i win every so often >> okay. i had davos envy, all right? there, i put it out there. >> i didn't have any davos envy. you would have gone? >> i would have gone >> ugh. >> 3:30 in the morning it's freezing. you're walking on those -- >> i don't like to sleep. >> your little hubble of a room down the hill. >> really? >> that's what i remember. >> those people look so special. >> jim, the names that have

announced layoffs this week, microsoft is roughly flat for the week, i think. google is going to end the week higher >> right >> there's teledoc in there. we've mentioned wayfair. 10% global workforce that's going to be 1700 employees. >> yeah. >> they can move up their adjusted ebitda break-even target. >> i think of those, the one that i was think mystifying to us is google was selling at 18 times earnings obviously there was something wrong. i think that they've sincerely regretted the hiring spree they had in 2022 even as you could have argued that they knew their business was going down. so they've corrected that. and i think that's good. >> as you pointed out, it's hard for hr departments to let go of people that they just brought on >> look, to get a job in google, like we used to -- goldman was very hard to get a job and i got a job. to get a job at alphabet requires many, many stages,

seven, eight, nine weeks so you can't -- like the day that you hire them say, looks like we got that wrong it's not their style the it's a very good company and they -- i think they're very reluctant to say, you know what, we've gone this far. we found these great people, we should let them go but this discipline is what people wanted to see to get it so it has a more premium hold. >> starting to see discipline across the board >> right. >> we're talking about 200,000 jobs roughly now, at least of -- when you add up all the announced layoffs and obviously there are others that are smaller, perhaps, that aren't part of an announcement. >> nowhere to go. >> but these are high-paying jobs as well >> why he, they are. >> in the technology sector. >> that's why we're seeing real estate go down pretty drastically in california. >> overall, in aggregate, jp morgan said the jobless claims data is not sending a distorted signal it reflects legitimate strength in the labor market. if anything, seasonal

adjustments may be pushing continuing claims up >> this is why you need those two more rate hikes because there haven't been any highly visible closings what we need are some of these enterprise software companies, they need to merge or they need to close we don't need them david, there are companies that have losses -- >> there are. >> -- multiple losses for years and years. >> they were funded obviously by 0% interest rates. that game ended. >> don't you think those stocks are going to have a hard time when the money runs out? >> yes, i think they are. >> there it is. >> i think they are. >> that won't be until the middle of the year. >> layoffs will help getting people back to the office and increasing productivity argument to be made there. most of these companies still have people showing up maybe twice a week if they're lucky. >> i think alphabet had a very good lead on who was working hard, who was playing games on friday >> yeah. i'm starting to hear more of that people -- that companies are more focused on bad swipes and

actually are you here, are you not? because you've got situations where they're asking people to come back twice a week and even that is causing friction twice a week by the way, iger disney asked for four days a week we'll see. different story in financial services where the culture has always been different but when you're talking tech or media, back to work story is still going on it's still an interesting one. >> nobody works on friday. >> no, people don't work on friday they're at homeworking they keep -- there are devices, you know, that you are able to put in your computer that make it look like you work. >> moves your mouse. >> did you know that >> no, i didn't. >> you didn't know that? >> i didn't. >> moves your mouse. >> keystroke >> really. yes,it's kind of like a -- >> of course there are >> no, there are oh, wow, cramer's really working his butt off there no, it's a device. >> chatgpt to pretend it's you. >> better than you better than you. it's like the matista.

>> i replaced my job with ai but i'm still getting paid perfect. >> what a country. >> how about the setup for next week, jim? the earnings list, microsoft, ge, j&j, service now, love the airlines, transportation what -- does the setup feel good is the layoff dynamic, do you think, pointing to something more ominous >> i think that there's enough negativity that the setup could be good, and i'll give you a great example. one of america's best companies, johnson & johnson. my travel trust owns it forever. it's really terrific the stock was at 186 in april of last year, it's down to 169. it's breaking up into consumer products, versus medical device and pharma, and that stock is up to 2.67% yield i like that. i like that kind of thing. that kind of thing can work. microsoft down -- i don't know, microsoft they announced the layoffs. we have to find out whether --

did they do them out of strength or weakness? that's what we're going to start seeing people are saying -- like, for instance, the cowen piece about salesforce, the downgrade, doing layoffs out of weakness. so the story will be did they have too many people and they have good revenues or are they just doing poorly and they've got to let people go the cowen piece said salesforce is doing poorly and marc benioff has to let people go the they talked about growing 13%, the worst ever. i felt the piece was critical. >> do you agree with it or not >> i thought it was too mean spirited. >> all right do you agree with it or not? >> i think that there are three activists in there and they have to -- they have to -- >> three >> three three. >> that's a lot of activists. >> that's a lot of activists. >> that's a lot of activity. you're benioff it's like, wait, wait. >> i've got two arms. >> my head >> his head is on a swivel

lazy susan but i do think that he has a lot to demonstrate that he's not -- his company's not losing strength so companies that fire from strength, yes. companies that fire from weakness, down the most interesting one to see will be servicenow because -- >> bill mcdermott? >> yes he's been on to say things are great, things are great, things are great and the stock is down considerably servicenow is a very, very big company and i've got to tell you, servicenow will be the tale of the tape. that's what i want to know 621 was the high it's 429 if servicenow rallies, then you're going to have a real good week. >> we'll see salesforce crm still the third best dow stock of the year up 10%. >> three activists david, is there anyone else other than activists >> there is a lot of activism, some of which we know about, some of which we don't i don't think everybody is aware there are three activists at p

crm. >> that's what i call nn-e-w-s. >> yes you did sneak it in there with me. >> no, i made it up. >> well, there is that >> holding 3900 on this friday let's get to bob pisani. good morning, bob. >> good morning, guys. happy friday dead even on the advance decline line down week but an up year some of it is starting to look like 2021. take a look at the leadership. semis holding up tech sector. communications services, a little bit above average as well we're still seeing some lag in some of the consumer staples and some of the defensive sectors. megacap, tech, alphabet is leading. had a great week up 4% here today nvidia, meta, amazon all leading. it's just been a real -- i call it let's get the band back together again looking like 2021 at this point. as for some of the other stocks

that are also modestly on the up side, tech job cuts i think is a real key story here today to look at what's going on here this is a very small part of the overall jobs it's low single digits for all of these companies 6% over at alphabet and the thing i keep hearing this morning from everybody is this is okay. this is good it's going to help prop up earnings but you can't cut your way to higher stock prices you can't keep doing that. that will work today but not tomorrow we need to see some kind of reacceleration of growth coming on at this point and that's what's not clear. i'll say this, the market is starting to believe it could be possible this is what i'm saying. it looks a lot like 2021 the leadership group semiconductors, communication services, consumer discretionary, technology. this is 2021 the look at the lag. the laggards this year again, this looks like -- a lot like 2021 here now it's only three weeks so it

could change, but the market's acting like we could get some reacceleration of growth and it's not just the sectors, it's the individual leadership it's -- let's bring back the band the old growth stocks are back and microsoft is sort of the lone holdout for the year. this is the old classic leadership group for 2021. the go down to the next group here you see tesla. apple is on the up side as well and there's microsoft, which is the lone holdout amongst growth cap stocks the market wants to believe reacceleration of growth is possible and the old growth names. we'll see. as for where we are in earnings. 55 companies have reported 12% of the s&p still very early fewer companies are out there beating estimates. i have 69% beating you usually get 80% beating. they're beating about i a smaller amount

the beats are smaller. that may be because analysts have not cut the estimates enough earnings are flat for q1 and q2. that's what we care about. basically flat everybody is hiding out in the fourth quarter where earnings are expected to grow by 10%. carl, wake of the expected options expiration today on equities the fed speak window, the blackout window does begin pretty much tomorrow one final blast as we got the ten-year back around 3.45. two-year, as you know, has had quite a week for now, back to just shy of 4.2. we are back after a break.

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you're not coming in early look out, it's been great. >> big div hike. >> much more than i thought. >> oh, look at that. i'm wearing cuff links that have the eagles on them wouldn't you know it yes. it's a philly thing. let's go, birds. >> it's going to be a great game. >> it will be a big game. >> if last week is any indication >> look, the season's been great. >> ratings have been good. >> where's the money show me the money, formula one. >> i don't know. i don't know >> we'll talk on monday. we'll see you tonight, "mad money," 6:00 p.m. eastern time. when we come back, a lot more on netflix beating subs, that leadership shuffle plus phetalab cutting 12,000 jobs dow down 36.

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the netflix. s&p pretty stead just up fractionally at 3937 new home sales out, so we'll turn to diana olick. >> reporter: existing home sales in december fell 1.5% to a seasonally adjusted annualized rate of 4.2million units that's a little better than expected but the 11th straight of declines and sales were down 34% year over year higher mortgage rates and tight supply are plaguing the market with the inventory at the end of december down 13.4% to 970,000 units. supply was up just over 10% from a year ago, but at the current sales pace it's still just a 2.9-month supply four to six-month supply is considered a balanced market even with tight supply, prices are starting to ease the median price in december was $366,900, up 2.3% year over year but way off the huge annual

gains we've been seeing as recently as last summer. homes are staying on the market longer, 26 days, up from 19 days a year before. all cash sales are rising. 28% in december from 23% the year before. that's likely due to higher mortgage rates and a return of investors to the market. just finally, sales are weakest, actually, in the $1 million plus range. back to you guys >> diana olick, thank you. we are 30 minutes into the trading session. here are three big movers we are watching alphabet popping after announcing plans to kit cut nearly 6,000 jobs, 6% of its workforce, the largest round of layoffs from the company coming from the ceo. you can see shares are up almost 4%. ppg on pace to break a three-day losing streak, reporting stronger than expected results. even as volumes sale, slowing manufacturing activity they make industrial paints and

coatings shares are up 5%. nordstrom, negatively preannouncing for q4 noting a margin hit, working through inventory as consumers spent less freely during the holidays. similar scenario to what we saw from department store rival macy's you can see shares of nordstrom are down 2% right now. let's dive into this morning's biggest mover, and certainly leading the s&p. netflix, exceeding expectations on subscriber numbers. founder reed hastings is stepping down as co-ceo. our next guest is more concerned in the near term with the increased price of password sharing rather than advertising. let's bring in alan goulds with a price target of 3.20 per share. great to have you on >> good morning. >> just walk me through. there's a lot we could break down, but walk me through what youle think is most meaningful for netflix right now and whether it changes your stance,

your rating on the stock right now. >> sure. i think the two most important thing are password sharing, how they crack down on it, what implication that has on the subgrowth and the arpa growth. the second thing is the fact they are at about a steady state in terms of content spend. in terms of password sharing, you know, it's going to come out this quarter greg peters on the call said it's going to be a little messy. there will be some consumers upset. there could be negative press. people may have multiple kids on an account they're going to probably limit you to one or two extra people on a password sharing account, so that will force additional people to take new accounts. will they take the new ad price tier, which is $6.99 we don't know what netflix is going to charge for password sharing. in latin america they charge $3, but the latin america arpo is a little more than half of the u.s. one maybe they charge $4, $5 in the

u.s. for password sharing. there is an execution issue here on advertising i think it's going to be creative but they warned us it's not going to move the needle right now >> okay. so, given the fact we'll probably see noise and messiness, at least in the current quarter as password sharing piece of the puzzle begins to take root in a more meaningful way, free cash flow is the other driver of this stock this morning can they continue to maintain these higher than expected levels versus what the street's been calling for and does it speak to how quickly netflix kind of pivoted to focus on that amidst lower market last year and tightening financial conditions that have affected tech companies more broadly? >> yeah. free cash flow is phenomenal netflix did have cost cutting last year. the main thing is their content spend was down year over year. less than $17 billion. they say it should be in that zip code for the next two or three years. amortization will be $14 billion

next year. which will certainly be additive to free cash flow. and the whole street is looking for profitable cash flow generating streaming businesses. netflix has a ten-year head start but they have proven you can do it. they've got a real flywheel going here the only issue we have with netflix is you're paying 30 times earnings for a company that even on a currency adjusted basis only reported 10% revenue growth last year and will probably be, you know, first half of this year, will probably be in that zip code or a little less >> cultural fallout from hastings jumping to executive chair? there's some discussion today about the fact that he was really in the weeds on the technical stuff, algos, at a period when the company maybe needs to manage their talent a little better. anything on that >> carl, i think it will have almost zero effect just like everything else reed

hastings has done, i don't think you could have handled this management succession any better he has been co-ceos for a number of years and promoted greg peters to c.o.o. a few years ago. reed is executive chairman he's not walking away. i'm sure they have his advice when they need his advice. i'm sure if he sees an issue with the algos, he'll make sure it gets fixed, talk to the right people greg and ted have done a very good job reed will still be in the background i'm not worried at all about the management succession. >> alan, all i've heard from you are positives but your 320 target is 21 bucks below where the stock is you just don't like the multiple here on free cash flow i heard you say it on earnings, free cash flow as well, it's just valuation that you're worried about? >> correct, david, it's just valuation i'm worried about. the other thing i'll mention is netflix seek seems to speak when

it has good content cycles the peak of the stock was $700 a share with "squid game," the trough is when they had two consecutive quarters of sub downgrowth we've had two quarters of subgrowth, better than expected. on a multiple basis, yeah, it is not inexpensive on either -- on multiples of revenue, multiples of earnings, multiples of cash, multiples for sub. >> thanks for joining us >> thank you let's keep that conversation going with someone who has known hastings well over the years going back to the days before netflix, powell holland, general partner at mach49. great to see you happy friday >> good to see you again i would love your take on

hastings co-ceo roles tend not to work in a lot of high profile cases but that does not seem to be the case here. >> yeah. so, i mean, i took a little grief, i think it was 15 years ago, i was on motley fool, and i said, i think reed hastings is the best ceo in america. and that is when the stock was at about $1 billion in market cap. you know, reed is just a very one-of-a-kind human being. and a one-of-a-kind leader back in the day when i worked with him in the early days of pure software in the '90s, he just -- he was so studios and so -- he must have read 200 business books during that time period and absorbed all the information in it. and then has now applied it over the course of his whole career so, your previous guest, alan, i think he nailed it i think everything reed does is intentional. and for all of us who have been, you know, benefiting from it,

both in terms of the content from netflix but also the stock, you know, he's just done an unbelievable job over a 35-year career >> right they, of course, have always been focused on their own business you ask them about competition they always say in the past, our competition is sleep but at this point, given the traction that some large rivals are beginning to get together, don't you think external focus has to get stronger? >> yeah, i don't know that i can -- i'm not close enough to the day-to-day at netflix to comment on that aspect of it i guess what i would say is, if go back to the early days and one of the things i recall from my time at foundation capital were we were in early stage investor through my partner, mike, reed used to do the quarterly analyst calls with the wall street analysts and they just hammered him every single time. show me profit like, where's the profit

i want to see profit, profit, profit his response, essentially was, you don't understand how large my market is i'm going to keep investing, investing, investing he did it quite consciously knowing there would be these big investors that would eventually wake up. for years they criticized but eventually wake up recall, carl, even in the very early days we helped take netflix public in 2003 and right out of the gate, amazon went after them, walmart went after them, blockbuster remember those guys? they went after them disney was looking at them but not yet ready to make any moves. you know, the greatest gift that all those people did is they didn't take streaming seriously. they didn't resource the company for streaming. they were the incumbent so it was difficult for them to embrace the new business model ultimately, netflix's wild success forced them into doing it it's not a surprise at some

point they began to take some share. >> listen, i would watch the reed hastings netflix story on netflix any day. the fact he's moving to an executive chairman position, and i realize he's still going to be involved in the company, but now with greg peters stepping into this co-ceo role, if he's one of a kind, what does that mean in terms of the future vision, the future direction of netflix and whether it can continue to navigate what is a growing landscape of competitors >> yeah, so i've been on a number of public company boards and dozens of private company boards and i've been involved in people who are former founders who moved into this chairman role. their voice stays very strong. your former guest, the previous guest, alan, nailed itm at perspective. he's not just going to disappear. he's not a big retirement sort of guy and so he's going to stay very actively involved. the partnership that he's forced with ted and greg and -- over

the years has been fantastic so, you know, my assumption is that he's still going to be a voice in the -- kind of the strategy of the company, but after, you know, 30 years of his life, essentially, you know, he's going to let other people handle the day to day. >> all right, paul, pretty fascinating. we've had some wild rides in recent quarterly prints. this one, though, is going in the right direction with the company's standpoint thanks for the help. great to see you again >> thanks, carl. bye-bye. as we head to break, here's our road map for the rest of the hour the fed is on the verge of a blackout period before the february meeting we'll talk with a former fed governor about the latest commentary out of the central bank a tesla shareholder trial heads back to court today. elon musk, well, he may take the stand. don't think we're done with netflix. we'll talk to a former streaming executive on strategy in the streaming wars all in the face of what could be

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today's the last day we'll hear from fed officials ahead of the upcoming meeting as the central bank starts a quiet period that starts tomorrow. steve liesman with the latest. good morning. >> just ahead of the fed's blackout period where officials remain quiet in the ten days leading up to the meeting, new

york fed president john williams last night acknowledged progress in the fed's goals of bringing down inflation and loosening up the job market williams insists the fed still needs to move rates higher. >> inflation's still high, and indications of continued supply/demand imbalance shows we have more work to do to. >> data, which has turned bleak, was mixed and out of line with his own forecast that growth will be modest this year while manufacturing data has turned negative, williams still points to job growth that remains strong i asked him if he altered his forecast for the funds rate this year, all of the fed folks are above 490 for year end he said he would only do that based on the data when the fed next gets around to doing its forecast in march. the market, it's already decided what the fed's going to do pricing in a series of rate cuts from the fed after reaching a peak of the rate of 489 in

march, the futures market sees the fed cutting to 4.43 by year end. the average fed official forecast, 5.13 that leaves 71-basis-point gap, around three quarter cuts. most fed officials have stuck to their forecast that ends the year above 5%. they cited better data on goods inflation and housing inflation to decline but they keep pointing to the pesky still high core service inflation as a reason to keep hiking. while the data has moved, the data-dependent fed has not, at least not yet. i'm going to keep asking this question i'll be speaking later today to fed governor chris waller at council of foreign relations and we'll bring up some of that interview live to you on cnbc around 1:00. >> we're looking forward to it, steve. that's what i was going to ask you. when you have someone like vice chair brainard who tends to be more dovish with her tone in general speak, it seems like the

market expects that or it's baked in when someone like waller speaks and seems a little more hawkish than a brainard, is the expectation that what he could say could have an even bigger impact today >> you know, that's a great question, morgan i'll answer it two ways. first of all, brainard is the vice chair what we don't know, because she's sort of just recently become the vice chair, is she sort of a policy pulling guard, to use a football metaphor, for powell or speaking her own book? there was a little disagreement between brainard and powell on how service price inflation can come down. she thinks the decline in oil prices and commodity prices and other input costs could bring down inflation without loosening up the job market much powell seems to be pointing that you have to loosen up the job market to get the service price inflation down she's a touch more dovish but there's not a whole lot of room between powell and brainard.

waller has been ahead of the group in talking about the need to raise rates faster. and i think any give by a guy like waller, morgan, and this is where i agree with you in the premise of your question, any give on the dovish side by a guy like waller would be very influential. i'm not sure we'll hear that today, but that's why we do the interview. >> can't wait for that, steve. steve liesman. despite this tough week for the markets, our next guest argues we are still on pace for a soft landing let's bring in goldman sachs asset management investing and public cio fascinating week between david solomon's comments about a soft landing at davos this week, goldman pulling their recession call in europe directionally, is that really the house view, moving in that direction? >> very much so. if you look at the data, just like the last week of data soup, you're having retail sales come off, so you're starting to see

that weakening of the economy. at the same time, employment is strong at the end of the day, if people have jobs, they're going to be able to spend money. you're not going to see a deep recession. you may see a mild slowdown, but either way, that kind of lands us in the right spot >> right a lot of this sort of pivots around the notion that goods inflation is slowing faster than, say, wages and as a result you'll end up with a little more gunpowder for consumer spending, which is obviously a huge part of the economy, right? >> absolutely. and i think if you go back to the pandemic, goods were the first things that experienced inflation. so, the leading edge of kind of the thing that should come down from a pricing perspective, i do believe you're going to see normalization on the services side as well it's just going to take longer because that's where wages and rising wages have really had impact and it's more constrained

in terms of just the labor pool that can go out and provide those services >> we talk so much about what's happening with the central bank here in the u.s., but the bank of japan and the moves they made earlier this week -- i should say didn't make earlier this week, even as we're seeing inflation in that country hit a 41-year-high this morning, has had a big impact on the overall global rate complex. just want to get your thoughts on that and how it's contributing to everything we're seeing play out in fixed income right now at a time where there is so much investor enthusiasm and focus on it. >> so, i think in the short term, i think a lot of investors, including ourselves, are expecting the bank of japan to kind of flex and see rates higher there the question is the timing and so getting -- not getting that move at the most recent meeting was definitely constructive for the overall market you got that and weak retail

sales number and those two things led to the pretty substantial rally we've seen this week. you know, i do think that in the future you will see kind of the bank of japan flex so, that's going to put some upward pressure. at the end of the day, the bank of japan doesn't have to do a tremendous amount of work to slow inflation given the demographics we see and kind of the headwinds of inflation in japan. >> given you have a background in the credit markets in particular, and given we're coming off a brutal year, not just for equities but for credit as well, or for bonds, where do you see opportunity, if any, in credit you know, leveraged finance has been closed, high yield. i'm curious, where are you telling clients in public portfolios to think about where they might want to be if there's an opportunity >> that's a great question so, i think this is a year of income we've been very, very adamant, last year we were pounding the table that bonds are back, it's

time to recapture that income. i actually think across the credit spectrum, you want to stay on the better side because are you going to see better quality side, because you are going to see a slowdown in the economy. none of us has a crystal ball and can predict whether we end up in an actual soft landing or not. you want to focus on companies with strong balance sheets, strong cash flow and the ability to execute well. and i think that that goes across both the fixed income markets as well as the equity markets. you know, one of the things we've really been telling clients is, there's a tremendous amount of opportunity there in selecting your way to return but when i returns, there's easy money in fixe diver alpha in equity markets, especially when you look globally at markets like emerging markets and europe. there's just a large number of

companies that have strong balance sheets, strong cash flow, and can weather this storm with strong management >> that's one thing we'll be talking about later in the year, is the rate trajectory in some of those emerging markets. appreciate it very much. great to see you thank you. >> thanks so much for having me. elon musk is expected to take the stand, perhaps as soon as today that is in that trial that is ongoing over his 2018 tweet in which he indicated he was thinking about taking tesla private. now, the stock is up 460% since that time, even with last year's significant downdraft. we'll bring you the latest later this hour. don't go anywhere.

keep an eye on defense stocks a mixed picture this morning after the u.s. announced more military systems to ukraine, $2.5 million package, including armored vehicles including general dynamics strykers for the first time, comes ahead of the meeting in germany of countries supporting kyiv. that said, after strong gains

last year for many of these names, defense stocks are among the biggest laggards on the s&p to start 2023. northrop grumman, lockheed martin, among others we're going to hear much more when we begin to get earnings from the sector next week. we're back in a moment lily! welcome to our third bark-ery. oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect. terrier-iffic i labra-dore you round of a-paws at&t 5g is fast, reliable and secure for your business. ♪ this feels so right... ♪ adt systems now feature google products like the nest cam with floodlight, with intelligent alerts when a person or familiar face is detected.

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lloyd austin is urging fellow defense ministers to, quote, dig deeper, on supporting ukraine. the united states says it will send another $2.5 billion military aid to ukraine, and that includes those stryker armored vehicles for the first time germany, though, continues to push back against sending its advanced tanks saying it wants

consensus among allies. social media personality andrew tate may spend another 30 days in a romanian jail. tate, tristan, his brother, and two others have been behind bars on human trafficking and rape charges. a lawyer for the brothers says the continued detention is totally unjustified. and the first native american woman in space is conducting her first spacewalk nicole mann and japan's wakata are expected to spend six hours outside the international space station prepping the installation of more solar panels morgan, right up your alley. >> i love you ended with this story, thank you, contessa brewer. we have more signs this week that inflation is easing and the economy is slowing but fed funds futures markets are still pricing in another 50 basis points of rate hikes while some are warning of overtightening, our next guest says the fed needs to continue to be more aggressive and supports a 50-basis-point move

next meeting joining us, former federal governor, cnbc contributor, fredf frederic mishkin great to have you back on. given we got this mix of data that does show a softer economic picture right now, and certainly led markets earlier this week lower on recession fears, why do you think 50 basis points at the next meeting is still warranted? >> so, i think, let me free face is by saying i'm not a big fan of gradualism under two situations either when you get a big negative shock and nonlinear shock as we had during covid or the global financial crisis or when you've had a big inflation shock and have a real potential for inflation getting out of control and inflation expectations getting out of control. so, the fed actually dropped gradualism, which is very good in this impressive turn-around they did but my view is that the -- and

it's been successful in containing inflation expectations, but in an environment where, in fact, the inflation numbers -- where people say they look so good and they're getting better, that's very true about the headline inflation numbers. but we still have a long way to go in terms of underlying inflation getting it back to 2%. my view is that the fed really has to make a very strong commitment, that's its primary thing it has to do i think it's done that a way of showing that is with 50 basis points the bottom line is i think the fed is going to have to go higher than their projections and the market is thinking they probably need to go to around 5.5%. my view is this idea you have to slow it down and do it gradually, i don't think that really makes a lot of sense when, in fact, you have to really show people that you're serious. and there's some history behind this i was actually attending fmoc meetings in '94-'95 when the fed did a huge increase at the time

to get credibility and then they stopped. my view is we don't have to just go slowly raising rates. last thing i should say, the really key thing is not so much what they do at the meeting, it's just they make sure they get rates high enough and then stick to their guns. that's what's really important. >> why do you think the fed is -- has diverged not the fed. the markets have diverged as much as they have from the fed in terms of what they're pricing for the future >> you know, i see this happen all the time the fed can't be led by the markets. i think that the markets, they start talking to each other. there's all this thing, inflation has come down and it's gotten better. the bottom line is, that was all expected there would always be transitory elements to this inflation surge. the big problem was that it was much less transitory than people expected and underlying inflation actually rose a lot. the fact energy prices have come down and a lot of these prices -- you can now buy used

cars and so forth at lower prices, that's not really the big deal the big deal is underlying, and that's what monetary policy can affect it can't affect these supply shock things that's completely out of their control. what they can actually do something about is underlying, which eventually tells you where inflation is going to head >> fred, from a broader economic viewpoint, how do you view these -- this recent spate of layoffs from big tech firms? meaningful, important? i'm curious of your perspective. >> it's in a particular sector that's been running into some problems so, you know, does that tell you the whole economy is going to go down the tubes i don't think so now, i should say that the likelihood of a recession is very, very high. actually, we're just involved in research with the u.s. monetary policy forum, which we'll be presenting in about a month. one of the things you see, when

the fed actually has inflation get out of control, and then basically raises interest rates, you always get a recession the only times that doesn't happen, when you get so-called soft landings, is where inflation is already under control and the fed is just being pre-emptive. one of the great examples is when i was taepding fmoc meetings at the federal reserve bank in new york in '94-'95, the fed was pre-emptive but inflation wasn't out of control and they were very successful. i don't think that's the situation now. we are going to have a recession. i don't think it's going to be that severe unless something really bad happens that we can't anticipate at this juncture. you know, when you get -- when inflation gets out of control, you have to basically get back on track and the fed's been doing a good job lately on that. but it's very important they stip stick to their guns, not listen to the people who say, gee, inflation is getting better you should ease up when that's happened, another good example is in the volker disinflation, people don't

remember that the fed backed off in 1980 and then, in fact, had to raise rates to 20%. this is not where we want to head this time around. and i think we won't have to but the fed really does need to stay tough and resist the pressure, whether it comes from politicians or even from the market >> i was going to ask you, fred, whether or not you think moving fast helps avoid a showdown with political pressure or whether you really need to wait and see if the labor market is going to break? i wonder where you think unemployment's going to wind up. >> you know, i think unemployment is going to rise. how high if we come out of this situation with unemployment rising to less than 6%, that's a good recession. that's fairly mild that's sort of the kind of thing i anticipate i think the bottom line is that it's better to get this stuff out of the way from a political viewpoint, my view is just do what you have to do, make the argument, and you're probably better off doing

that now, there could be different views on that. i'm not a politician, thank god, but i think that's the best way for the fed to go. >> you know, fred, we don't usually ask you about your students, but i'm just curious, are they worried about what kind of job market they'll be graduating into from the business school? >> i actually have mentioned this to them because -- and i've told them that it can be a little tougher than they expect you know, it's been so good recently you know, we had a period during covid where it was actually pretty scary, when covid initially hit. but actually good policy both by the federal government and the fed got things okay. but i've warned them it could be a little tougher than they're expecting and just study hard and make sure you really know your stuff so you can get a good job. that's what i -- i use it as an incentive to make them work harder. >> there you go. you're a tough grader, i bet, too. >> actually, i used to be

tougher until my nephew had friends that i was one of the toughest graders in the school, realized i was too tough, and my nephew couldn't go to a party because all their friends didn't get the grades they should get so i learned my lesson. >> good to hear he backed off some. >> thank you for joining us. >> you're very welcome we're keeping an eye, of course, on broadly speaking the media stocks, including our parent company, comcast, all of which are up this after that netflix knockout earnings report we'll talk with a long-time streaming and content executive, who sees a third wave of subscribers coming in the next year but says netflix, well, may be the least likely to benefit.

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shares are up a little over 6% after that robust subscriber growth despite the beat of earnings and subscriber expectations, our

next guest believes the streaming giant still needs to invest more in international expansion, add infrastructure and content strategy as we enter what she calls the third wave of streaming subs joining us the head of content for hulu, heather. first explain what you mean when you say the third wave >> good morning. thanks for having me back. i believe the third wave of streaming is really coming the first one is when netflix launched along with amazon and hulu the second was really three years ago when all the major meet media platforms launched their own direct-to-consumers like disney plus and paramount max and paramount plus and peacock the third wave is happening in the next 12 to 24 months as we see what's happening with cord cutting accelerated, nearly half of the u.s. has already cut the cord i think we have another 30 million households to go over the next 12 to 24 months as we see things like major

sports moving to streaming and everyone under 35, nearly 100% of everyone under 35 is, you know, 100% streaming household at this point. >> you know, heather, investors who i speak to would rather see an austerity wave, meaning keep your content spending where it is, don't go crazy anymore and actually show me some free cash flow now, netflix is doing that, keeping it roughly $17 billion, $3 billion in free cash flow this year, $4 billion next none of the other streamers are in a position to make profits as yet. does that concern you? >> well, netflix has proven that a pure play streamer can be an extremely profitable business. that bodes well for the future as things shake out on the sports cost rights the media companies obviously have those, you know, heavy burdens on the sports debt but when it comes to entertainment content, the future is bright for streaming

>> why >> because it's -- i mean, netflix has proven this is a model that works when you deliver quality content on a global scale, driven by, you know, hits that are repeatable, which also disney has in its quiver as well that you can succeed so, the sports rights costs over time will shake out and that will right size itself, but i think the future is still extremely bright. >> heather, $17 billion spent on content. certainly, they've been generating hits. is this something that is specific to netflix as it stands right now, the fact they have been so successful with so many different types of products on their platform, or is there a formula here that those other streamers have taken notice of and can mint in terms of being able to turn out big blockbuster programming that folks are going to pay more and more money to tune in to watch >> i think it's -- i think netflix has picked up on a tried

and true model, which is double down on major creators that have fan bases like shonda rimes and phil murphy. they have an international strategy that everyone can learn from in terms of being able to dig into, you know, local hits that are extremely profitable because they are low cost to produce. so, if you combine the best of the top creators that have existing fan bases and know how to turn out hits with that international strategy, i think that's really where everyone should look to replicate the strategy going forward >> heather, finally, you did mention sports obviously, that's a very expensive component of programming. certainly for the existing cable ecosystem. what are your expectations there? do you think the streamers -- and we've seen them move into it to some extent -- are going to become even more invested when it comes to sports rights? >> there's some rumors that netflix is looking to experiment in this space with the sale of

the -- the upcoming sale of the wwe, which i think they should do you've seen youtube double down in the biggest way with taking sunday ticket away from directv for youtube tv and for youtube i think you can expect a lot more in addition to amazon already having played in this space of going forward for sure. >> heather, appreciate it. thank you. >> thank you >> take a look at slb, that stock is down slightly despite an earnings beat and it's had gains this year that are triple that of the broader energy sector. an early indicator for how other names like exxon, chevron, shell, conoco fared in q4. 'rba ithe. good luck. td ameritrade, this is anna. hi anna, this position is all over the place, help!

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coming up this morning on "tech check," nearly 40,000 employees across tech have been layed off this year. we will unpack all of that and a lot more in the coming hour with the dow up about 30 points

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francisco courthouse but why are we showing it? that is where elon musk may take the trial over those 2018 tweets in which he indicated he was thinking about taking tesla private. shareholders are seeking damages for the money they say they lost as a result of the tweets, which musk lawyers argued were a split second decision in an effort to be as transparent as possible with investors court is set to start at 11:30 a.m. eastern jurors will be hearing from an investor, an outside expert for the plaintiffs before musk perhaps will be seated for testimony later on this afternoon. if not, it could spill into monday morning wow. it's riveting, isn't it? >> well, i mean, it is but i think it's also the fact that you're talking about a rare securities class action suit many times these get settled before they actually go to court and before you ever, you know,

come in contact with a jury. that in and of itself is a reason to watch this of course it is elon musk and tesla. as we talked about in the past, it is a name that has, despite the selloff last year seen the stock performance surge more than 450% before this trial. so much has happened since this take private deal didn't actually happen. >> didn't actually come together as i pointed out, yeah, he would have gotten a great deal if we bought it. remember, it split adjusted at 420 back then, despite the fact that it was down so much last year but we'll see. there are certain things at stake here if he is found to have misled. it is sort of under the fraud banner. >> yes i arealize that we're talking about how much the stock has moved since then it comes at a time it is one more thing on the laundry list for elon musk,

right? everything that continues to go on from twitter, everything that tesla is dealing with. the launches keep coming at spacex. >> it's incredible i would hope the court is not far from twitter's headquarters where he continues to spend most nights with a little bit of sleep on what i'm told is the eighth floor they have literally set up cotcs >> i'm not surprised meantime, crypto lending ing gi is filing for bankruptcy it is the latest blow to barry silver's digital currency group. kate looney has the latest details. >> good morning. yeah this bankruptcy caps off months of trouble at this crypto lender and its parent company genesis filing late last night that includes the trading. the derivative side becwas not

included genesis listed over 100,000 creditors. liabilities fell between $1.2 and $11 billion. it is by far the biggest unsecured creditor with more than $765 million. it has used genesis on the back end of a high interest loan. genesis was the original lender and market maker in this space it issued $131 billion in loans. just last year the unraveling started in the spring of last year to the now bankrupt hedge fund it stopped issues new loans and halted customer withdrawals back in november. today's news, guys, puts more pressure on barry silbert's parent company group also owns grayscale, which is publically traded and adds fuel

between a battle between silbert and the winklevoss twins but still threatened to take legal action against barry silbert. the list of high-profile failures in this space is fpilig up in large part because of the daisy chain we have seen in collateral and crypto. we will hear about ftx today that team is back in a delaware court this morning. back to you. >> is there a genuine concern, especially given the fact that you are talking about customers of gemini? >> that is a big concern, and that's something that folks are watching in terms of some of the knockdown effects here they have $765 million, depending on where prices are trading, locked up in terms of client funds so they're facing a class action

lawsuit from those customers who say, wait a minute we trusted you with our money and it is our issue. they have tried to shift the narrative and say it is a genesis problem. they talked about dcg, that parent company i mentioned potentially committing fraud so you have seen this back and forth. but a lot of fear around that exchange in general. >> kate, thank you and that's going to do it for us on "squawk on the street." happy weekend to everybody "tech check" starts now. happy friday welcome to "tech check." i'm jon fort giant hour of "tech check" ahead. alphabet joins microsoft and meta with a huge round of job cuts saying it will slash 12,000 jobs is netflix a good-bye or a good buy. the ceo seats the executive chairman and later, i