it over to "squawk on the street." this is the final time we're going to look at it. down 285 points now on the dow boeing, hurting things microsoft, late yesterday, with some weak guidance nasdaq was down yesterday, diverging from the dow down significantly today make sure that you join us tomorrow, which will be thursday by my reckoning. "squawk on the street" is next ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer, and david faber. futures still absorbing that guidance from microsoft last night. nasdaq futures are weak, yeeds lower too as some of these macro slowdown worries come in microsoft forecasting the recent slowdown will continue and suggesting the cloud growth will

stay muted plus, boeing shares are under a bit of this morning. ceo david calhoun is going to break down the quarter with us that's just a few minutes away and targeting google once again. the doj and several states accusing the tech giant, alphabet, of abusing its dominance in digital advertising. >> real rockefeller situation there, don't you think like exxon, standard oil teddy roosevelt? give me a break. >> we'll begin with microsoft, though, under pressure in reaction to that guidance on cloud. the company's slowest growth in about six years. satya nadella last night addressing economic uncertainty on the earnings call >> as i meet with customers and partners, a few things are increasingly clear just as we saw customers accelerate their digital spend during the pandemic, we are now seeing them optimize that spend. also, organizations are exercising caution given the macroeconomic uncertainty, and the next major wave of computing is being born as we turn the world's most advanced a.i.

models into a new computing platform >> lot of discussion of a.i., jim, but azure, decelerates into the end of the quarter, down about 35%. >> if you want to follow the arc of a conference call, this was one of the most confusing but also negative one i've come up with satya comes up with a million things that make you want to own it then he gives you that littl negative about optimization. optimization is a code word for, like, we've had enough there's obviously, literally, a glut of enterprise software. then, amy hood comes on the call, and i have always told people, please wait for amy hood, because she's the hammer what she did was say, look, october was pretty good. november was okay. december was bad and january's worse. so, you see this -- this is azure. so, you see this, yeah, 38% in the quarter, but the -- for azure, which looked really good, but it is literally a deceleration that is remarkable, and i think, frankly, the

bringing all of tech down, and we should just focus on it >> jim, you nailed it. you said the same thing i've heard in a number of conversations this morning, which is that massive deceleration from december to january, particularly in azure, from the exit of the year and then down from the mid-30s and then down and that's what's caught everybody's attention this morning that's why you saw the turn around in the stock price during the call yesterday that's why you see it down as much as 3%, and that's going to color a lot of perception of the rest of tech in fact, someone saying to me, how can service now do a good quarter? >> i'll tell you, that has to do with sales i don't think that bill mcdermott is going to miss the quarter. but it may not matter. there is this thing -- i wish people understood, there's this thing called enterprise software, and it has been the single greatest run of anything i've ever seen, frankly. it's been ten years, digitization, cloud, everything. david, it's over the growth is over enterprise software is where

raytheon is getting its engineers, because they're being fired so fast at these places. microsoft, you know what, david? sheryl crow dictum is not in place here the first cut is supposed to be the deepest. there will be many more cuts microsoft, do you see the number of people they have versus three years ago? enough you don't need all those people. and i don't know what those people are doing, but i got to tell you something i have a visualization can we have a camera on me, please focus on that. they're doing this really rapidly when they're not playing "call of duty. that deal's never going to go through. are you kidding? >> we'll see >> oh, we'll see this is a wilsonian day. we'll see. >> we're going to talk more about the knock-on effects bernstein today cutting their argument on amazon we'll get to that a little bit later. but boeing is the other big story this morning on the quarterly miss and some of the cash flow guidance let's get to phil lebeau with a very special guest

hey, phil. >> hey, carl dave calhoun, ceo of boeing, on a day where you miss on the top and bottom line, people are waking up, looking at this and saying, whoa, you guys report a loss of $1.75, street's expecting 27 cents what happened? >> we gave our first guidance, phil, back in november, first in the last three years in light of all the existential issues we've been facing. if we look at the way we finished the quarter, we focus on deliveries and cash flow as the primary metrics, and on both of those fronts, we kpexceeded even our own expectations. we feel good about the fourth quarter and the execution. on the revenue side, we were within a hair of whatever the ultimate consensus was we exceeded on dloeliveries and cash flow. we got over $3 billion in the quarter itself >> the cost component, the cost bug-a-boo, if you will, it's abnormal production charges and reworking these planes that are

in inventory, right? >> yes and for us, our margins from an accounting standpoint will be bouncy throughout this year. largely built around the return to service of the inventory to our planes, both the max and the 787. on the other hand, on the nose of the airplane, it is what determines our cash flow, and so we still feel very good about our guidance, and we're off to a pretty good start. >> jim, i know you have a question for dave. >> first thing, dave, i want to actually congratulate you because i was looking for free cash flow that wouldn't be this good, and i know that phil definitely raised this issue, but i want to feel like there's a mcenerny to this i want to ask you, because of travel, because of demand, how many years visibilitydo you have, and what can you say about long-term free cash flow >> well, we still feel very strongly that the $10 billion cash flow number that we forecast for '25, '26 time frame

is well within our reach without doing remarkable things. but in many respects, it's getting back to that period that jim experienced, which is long-term growth, which is exactly what the market is telling us today we're out competing for orders that are largely being deliver in the '28-'30 time frame, so the near term discussion about recessions gets a little lost. you could have two recessions between here and then, so i think mostly, the industry is concerned about supply chain constraints, and therefore, trying to get their oar in the waters as quickly as they can. that is what we're seeing and experiencing on the field. >> in the old days, i used to ask, okay, how many orders are you winning versus airbus? then i stopped asking that, because it seemed like it was gratuitous are we back to the era where airbus plays a second fiddle role, at least in america, if not even china >> well, here in the u.s., we have had a very strong run here over the last year -- last

couple of years. you'll recall the big delta order, the big united order that just got announced you'll recall that southwest was one of the early sort of recovery stories, and their orders on the max. in the u.s., we feel very good about where we are competitively and pretty much everywhere in the world. just based on the order scoreboard with the exception of china. and if and when china comes back and we remain constructive on china, then my view is we will be back to that same competitive playing field that we were on before until eventually the next airplane gets introduced, and i have a lot of faith that boeing will do that really well >> let's talk about china. you know, the first max flight happened within the last few weeks. you're optimistic that these deliveries begin again do they start again this year, do you think >> i'm not going to get into the guessing game about the day they start. what i will say is that this is likely to start the same way it did in the u.s china has roughly 100 airplanes on the ground, already bought,

that they have to put back into service. china southern launched, and then i think there will be continuous progress over the next six months to get the rest of them in the air and then the question of deliveries of the airplanes that we havetoday will be on the table. my hope is, in light of the fact that they've opened up like they've opened up, and they are experiencing everything we experienced in the demand for travel, probably times two or three, and the cross-border traffic now is really off to an explosive start. that is our sweet spot, which is the wide-body traffic. so, yeah, i'm feeling pretty optimistic and constructive around the market. i think for good reason. i don't think any of us have rose-colored glasses on here >> yesterday, we heard from ge's larry culp about challenges in the supply chain basically, it's going to be this way at least in '23, maybe into '24. do you agree with that are we looking at a supply chain where it's bumpy >> yes and i would characterize the

supply chain and our industry as largely a u.s.-based supply chain. it's labor constraint. >> not hiring, but training. >> they are getting over the hiring bubble, and markets are definitely beginning to provide enough labor to get the job done, but you have to train. every one of these products are pretty sophisticated there's quite a training cycle involved in that process, and that's what they're working their way through. i have confidence that we'll get through this year. it will be a bumpy year for sure, why? because we are all, larry, our -- all the other major tier one guys in our world are on the same page. transparent discussion about what's required, what's going to be needed to hit the next rates, et cetera, and no one's questioning the rates, because they know the demand in the marketplace is there >> carl? >> dave, you mentioned the explosive growth in china, and i wonder if enough clouds have cleared regarding china, regarding covid, to the point where we might get some new details on next generation, say,

mid-sized aircraft and whether or not that would be narrow, wide body, or a mix of both. >> carl, i don't believe anything newsworthy on that front will come as a result of the china opening. as you know, they've introduced their narrow body version, c-919, into the marketplace. it's got an order backlog. it's going to have to go through a slow, steady, disciplined ramp-up in order to meet the demands it's already got on its books. i don't believe that is going to cloud the picture, globally, for either us or airbus. i think the industry's going to be very healthy, plenty of demand for all of us, and i don't expect a significant change on the wide body front with respect to new entrants i still believe the 777-x, which is the one on our docket, is ultimately going to be one of the real crowd pleasers in the industry >> dave, tomorrow in fort worth, boeing will be arraigned on

criminal charges relating to deaths of passengers on the two 737 max crashes. you settledwith the doj. now a judge is saying, the agreement didn't take into account the victims and their families that were involved. what's your reaction to this >> my reaction to the families is always the same just nothing but heartbreak. i think we all can imagine how tough and difficult that would be any and every hearing they want to express those views is okay with me. it's a good reminder to our whole boeing franchise, industry, how important safety is with respect to the legal proceeding itself, that's not a subject that i'm qualified to talk about >> last question faa. this outage a couple of weeks ago has a lot of people here in washington and around the country saying, what's going on? what's going on with transportation in this country should the faa be privatized

is that the answer here? >> that's an avenue. >> but do you think it should happen >> let me first just say, when the term infrastructure gets thrown around and billions and millions of dollars get allocated to infrastructure, trillions, the first term that comes to mind for me is digital infrastructure airlines, railroads, all things logistics, and the government should, if that is the priority, if that is what delivers capacity, productivity, efficiency, service levels to consumers, and that is the answer, then you would prioritize it, and you would consider every avenue, including privatization. >> would you like to see privatization? >> i would probably favor it, simply because the efficiency and speed with which they would likely get it, and all the proof points around the world who have already adopted it >> dave calhoun, ceo of boeing on a day where they miss on the top and bottom line but reaffirm their guidance for 2023 free cash flow.

back to you. >> good stuff, phil, thank you so much. that's our phil lebeau when we come back, the latest on rupert murdoch withdrawing that proposal to reunite fox and news corp. a lot more to come later this week we'll get to at&t and texan and some news on apple and tesla as well don't go anywhere. this tiny payment thing- is a giant pain! hi ladies! alex from u.s. bank! can she help? how about a comprehensive point of sale system... that can track inventory, manage schedules- and customize orders? that's what u.s. bank business essentials is for. (oven explosion) what about a new oven, can u.s. bank help us there? we can serve loans in as fast as 12 minutes. that would be a big help! huge! jumbo! ginormous! woo! -woo! finding ways to make your business boom. that's what u.s. bank is for. we'll get there together.

i screwed up. mhm. i got us t-mobile home internet. now cell phone users have priority over us. and your marriage survived that? you can almost feel the drag when people walk by

with their phones. oh i can't hear you... you're froze-- ladies, please! you put it on airplane mode when you pass our house. i was trying to work. we're workin' it too. yeah! work it girl! woo! i want to hear you say it out loud. well, i could switch us to xfinity. those smiles. that's why i do what i do. that and the paycheck. all right, late yesterday,

news corp. and fox said, forget that, you know we wanted to try to put these two companies together well, rupert murdoch, of course, who is controlling shareholder in both fox and news corp., said, we're not going to do that and in fact, they say as well, we've determined the combination is not optimal for the shareholders of fox and news corp., and a special committees of the boards -- remember, they have been working on this since really mid-october is when we first announced it, established special committees you're going to need a majority of the minority to vote in favor. unclear whether they would have gotten it or not index funds, such an important component of votes like that, but they say special committees on the boards of both have been dissolved, and they're moving on one reason, well, news corp. shares had been up a decent amount during that period, so it's not easy to sort of negotiate what they had hoped would be an at-market merger of the two when you've got one having moved up significantly. fox hadn't moved up as much, so it's difficult to do that. in fact, they never even got to an offer, is what i'm hearing,

where fox said, this is what we're actually going to offer you. but another key reason is because news corp. is close to doing a deal, and a sizable deal for move this is a company that owns realtor.com. they're in discussions with costar group this is something they also told us late yesterday. i can obviously give you a little bit more information on that the price tag, somewhat above $3 billion is what i'm being told by people familiar with the situation. they've wibeen talking for mont, so not really a surprise in fact, one wonders, were they talking even prior to when they were talking about putting the companies together they have been talking for months, is my understand, and they're getting close to a potential deal maybe not days, but certainly not months away. so, let's call it, maybe, weeks from a deal that would value move, again, owner of realtor.com, they bought that asset for $900 million in 2014 now, it's not all owned.

80% is owned by news corp., and then a company called rea owns 20%, but news corp. owns 60% of rea. they're selling all of it. all of move would be sold. costar would be the owner if the deal actually occurs obviously, that would have a positive impact on news corp. as well, bought it for $900 million, selling it for over $3 billion. but jim, you can sort of put on the sideline the idea that these two companies are going to get together not in the cards any longer. >> what happens to the dow jones? >> i think it stays. there's been some rumors, would they ever consider selling dow jones or "the journal. i don't buy into them too much at this point. >> you don't >> no. i mean, i think this has been the focus, the move deal by the way, that's a big number. probably a bigger number than you get for -- remember, they bought dow jones for about $5 billion, a teal i deal i rem very well, but what "the journal" is actually worth -- >> i marvel at this because at

this point in the housing cycle, one of the worst things you can buy is move. zillow is trying to make a comeback i don't understand this. move is -- >> well, do you not understand it from the potential buyer of it then? >> i don't understand it from the -- >> costar, obviously, is who they're talking to >> i don't understand from the point of view of the internet and where people are and how that's kind of a yesteryear property. but if they want to spend the money, i'm not going to fight them they do have dow jones they could have doubled down on that, because finance is a good business they'll get thompson reuters as a stock. >> god, i haven't looked at thompson reuters in a long time. >> but move, huh >> realtor.com it's a hot property. >> like compass and red fin. these are hot ones before they may be >> compass, red fin, move. in other words, stay away. remember when nixonsaid that o the tapes? >> yes >> you do have mortgages back to 6.2% >> dr horton downgraded. they had a great quarter they're making as much money as they did when they were selling

fewer houses because they've jacked the price up of houses so much that's one of those calls, if you're jay powell and you're feeling better, you're feeling worse. because i mean, basically, we're raising prices and people are buying them because rates are going higher, so you know what, fed? take a hike. fed don't take hikes >> well, they do hike, but they don't take hikes >> oh my, david, with a wilsonian comment. >> yes >> remember, wilson has been completely discredited, by the way. >> he has. he was racist. >> names all the foods after southern generals. >> the more i read about that guy. >> yeah, wilson was -- there's only one good wilson, and that's mike wilson. >> yeah. we'll talk more about mike wilson's views, actually, having been on fast cut the past couple days shopify with new pricing as well we'll get cramer's "mad dash," countdown to the opening bell on this wednesday that's busy and getting busier don't go anywhere.

♪ prizefighter... ...meets trailblazer. ♪ ♪ classic meets modern. ♪ at morgan stanley, we may seem like a contradiction...and we are. ♪ ♪ at 87 years old, we still see the world with the wonder of new eyes, ♪ helping you discover untapped possibilities ♪ and relentlessly working with you to make them real. ♪ partnering to unlock new ideas, ♪

to create new legacies, ♪ to research, innovate, collaborate, ♪ and build the way to transform a company, industry, economy, generation. ♪ because grit and vision working in lockstep puts you on the path to your full potential. ♪

cloud's going to open weaker this morning as you see futures in the red, all on the back of microsoft, open down about three. same thing for names like amazon and service now, workday and palo alto will open lower. we'll talk about that and some of the relief in lower yields, at least two-year got to 4.14% this morning. you can catch us any time, anywhere, listen tand o follow the "squawk on the street" opening bell podcast

[office sounds] ♪upbeat music♪ ♪♪ ♪when the day that lies ahead of me♪ ♪♪ ♪seems impossible to face♪ ♪a lovely day (lovely day)♪ ♪(lovely day) (lovely day)♪ ♪(lovely day)♪ a bank that knows your business grows your business. bmo.

>> announcer: the opening bell is brought to you by nuveen, a leader innin income, alternativ, and responsible investing. let's get to a "mad dash" before we get you the opening bell of course, we talked a bit about microsoft, those earnings going to have a dampening effect on

the broader market we'll get back to that, but texas instruments also out there. >> texas instruments is kind of an amazing company you won't see the stock down a lot, even though they're saying orders are weaker, weaker demand for pretty much everything industrial market down 10% auto is up personal electronics is just down so badly, down 20% for phones, tablets, pc. gee, 25% but david, enterprise software, only 6% of their mix, down 20% i keep coming back i would have asked dave calhoun, if i had one more second, say, how many engineers can you get from the valley? when you see enterprise software down 25%, you realize tlhere was a whole industry predicated on bringing more companies into that mix that's been the growth area forever. industrial market only down 10%, really not so bad. so, what i would -- by the way, texas instruments is a very

disciplined company. autos are good i don't know, david. this was a $4.7 billion quarter. we're not talking about a small company. the problem is that companies are still working to reduce inventories, so we have a big glut, and it's not been finished, and i think people have to recognize that they gun jumped that's okay if you're trying to buy millions and millions of shares of some of these stocks you need to. but david, this is in keeping with what's going on with amazon and what's going on with web services throughout the whole business, including, of course, azure. it's -- david, it's a sad day for tech sad. there are a lot of people in these businesses, and i predict they will be looking for jobs. there are jobs at raytheon >> right it's a -- what you said, it's a deceleration from a ten-year period of incredible growth. >> right >> obviously, some of it fueled by 0% interest rates >> right, and you know, we can extend that to salesforce late on if we want to

>> yeah. >> but enterprise software's the new natural gas. >> oh boy. >> nat gas incredible i think it's march and april now with a two handle on that gas. >> really positive one positive is that heating costs are going down i mean, holy cow there's a positive for you >> the dollar and energy, headwinds that are lessening no doubt about it. >> gold off. we searched -- the only positive piece of research was five below. the stars are aligned. is that global warming five below is that jackets? >> yeah, it's jackets. >> no. it's a store where you can buy all the jump in the world you want they are from philadelphia i apologize. >> there's a look at the opening bell, by the way at the big board, capital advisors celebrating two recent listings at the nasdaq, the chinese consulate general in new york

celebrating the lunar new year, which we just heard dave calhoun talk about the explosive growth in travel. >> don't have it yet they're still on the tarmac. secretary reimondo is the head of the indian initiative that we're doing. not china. now, of course, david, the chinese ipos are back as if nothing happened because they like to fool us. >> well, the bigger question is, is china back? i mean, as the chinese economy truly reopens from having been locked down for a couple of years, not to mention the crackdown on the technology sector that we talk so often about, as all of that has lifted, how big an impact is china going to have in terms of demand not just on oil but in general? inflationary impact, even. potentially. >> we don't know what apple's going to have. but there's a note -- there's some notes in the last few days. it's every day estee lauder china is their market. people are going out again, and they're putting make-up on, and

it's back to the selfie generation, david. stocks down, of course it's a lousy day but the notes are really incredibly positive. >> katie huberty, morgan stanley great shark, yesterday, looking yesterday at china's reopening it's going to have much more of a hit on iron ore than crude >> katy is in the charts i look at, and it's intriguing because she's coming up with very contrary views, and i like that. anybody who comes up with a contrary view might have spotted what's going on with enterprise software by the way, the venture capital industry enterprise software, where are the deals? where are the deals of all the companies that were created? where are they >> you have to get to a point if you're a private company that you're actually running out of money. >> that's what i keep thinking >> i don't think they're there yet. that said, we've made the point that some of the bigger buyers of those businesses, vista, for example, don't look to the private markets now, look to the public markets where they see

some value because these stocks have been so wbeaten down, jim you can talk about the business decelerated dramatically and it being like natural gas, but at the same time, it's not like the stocks are soaring >> it's a little facetious i tell you, carl, if you're a young person, it was always, like, go west, young person. no now, it's go midwest >> that's true speaking of which, bernstein today looks at the microsoft guide, implies more deceleration for aws. in the medium term, we think ecom and aws are fine, but quarter's tricky they cut to 120. >> look, the long knives are out. what can i say amazon has to do -- i mean, we're all waiting on jassy, andy jassy, the ceo, to fire enough people to get it -- the table of employment back to pre-pandemic, but that would involve literally hundreds of thousands of people,

and i don't know whether anyone has the stomach to do the kind of layoffs that are needed either in seattle or in california they don't know how to fire. what they need to do is bring in somebody who's a good tool and dye man, someone who's worked at a steel mill, someone who knows what happens >> i have a question for -- >> the tool and dye man, remember that? that was a reference to kidder peabody. they brought in like an illinois toolworks guy. that's what they need to do. bring in someone that says, okay, listen, the bottom 30%, go get a job at boeing. they need engineers. i wish i were being facetious, but raytheon said that yesterday. >> can i ask you a question? >> i'm sorry >> thank you on amazon, what about -- why do they need to spend so much money on content do you think people would actually no longer have their prime subscription if they didn't have access to all of those movies and television shows? i ask it because it's not an

insignificant spend for this company. it was an effort begun under mr. bezos. i don't know how attached to it mr. jassy is what if they were to say, you know what? we're kind of done with that now. we'll keep our library, but we're not going to spend all this money on content. >> i'll give you an answer, which is that i have alexa, and i asked yesterday on my fire stick, please put on "your honor," and my alexa in another room says, i'm sorry, we don't have "your honor." it's a 360 -- you would probably say big brother, orwellian, but they want to be part of every aspect of your life, and i think that they could spend less money to do that but when you want to sign up for some sort of web -- to watch something, people go to amazon, because they know that's the locus of the world >> but i think a lot of people would maintain their prime subscriptions even if it did not include -- >> they want information about you. >> if it was just about the delivery >> they want to know, what are

your proclivities. >> understood. but it's a big spend for them. obviously, they have given no indication it's going to stop. they're spending more money on professional sports. they're becoming a real bidder in that area, but it's a big spend. you talk about 100 to 200,000 employees, there's a lot of money on that side of the business >> i think that jassy is saying, if we can be more integrated into your life in every aspect, carl, every aspect, we will do better five years from now and i think as someone who talks to alexa quite a bit, because a lot of times i'm alone, very chatty >> she likes to talk >> yeah. i mean, microsoft's talking about, you know -- they're talking about openai i come home, alexa, says, do you want me to tell you a joke about the eagles i say, i'm in a bad mood sure that makes he laugh. alexa and i laugh together >> it kind of takes us to alphabet today, not just the doj story yesterday. >> oh my god >> more discussion about what

would it look like, some of the parts. today, this piece about apple going perhaps vertical in search on their own >> well, i know. i mean, apple wants to bring in everything it was even mentioned on 3m. the 3m call, by the way, i'm nominating as the worst call -- like, we should do kind of nominations. second might be hans wessberg where he's not laser focused, he's super laser focused >> what is he super laser focused on >> losing customers to t-mobile. well, i mean, that's hans down the way i look at it i think the google case -- i went over the first google case. it was the same case google also was -- the acquisition of double click was blessed by the justice department so, for the justice department to reopen this just shows how much they despise big business anyone with a small business knows if you give google money, you can find out everything about who comes to your place. they hate google, what can i

say? and i think that i also would say that i think google is ill prepared for what's about to occur. >> why >> yeah, it's not like they -- not like they didn't get the heads up about 20 times on this. >> this is like the fifth suit >> because they don't know that jonathan kanter, who's the assistant attorney general, is very smart go read -- if you want to read an incredible ruling, go read the simon & schuster/random house win by jonathan kanter >> all right >> you dismiss me? >> it always comes back to the publishing >> i'm not saying he's not a very formidable guy, and i'm sure he has a lot of great lawyers, but you know who else does alphabet you know who else has unlimited money? alphabet >> jamie now represents amazon she's on the board what i'm going to say, uniquely, let me go back legally, they're good. i mean, they're not musk, whom we haven't even touched yet. i'm just saying this is the most

ideological antitrust department i've seen since -- and you'll get this -- standard oil and teddy roosevelt. they want to make law. i don't know if you read the "harvard law review" piece by our distinguished ftc person, but what it says is that all combinations are bad they're all bad. they're bad for everyone and they're really particularly good for rich people and bad for everybody else that is their ideology david, that's an ideology -- i remember, i took marx and engels remember when he said they were like a sack of potatoes? >> understood. under antitrust law, it may be difficult to prove a case. >> they don't care >> there are many people who believe, including legislators, that the power of these tech companies is far in excess of what it should be, and their

ability to be involved in every part of our life, not to mention, then, you get into the deleterious effects of social media and everything that's doing to younger people in particular i mean, there's a lot of evidence to go down here, jim, that say, hey, it's gotten too big. it's too much. and we got to do something they have too much power >> right well, that's lena khan's view, head of the ftc. what they believe is, these big companies have monopolistic tendencies to wipe out others, even though google would say otherwise, and they're bringing back an antitrust era that is like tr where they basically think that big business is anomalous. it's not the way we do things. and these companies have co-opted the system, and you know, look, when you're sitting there listening to alexa, and she's in charge of everything involving your life, you could argue that she's too powerful. she, being a metaphor for

amazon lena khan, if you're a hard-core leftist -- i was a big union guy, wildcat strike, she would be very sympathetic to me. poor as a church mouse, and i was tired of the man she is anti-the man. it's a real throwback. we're not used to it, because obama wasn't like this >> right, but you need the change in the antitrust laws to actually get her to really -- they're still going to come up against -- >> clayton sherman supporter >> they've already started to lose, and even these other cases, obviously, the one we've been talking about here where the doj is trying to come after google >> you work there at alphabet, you're saying, oh my god, i can't believe she's doing this it does not -- >> it's the doj. it's not her, actually >> jonathan kanter is a much more rigorous thinker than lena khan, head of the antitrust division, and i think to see him be on the side of the break-up of alphabet -- >> they do say -- >> i'm having a wrist -- >> i thought that was -- he was

doing this i thought that meant, "move on." >> bewe should move on. >> if personnel is policy, wu is leaving. brainard is coming in. ron klain is out the door. you think the back half of this term changes >> hard left >> harder left >> really? >> hard left that's the only thing that they can control. they lost the house of representatives, so they go real hard left. they're hard left. that's what's going to happen. that's one of the reasons why i think health care is not doing well >> i could see an argument otherwise. >> chief of staff saying they -- >> you could make a deal with klain. >> you could make a deal with the guy that's going to replace him. >> because he's a venture capitalist >> he's not a hard left. >> the agencies are hard left. they're going after a company that's been gone after already with the case lost, okay where the government lost.

and they're reopening it david, double click was approved how many years ago >> best party maybe ever remember the google double click party? >> yeah, tit was approved a long long time ago when both companies were far smaller >> the lena khan piece which says, it's the rich have had a big run. i mean, like, yeah they have. >> let's move on and talk about another run. >> but why >> at&t up 6%. >> i know. >> i know how you feel about at&t >> they took the charge. >> stock's up 10% for the year >> it's true >> they did take a big noncash goodwill charge. >> reverse head and shoulders. >> they seem to have come in better quarter than verizon. >> that's a real benchmark only 3m's been worse than one. >> stankey's been on the call talking about inflation, saying he's reasonably high confidence level customers are going to continue to want to use the product and pay for it

good news is think through the worst of it when it comes to inflation and the impact that's had. but overall -- and guidance. $16 billion plus in free cash is what they're pointing to for this year. remember, they had once been at $20 billion. that got ratcheted down. >> dividend is covered >> and they generated over $14 billion last year, so generally good we're going to talk to john stankey. >> when? >> next hour >> good. >> yeah. >> he got a -- would you ask him about that goodwill impairment charge >> sure, the $24.8 billion charge business wireline -- >> they had to do it and directv was -- >> they've got this joint venture with blackrock that's kind of interesting in terms of building out fiber >> breet >> no, that's backstone. >> scotty got in the hall of fame anything can happen. >> he did? >> news flash. >> scott roland? >> yeah. >> they voted him into the hall

of fame? >> david, that's, like -- yeah >> wow >> go to cooperstown one-way ticket >> i thought nobody was getting in this ballot >> scotty roland campaigned very aggressively, apparently mike schmidt and scotty roland can you imagine? the hot corner >> he was a great player he was no mike schmidt >> david's shocked the only thing i've shocked him on i did a lena khan analysis about "harvard law review," and what does he care about scotty roland. >> that surprised me i was surprised. >> overall, breadth pretty weak here let's get to bob pisani. good morning >> good morning, guys. mike schmidt, definite yes on that one, old philly guy six to one, declining to advancing stocks the problem is lackluster earnings the stuff that's done great this year, cathie wood's ark fund discretionary, great start

down and communications, also great start, down a little bit and of course, other stuff like defensive names like health care, doing a little bit better comparatively. consumer staples also doing a little better, and it's the earnings situation we talked about microsoft, some downgrades, but really, concerns about azure growth there at&t, david talked about that. textron was fine freeport was okay. kimberly-clark is a problem and that's a real disappointment here because the revenues were disappointing, the guidance is disappointing, and let me put up the following full screen. this is a problem with a lot of the consumer names we've done this chart, this full-screen before organic sales are up 5%. the volumes are down 7%. okay so, the prices are higher, and the volumes are down that's a problem and you get margin compression

there. margin is an issue for a lot of consumer companies where are we on earnings season? about a hundred companies, about 20% of the way through here's what's important. they're beating by 71% that is below the average number of companies the number of companies, beating by 71% of them are beating the average is 78% of companies beating. here's what's remarkable the average beat rate has been close to 10% for the last three years, in other words, they beat by 10% the average beat rate is only 0.7% so, not as many companies are beating and the amount they're beating by is much, much smaller, so the analysts appear to have been not too optimistic. they didn't cut the numbers enough to get the usual pop that we're actually getting here. so, right now, here's where we are for the s&p 500. basically, they're expecting everything to be flat for the first half of the year and everything is back-end loaded i said this last week. everyone is hiding in the fourth quarter, anticipating this tremendous turn around that we're going to see so, you see how basically it's a wash for the first half of the

year everyone's playing in the second half of the year finally, on that trading glitch yesterday, the new york stock exchange did issue a statement this morning what they said was the root cause was the determined to be a manual error involving the exchange's disaster recovery configuration at the system start of the day they were testing the system whereby if there was some kind of disaster and the new york stock exchange floor didn't open, what would happen? what happens is you don't have any participation from anybody on the floor, and so they -- it was not reset properly somehow there was a manual error, and so when they tried to build the book in the morning, all of the dnms down here got their orders rejected the people on the floor got their orders rejected. in other words, the system acted like there was nobody on the floor, and we didn't have any opening prints that's what caused a lot of this craziness. so, this just goes to show you, carl, how difficult the world can be when software goes crazy. one big issue is, are the prices right for the s&p 500 at the open we had a lot of new highs and lows are they going to bust a lot of

these trades they're still trying to figure this out some will be busted. they got printed at the open some will not be busted but there's an interesting question about what the right prices are for the open, and this does matter to a lot of companies that get opening prints and it matters for technicians who are doing charting we've got new highs or not there's a little bit of issues that have to be worked out in the course of the next couple weeks. back to you. >> bob pisani. a quick reminder this morning, you can get in on the cnbc investing club with jim. sign up and find out more. use the qr code on your screen as for bonds today, not a lot of data on tap. and of course, no fed speak. we have the curve broadly lower, two-year back to 4.12% as we await more earnings tonight. microsoft, lower, but still on pace for a weekly gain back in a minute

>> safe to say companies have been through a lot these past few years between covid, supply

chain issues, so much. what should they be planning for next >> there are significant challenges still on the horizon. inflation and economic shocks to come, talent and workforce constraints, and they've been through a lot in terms of accelerating the adoption of technology this has created a tsunami of data leaders are going to figure out how to harness that data and unlock its value and growth. >> so what do companies need to do to improve their approach to data >> the first thing is being intentional. intentionally capturing that data and harmonizing it across the organization then they've got to turn that data and build the capability to turn that data into insights and then finally, they've got to use those insights in order to innovate their solutions, their services and that customer experience >> how does the right data help a company succeed? >> well, the right data improves that customer experience the right data unlocks the scale

of their business, and the right data accelerates trust and transparency. >> kristen, really appreciate you sharing your insights. thanks so much. >> thank you has no idea she's sitting on a goldmine. well she doesn't know that if she owns a life insurance policy of $100,000 or more she can sell all or part of it to coventry for cash. even a term policy. even a term policy? even a term policy! find out if you're sitting on a goldmine. call coventry direct today at the number on your screen, or visit coventrydirect.com.

you can see most components are in the red as for the moving average, we are right back to that 200-day that we spent two days above right now, just about 3961 we'll see if that lendans y support this morning dow is down 240. don't go anywhere. engineered to elevate the senses... touch, sight, sound, and scent. it's the electric that recharges you. the all new, all electric eqe sedan from mercedes-benz.

let's get to jim and "stop trading. >> ae lie lilly is expanding $450 million manufacturing site in north carolina. what people don't realize, this is going to be for the greatest selling drug of all time, the drug that right now is being used for diabetes, but allows you to lose 15% of body weight in a few months. they need to be able to have enough to meet the demand. people don't talk about it enough this is the drug that will change america about obesity. >> we didn't get to abbott covid tests down >> abbott has a very good diabetes -- it competes against

dexcom and is less expensive abbott is fight. >> how about tonight >> levi strauss, very interesting. chip bergh just downgraded to a sell. and david, rich chai brothers, ann fandozzi just got a new shareholder i think we'll discuss your work -- >> i didn't do any work. i had nothing to do with that. >> no. but a good show. >> good to have her on a lot of ground covered. bad day. some days go well. some days go wilson. >> i'll see you tonight, "mad money" 6:00 p.m. early session lows down 315. when we got back at&cht ief john stankey. back in a moment

good wednesday morning welcome to another hour of squ "squawk on the street. microsoft's azure guidance has bulls revisiting hopes for 2023.

the nasdaq down better than 2% here in a few moments, don't miss a big interview with at&t ceo john stankey. here are three other big movers we're watching this morning. we'll start with general dynamics, under pressure despite topping q4 earnings estimates. strong weapons demand offsetting the full guidance missing expectations shares down 3.5% they'll continue to be in focus later the day as the president is expected to announce the u.s. will send tanks to ukraine another name in the red, kimberly clark, falling out profit topped expectations, but company sales came up shy of forecasts. higher costs, inflation continuing to dent that name there. the stock is down 1.5% finally, texas instruments, the

semiconductor companies warning of a weaker than seasonal decline in demand for the march quarter. it's seeing weakness in all of its end markets except auto. shares down 2% >> the big earnings mover, microsoft posting the slowest quarter of sales growth in six years. jon fort joining us talking more about the quarter. you warned people last night to wait for the call. that was the right move. a lot of questions today about things people haven't had to worry about in a while, meaning what does azure trough look like and how long does it take to accelerate >> that's not at all clear i was talking to steve kovach yesterday. he said i expect them to make their numbers for the quarter. they're pretty good at seeing what's in front of them. it's seeing what's ahead in this environment that's really hard it was up more than 4% at one point after hours when those initial numbers for fiscal q2 came out with that guide, now it's down almost 4.5

so enterprise demand, bottom line, is weakening along with consumer demand. it's not so much the pc business, the windows business that's a surprise here everybody expected that to be bad. it's as you mentioned, azure, its office 365 subs looking weak it's microsoft warning that, yes, with all the lay-offs and things happening and the labor market slowing down, linkedin is likely to take it on the chin going forward. there's been a lot of focus on the fed, fed policy, what that means, interest rates, and not as much on the fundamentals of these businesses now investors will have to focus in a lot more on the fundamentals pc normal lizing the prepandemic levels people talking about the comps get easier in the second half. that's because the second half of last year is when we started to think about this kmiek slowdown we don't know yet how far that's going to go. i think we can see that the enterprise is sort of following the consumer trend if the consumer worsens later in

this year, all this talk from jamie dimon and others about the savings rate coming down, the consumer running out ofheadroo in credit in midyear, if that happens, what happens to enterprise i think that's a big question. read-throughs to amazon, ibm will be interesting because more of its business is in government at the same time with labor costs rising, is ibm going to be able to utilize that services workforce, get higher utilization and protect margins. all that out of enterprise going forward. >> you took the question right out of my mouth. you do see other big cloud names, like amazon and ibm trading lower in sympathy this morning. can we say that given the fact that microsoft touches so many different aspects of the country, that this is still a tech sector specific storyor indicative of a broader macroeconomic slowdown >> i think -- the way i'm looking at it, it's following

the broader economic slowdown. so, yes, we're seeing impacts in tech now, but these are macro factors starting to impact tech. we're starting to hear tech companies, whether it was lisa sue at amd or satya nadella saying, hey, we're going to continue to invest in areas that are strategically important because we believe in this digital transformation story long term. to me it looks like they're saying impact some margins in strong quarters. we'll still invest even though there's pressure on the top line we'll see how the investors digest that once they start to hearing it. >> breaking all this down in even more detail, jon fortt, later today on "techcheck" which kicks off in the next hour. at&t shares are up rather nicely, over 6%, this after the company reported fourth quarter earnings and issued its 2023 guidance overall

free cash flow, for example, going to be at least $16 billion. that compares to $14 billion in 2022 joining us is at&t ceo john stankey. let's start on free cash flow. certainly a metric investors watch closely. there had been a time when you were looking for as much as 20 billion. that was some time ago how confident are you in this 16 billion-plus target you set for 2023 >> hi, david it's good to be with you we're confident. we've got a lot of resilience in our customer base around the services and products they want to use we've had some really good momentum over the last 2.5 years. that growing customer base gives us a great opportunity to continue to grow revenues and grow operating profits, and we're doing that in addition, when you think about what we have and our cost

efficiencies and how we're structuring the business, we made really good progress on that this year that's going to help us ultimately drive some of our revenues down to the bottom line you saw that occur in the third and fourth quarter of last year. we continue to see that and carry it forward we feel really good about it it's part of what we know we need to do for our investors >> you obviously had very low churn, good subscriber additions being applauded by investors this morning the bigger question, of course, john, that you get many times, this is a maturing industry and seems to be a fight for market share maybe based on having to have the lowest price which could hit profitability. how do you view the landscape with your main competitors, verizon and t-mobile, not to mention the cable guys >> i think there's always a desire that many folks outside the industry want to try to kind

of gauge, whether it's more competitive or less competitive. i really don't submit to the view that there's a race to the bottom going on. i actually think the industry is doing quite well and is quite healthy. if we step back and look at the dynamics of how the players are ultimately picking up share and growing, look, we've got customers who find an incredible amount of value in the product and service we buy and while maybe organic growth on the number of subscribers in the united states isn't going to be what it was five years ago, they're using more product and service. we see engagement with the product going up i think ultimately those are really important trends for the long haul. in our case, what we've been using as an investment strategy is looking for places where we're underpenetrated and underperforming. we're able to grow because i think we've done a reasonable job of segmenting the market, in gaining share in places that we

just hadn't done as well so there's still an opportunity for us to grow, being better in a couple of segments that we weren't as strong in as i said earlier, we also have the opportunity to grow profits by just operating the business more efficiently as we do that, i think there's still an opportunity to drive great returns back into our shareholders >> john, we're a little ways in now to the 5g transition there's certainly been a lot of hope that it would create a lot of new revenue opportunities not saying iwon't. are therw? your company spent $36 billion on 5g, making aggressive investments in 5g capx when are we going to start to see some of the stuff we talked about years ago in terms of additional revenues, additional products >> i think you see some of it today. it's not the sexy stuff. we should all understand what i just mentioned customers are using more of the

product and service and they're willing to pay more for the product and service because they're getting better performance and better use in that spectrum, the infrastructure you just described, facilitates that walk-up and that occurring while that's not the sexiest thing in the world, it is allowing folks to continue to invest in infrastructure and meet demand. secondly, some folks are more aggressively going out and offering wireless fixed broadband. as a result of that, there's new revenues that come in for those who choose to take that play the more advanced services that you're referring to, david, they're going to come. i think if we go back to the early days of the 4g era interface change and how long it took for robust lte networks to really drive the innovation game with video and other realtime applications, we're only about two years into the deployment of 5g infrastructure right now.

it's not quite ubiquitous. we're not quite at the point where the networks are robust enough to have the kind of consistent performance that's necessary to be able to facilitate the new promise of 5g but i do believe it will come, and i think it's going to come in the enterprise space first. we're going to see it in automotive in what we start to see in autonomous vehicles i think we're going to see it in medical, and i think we'll see it in industrial manufacturing i believe you will start to see those revenue cases start to emerge >> we've been talking about it and waiting for it i wonder, this is a related question, john i did notice the upgrade rate. now talking about apple, the phones, is down. it was down for verizon. i wonder, back to the 5g question is that because of a lack of 5g applications, not motivating people to go out and get a new phone, or are there other reasons why that upgrade rate doesn't appear to be quite as high as perhaps people had

thought, in terms of existing customers getting a new phone? >> david, i'd probably say i think every company has their own nuances and subtleties when i look at the upgrade rate we've been driving in our sub skriesher rate, i don't consider the 5g upgrade rate to be any better or any worse than what we saw in the lte cycle it's pretty much following what we expected it to follow over time do i think customers will be a little more deliberate about replacing hand sets? i would expect that to happen. frankly, the networks are so doggone good right now and a customer is getting so much throughput and bandwidth, sometimes they look and say, gosh, is there something more i can do that's really critical. we're seeing handset lines become longer. a higher amount they have to invest in every discreet

handset. you'll see that extend a bit over time. i would tell youi think our upgrade rate has been pretty consistent with the 4g/lte transition that we would see at this point in the transition. >> i guess that leads to a question about the consumer and the economy. on the call you said -- i think i'm quoting you here you said i see the economy being relatively stable right now. you want to give us more color in terms of what you're seeing and what stable means? >> sure. for demand of our services, it he's really strong we came off the fourth quarter it was a good solid fourth quarter. i follow, just like any other ceo, kind of the broader indexes and information and data that's out there. we also have a very broad customer base. certainly there are some parts of the consumer base that are a bit stressed right now i've made those comments before. when gasoline is up as high as it was and inflation for food products is as high as it is,

you can certainly see the lower part of the market having some dynamics and having to make some choices. in our case, one of those choices and tradeoffs is typically not to get rid of the wireless service or disconnect their broadband. so for us, it's been a pretty stable environment right now am i cautious about what the future might hold when we provide guidance were we clear when we have an outlook that's a more moderated outlook of growth in the industry inflationary pressure through 2023, i expect that to occur i expect a more moderated growth for the aggregate of 2023. the good news is we're selling a pretty important stable into the consumer and business space today. i don't see demand dropping off right now with all the choices consumers are having to make. >> you mentioned inflationary pressure yesterday hans vesper of verizon was a guest.

he talked about last year's increases as a part of inflation as perhaps being a one-time event or at least a sense it might be how do you view it are price increases sort of over for your business right now? obviously given the maturity of the industry, a question i already asked, can you grow without price increases? >> sure, we can grow we're growing customers where we have an opportunity, frankly, to sell more products and services from a share take perspective. that's growth for us what i would tell you, david, is, look, we have a very broad portfolio and a very different set of customers across that portfolio. it's not unique to this year or last year. every year we're trying to understand where customers are getting great value from us, or where that value deserves to be priced differently we evaluate that and look at that that's kind of a normal course of business in any given year. last year we had a little by broader treatment of our

wireless base than we might typically have that was a great travalue transr we reported churn that was lower. we've had some of our best churn we've seen i think we're leading the industry in post-paid voice churn. that's because we were able to give the customer something better for what they're paying us it's a win-win dynamic we look for that all the time. we'll continue to look for that. i would expect at some point this year, place in our portfolio, we might find an opportunity to reposition a product and charge a different price on it. right now i think the fundamentals of the industry are pretty sound and our opportunities to manage costs in the business are good. i'm pretty confident about where we are >> you've got a couple of questions on the call, john. it was an announcement you made only a few weeks ago at&t and blackrock, this giga powered joint venture.

the analysts certainly seem to have a number of questions in terms of what you're trying to accomplish, how quickly, whether it's going to be on balance sheets what can you tell your investor base right now about your ambitions for what seems to be a pretty big joint venture >> it's a great opportunity and provides us a tremendous amount of flexibility i think my point of view right now is fiber is a great technology and it's going to be relevant for a long period of time to come my objective for at&t is to make sure we get as much of it deployed as fast as we can and as many ways as we can this is an interesting way for us to bring on a partner, to share some risks and look at different ways to deploy it than what we've traditionally done in our operating footprint. blackrock is excited about working with us given our expertise and ability to deploy, manage and sell on these kinds of networks. we're going to test some

investment these is that, looking outside of our traditional operating footprint and doing it in a way that's a very efficient approach. it will be a true partnership. it's off balance sheet the benefits of the partnership will come back to us through equity income. both partners are bringing capitalization into the endeavor it will be a stand-alone entity that will be able to raise its own financing to be able to run as well. it's going to allow us to deploy fiber quicker in high opportunity markets and ultimately i think build a very competitive footprint that will serve our company well for years to come. >> interesting certainly we'll keep an eye on it something else i'm watching today, john, that stock price. look at that when is the last time at&t stock went up 6.4% on earnings i bet you can't remember. >> it's a stringing together many days in a row, not just one day, david. >> there you go. john, appreciate you taking

time thank you. >> thanks for having me. i hope you're doing well >> doing okay. john stankey, ceo of at&t. as we take you to break, here is our roadmap, it includes rupert murdock calling off the proposed merger of fox and news corp. we'll tell you why. the doj and eight u.s. states going after google and its ad business. we'll check in with one of those ags on that decision. boeing posting a big q4 miss amid labor and supply chain concerns, thing to trying to bounce off its lows in early trading. a lot more "squawk on the street" straight ahead llion difs i should be trading. look! what's up my trade dogs? you should be listening to me. you want to be rich like me? you want to trust me on this one. [inaudible] wow! yeah! it's time to take control of your investing education. cut through the noise with best-in-class education resources that match your preferred style of learning. learn your way. not theirs. td ameritrade.

where smart investors get smarter℠.

we actually feel very good ability the fourth quarter and the execution as we went through it on the revenue side we were within a hair of whatever the ultimate consensus was we exceeded on deliveries and on cash flow over $3 billion in the quarter itself which is pretty remarkable. >> that's boeing's chief david calhoun with us in the 9:00 a.m. hour talking about the quarter stocks still holding yesterday's lows, largely a function of the free cash flow beat. the reiteration of the free cash flow guide and then slow ramp-ups in the 7-3 and 7-8. >> comments about supply chain and the fact that that is something basically the entire sector is continuing to ganavige through. that's going to be a situation that gradually improves over time i actually thought his comments, though, on the commercial

aerospace side, i thought his comments about essentially the growth we're seeing in commercial aerospace basically being able to weather recessions, that between here and then he said i think mostly the industry is concerned about supply chain constraints and, therefore, trying to get their ore in the water as fast as they can. essentially it's asecular growth trajectory given how long it takes to build some of these aircraft that got my attention and dovetails back with what we've heard from the ceos of raytheon, general dynamics and others. >> indeed. meantime this war continues with airbus in terps of new growth and new order delivery they're still behind the eight ball to some extent. the growth in china he made it sound is so explosive that maybe there's room for two parties to play. >> he did talk about china and the opportunities there. certainly that seems to be an area that so many investors within the sector, as we've seen with other sectors that are

china-facing, have been focused when that leg to the story kicks in in the meantime, another name moving higher today because we are seeing business jet and that piece of the puzzle begin to kick into gear, tektron expecting continued growth to 2023, particularly in the aviation unit. solid backlog, margins expected to benefit as they start to see supply supply chains, too. >> two other stocks we're keeping an eye on this morning, unrelated obviously to aerospace are fox and news corp. two companies had been discussions. speernl committees had been in suggss about bringing them together, this at the behest of their controlling shareholder, rupert murdock late yesterday we learned mr. murdock sent a letter to boards of both companies saying don't do it anymore, we're giving up on this.

those special committees had been dissolved they had not gotten to an actual offer i'm told by people familiar with the situation, in other words, where fox said this is what we'll offer for you, news corp. in part they were hampered by news corp.'s move up prior to today's move which made it more difficult photographs to try to negotiate an at-market deal based on respective market caps. but something else, also, was in play here. that may be one of the reasons why news corp. shares are up so sharply, which is they also confirmed they're in discussions with co-star group involving the sale of move, the owner of realtor.com. i am being told that that sale price could exceed $3 billion. they've been talking as well for months it sounds like a potential deal here is now much closer than months away. perhaps as little as a couple of weeks. i'm told not days. you can figure out what you want to think there that will be seen as a positive for news corp. they brought that property for

$900 million in 2014 they own 80% of it the other 20% is owned by rea which is owned 60% by news corp. it would be a sale of the entire company, that being moved to co-star. murdock's dreams perhaps or hopes in putting the two companies together, which may have faced opposition as well, given they needed a majority and minority to vote in favor, not going to happen right now. as we head to break, intuitive surgical is also moving, under pressure after reporting disappointing earnings and revenue. the robotic medical procedure company says the resurgence of covid-19 in china impacted procedure volumes in 2022. stay with us to where they're going. and at chevron, we're working to help reduce the carbon intensity of the fuels that keep things moving. today, we're producing renewable diesel

that can be used in existing diesel tanks. and we're committed to increasing our renewable fuels production. because as we work toward a lower carbon future, it's only human to keep moving forward. 92% still active? seems high. seriously? it's just a bike. wait. they make a treadmill with an intuitive speed knob? yeah. want to try? 92% stick with it, so can you. rent a peloton bike or bike+.

terms apply. this is ge aerospace, advancing flight for future generations. ♪ welcome to a new era of flight. my name is joshua florence, and one thing i learned being a firefighter is plan ahead. you don't know what you're getting into, but at the end of the day, you know you have a team behind you that can help you. not having to worry about the future makes it possible to make the present as best as it can be for everybody.

(woman 1) i just switched to verizon business unlimited. it's just right for my little business. unlimited premium data. unlimited hotspot data. (woman 2) you know it's from the most reliable 5g network in america? (vo) when it comes to your business, not all bars are created equal. so switch to verizon business unlimited today. warn signs flashing from the transport so far this season forecasting this year's revenue to be comparable to 2022 as the eastern u.s. railroad expects

volume to be off by share recapture and core pricing gains. used the u word, just like we heard from union pacific yesterday, uncertainty where the economy is concerned speaking of rails, tomorrow, don't miss our exclusive interview with csx ceo john hein heris. ayith us

♪♪ for skin as alive as you are... don't settle for silver. harness the power of 7 moisturizers & 3 vitamins to smooth, heal, and moisturize your dry skin. volume to be off by share stay with us

welcome back to "squawk on the street." i'm bertha coombs. here is your cnbc news update. germany will provide 14 leopard 2 battle tanks to ukraine with allies bringing the total to 88. ukrainian president zelenskyy says he's sincerely grateful for the important and timely decision in washington, president biden is set to speak on aid for ukraine at noon eastern time following reports that he is preparing to send u.s. battle tanks to the country

across the south, millions are under high wind warnings as a severe winter storm moves east the storm triggered a tornado in houston that destroyed buildings and knocked out power to 120,000 customers. winter weather advisories stretch from missouri to maine with parts of new england expected to get up to a foot of snow. pope francis is criticizing laws banning homosexuality in an interview, he says being gay is not a crime and that god loves all his children just as they are however, pope francis continued to say that homosexuality is a sin and criticized reform efforts by german priests. morgan, back over to you >> okay. bertha coombs, thank you. let's turn back to microsoft, slumping after issuing the dismalq 3 revenue guidance our next guest says while he sees a positive dynamic ahead, it reenforces the debate around growth trends.

joining us now raymond james analyst andrew mora. andrew, thanks for being with us why are you sticking with this rating given the fact that we're seeing the weakening and the guidance certainly speaks to that continuing where microsoft is concerned >> thank you for having me this morning. we do think, yes, in light of this quarter's results, those debates especially around the azure growth and the softness in the tick cal component of microsoft's portfolio, things like a more personal computing segment, we do see a lot of strong fundamental trends long term to like about microsoft including its sheer scale in the i.t. space, consolidation of i.t. vendor spend. and though azure may be choppy in the near term, we see a long run weigh for public cloud adoption and azure cementing its

spot as one of the big three competitors, and potentially carving out a defensible niche for themselves over the next three years. >> when you look at azure and the deceleration in growth there -- i realize you don't cover these names, we're seeing cloud providers like amazon and ibm trading lower on this news today. is the sense that at least in the near term companies are tightening their belts and maybe we've reached a point of at least near-term sat tour ration where spending on things like the cloud is concerned and you won't see more adoption until there's less uncertainty in the economy? >> i think there's probably two aspects to that conversation the first is that's a fair point in that companies shifting work loads to the public cloud are maybe taking a little bit of a breath after some pretty good years over the past several years, especially in the tech sector maybe reassessing where their cloud spend is going, maybe where they can be a little

smarter about rationalizing their spend and their work loads, potentially holding off on shifting new workloads into the cloud. where i think the major cloud providers can fight back on that narrative is on things like innovation in the products they offer. to my earlier point, that's where things like the open ai partnership can be kind of an ace in the hole for microsoft over the next few years. >> andrew, some of the people coming to the defense of the name today say, azure slowing is not a surprise they actually beat their own guidance for the first time in three-quarters buy side had numbers on their own. even nadella on the call, i don't know if you could say he walked back the cautionary comments of a couple weeks ago, but at least he said, look, i was talking about global macro, not just u.s do you find that stuff constructive >> i think the tone was a touch better on the call, and it certainly doesn't hurt their case that the fiscal second quarter numbers came in a touch

above expectations but again, the guide for 3q is just not enough to settle the debate around the name right now. i think the bulls will see something to like out of it. the bears will see something to like out of it i think it's one of those on going discussions that can't really be put to bed one way or the other until you start to see maybe some pickup in the economy and thoseeconomies, those customers using azure to shift their work loads over, start to field more confident and devote a little more spend and accelerate those shifts they have been doing. >> just to be clear, you would buy microsoft right now at these levels i ask that because we did see the 10% rally in the stock from january 5th through yesterday. yes it's under pressure, down 3.5% today does it have further to fall before this becomes a particularly attractive buy right now? >> there's been a lot of

derisking, especially on the personal computing sigh, devices, gaming. while there is the conversation going on around azure, valuations at these levels are pretty compelling, which is why we're sticking with our out dealer perform rating. this is a company where we think there's not a fundamental flaw with the azure component of the store richlt given that, we think this is a company that can continue to carve out their niche, continue to consolidate their share and at these levels look like a pretty attractive investment. >> finally, i want to shift gears here you have the justice department seeking the breakup across so much of the internet i know you don't cover alphabet. is this going to be a positive for them >> given google's commanding position even in open web advising on both the gsp and ssp

side, i think anything that injects disruption or uncertainty into that market can be positive for companies like the trade desk, like pubmatic where you have scale leaders in the open web who may be able to take some of that share that was previously walled off -- not necessarily walled off, but dominated by google given the fact they have that unified plorm. platform i think it kind of remains to be seen what the remedies potentially would be in a google ad tech breakup scenario that would dictate whether the demand side or supply side sees more benefits from this. again, going back to the theme of injecting uncertainty, we don't think that's necessarily bad for web ad tech. >> okay. andrew marok, thank you for joining us >> thank you for having me.

sticking with microsoft, steve liesman joins us to talk about what the corporate results might mean for the macro steve, something i know you talked about this morning. >> yeah, and it's still out there, carl. global bond yields falling right on cue with the microsoft earnings, the company's guidance affirming and deepening concern of an economic slowdown and the impact on earnings microsoft is such a large global player, jpmorgan writing its results in macro commentary may provide a setback for hopes of an economic soft landing which it says has taken hold on the street this shows in the two-year and the ten-year let's look at the two-year especially you can see that cliff right there, now down nine basis points from the microsoft announcement yesterday the ten-year off just a bit. yields also falling in europe. they fell in the uk as microsoft reportedslowest sales growth i six years, a potential broader

sign of cautious business spending that will have growth implications around the world. if it does indeed continue at bmo, they say microsoft saying it's seeing customers optimizing their spend and exercise caution given the macro uncertainty. the company believes customers may take this year to optimize their investments. microsoft is big, but it's still just one company it remains to be seen if the results are the leading edge of broader economic weakness that will be reflected. the companies printed money during the pandemic and even when high inflation hit afterwards surprising a lot of folks, microsoft suggesting folks may find the current environment more compromising. >> steve, interesting collision there between the corporates and the global economy thank you, steve liesman. >> you mean between the macro -- >> we did slip below the 200-day

of 3961. 'lsee hat dow is down 430 here wel if the selling continues. back in three.

d sonchtsj and eight states suing google connecticut's attorney general william tong joining us. thanks for coming in. >> thanks for having me. >> we've been talking about the tech stack and competition for years. can you help frame the timing of this and how it came together? >> this is the product of a long investigation by states and the doj. we know google is not just dominant, it has a monopoly over the digital tech stack, the infrastructure, technology, machinery around digital advising google controls or dominates or owns. just look at google's own documents. one of its executives used an

analogy. it's as if government man or citibank owned the new york stock exchange >> is there a consensus between the states at least over what relief would look like >> it's injunctive relief to get them to stop doing this and dominating the space there are a vears of fines and penalties and damages that the federal government can collect fees and costs that the states can collect. this is obviously a very big case on top of a number of other cases that we're investigating or bringing against google. >> it is a very big case google published a three-page response in the past 24 hours and said the doj's complaints -- claims mischaracterize the business we've built products to support the industry for over a decade it puts at risk billions for publishers and advertisers how do you respond to their response >> look, we have democrats, republicans coming together, state attorneys general.

you've got the doj coming together with us to bring this case we know they own the publisher side, all the technology around publishers and the websites that host advertising they own the advertiser side, so all the technology that enables advertisers to get on these platforms and websites, and they own the exchange the conflicts, again, are enormous the analogy is so apt. it's as if goldman or citibank owned the new york stock exchange. >> by calling for the specific dives divestures you have some experts saying this is going further in seeking a breakup than would have been anticipated. have we seen something like this play out before? >> in the antitrust space, we say if there hadn't been an antitrust investigation and enforcement action against microsoft more than 20 years ago, there wouldn't be a google and there wouldn't be a facebook or amazon.

>> easy to say and harder to prove it when it comes to evidence and what you expect you're going to provide to sway the court, so to speak, to your side. for example, they say your claims that publishers are required to use their ad server to access the ad exchange is untrue and you have no evidence to back it up. what do you see as evidence? >> we have an enormous trove of evidence it's really google's own documents. as this proceeds, we'll continue to talk more about what google says about itself, about how it dominates this market, about how it shuts out competitors it gets more than 30 cents per dollar of advertising dollar on the internet because of its dominance, because of its monopoly power the way it uses that power to prejudice competitors and consumers. >> how do you view -- for example, we talk about the exploding ad business set at, say, amazon. is that not a competitive threat >> it is a competitive threat. what google is doing, it's so dominant that even big companies

like facebook and amazon and others in this ad space are getting is that right-changed and pushed out of the market because of google's dominance. >> how long do you see this playing out? >> it will take some time. an investigation we have on top of the search cases we have. there's a lot of activity in the space. i think of connecticut businesses, small businesses, big businesses that need to get on the internet because this is where all the action is to advertise and how they get shut out and prejudiced and how they have to pay more to advertise because of google's dominance. >> talking about potentially years. from your vantage point, wha should google look like years from now if these cases go in your favor >> google should stop using its monopoly power to buy up, acquire its competition and then to kill it and to use its power to tie all of its suite of technology and services together

so nobody else can break in to the digital advertising ad tech stack space. it should stop using it's nor mouse market power to shut everybody else out of the market and charge advertisers, by the way, who want to advise, so much more than they would it's a loto understandthey would it's a loto we hope you'll come back as the case evolves the ag of the state of connecticut. elon musk, gears up for earnings after the bell. the s&p down 1 1/2%, 3954. stay with us prizefighter... ...meets trailblazer. ♪ ♪ classic meets modern. ♪

at morgan stanley, we may seem like a contradiction...and we are. ♪ ♪ at 87 years old, we still see the world with the wonder of new eyes, ♪ helping you discover untapped possibilities ♪ and relentlessly working with you to make them real. ♪ partnering to unlock new ideas, ♪ to create new legacies, ♪ to research, innovate, collaborate, ♪ and build the way to transform a company, industry, economy, generation. ♪ because grit and vision working in lockstep puts you on the path to your full potential. ♪

elon musk wrapping up his third and final day of testimony. that was yesterday, and of course that ongoing securities fraud trial, he gave insight to a number of things, including his dealings with bankers, saying the relationship between tesla and j.p. morgan is very morgan he testified, quote, when i asked jamie die monoat one point to support tesla, he declined i said, well, if you will not support tesla, you can't have the banking business

and me very much musk exited court yesterday. he didn't actually take the underground thing into an unmarked car he just walked out, talked to reporters saying that he thinks things went pretty well for him. this trial is going to keep going, but musk can get back to work. >> and he's back to work this afternoon because he's got earnings after the bell, the morgan stanley note, the fact that the ev market is entering the shakeout, the reason tesla is a top pick over there it is worth noting you touched on it, elon musk, has been my experience at times, particularly covering the space sector doesn't usually put himself in front of reporters unless he wants to talk, unless he has something to sap. that in and of itself was note worthy yesterday. >> he asked them, what did you think, and most of them hadn't actually listened because it's hard to listen when you're outside just waiting for him >> looks like he's getting into a tesla. twitter, reuters with a piece saying advertising in december

down 70%, according to some industry data. we'll keep an eye on pressures that he faces on that side a lot more on tesla, plus ibm after the bell tech check will check on that. in the meantime, we're back in two minutes.

i think it's well understood both by our administration and congress on both sides of the aisle that there's, you know, a heightened threat environment. our allies feel the same way we've come together in europe to work together to help defend it. there's increased demand, as you said, for the kinds of, you know, systems and products and platforms that you need to defend your country. we've got great relationships with a number of our allies. >> that was lockheed martin, chairman and ceo, talking defense demand with me yesterday with earnings results for the top weapons maker. amid reports that the u.s. is finalizing plans to send as many as 30 m1 abrams tanks. we could get that announcement when the president makes announcements in just a short while, as well as a small number of recovery vehicles now expected to be sent to ukraine in terms of general dynamics, on

the call executives there saying we're seeing demand signals resulting from the war in ukraine, but we've only just begun to see that manifest in our backlog at this point. recall just where tanks were concerned that poland has ordered just recently signed a deal to order a second batch of abrams tanks deals worth upwards of $6 billion to that country you take that, couple with lockheed martin, also announcing the first flight of the f16 block 70 fighter jet a first of a handful of planes going to bahrain the stocks have been trading on congress and uncertainty around defense spending for the future here in the u.s., but we're seeing defense demand increase among allies as well, and that hasn't even begun to hit the order books, let alone translate to sales >> interesting as we take a look at the stocks. to your point, they're going to move up and down based on the rhetoric out of congress one would expect in terms of the budget and everything else.

>> that's right, but there is this growing backlog that is tied to international type two allies and not just ukraine. the world in general we talk about it so much has become a much more dangerous place and the geopolitical risks have heightened. >> that's going to do it for us on "squawk on the street" with the s&p down about 1.4%, let's get over to "tech check. good wednesday morning, welcome to tech check, i'm carl quintanilla with deirdre bosa a we're going to discuss microsoft's impact on macro. more results tonight, actionable tech bets after the bell, why investors are watching tesla, ibm, and service now later on, the quote, buy of the century. the ceo tells us why wall street is so bullish on that stock. >> well, those microsoft earnings, as you mentioned, carl, taking a toll on the broader indices, the nasdaq on