Three days in a row of 10 hours of netflix each day. Besides reading news. I had to catch up. Reading all news all weekend long. And watching. Lets get started with the headlines. Another home run for carl icahn. Forest labs agreed to be bought by actavis. Icahn has been pushing for sale for more than a year, he is the secondlargest shareholder in forest labs. Off. Rsistence pays he has threatened a proxy fight for the last three years. To appease them, the company give him some seats on the board and he got his guy as ceo. As a result, you get the outcome that carl icahn wanted all along. Forest labs to be bought out. He is different from the other activist investors. How many years has he been invested here . At least three. Lets not forget the fact that he came into the stock saying it does not have scale, it does not have a sales force that is as strong as the other players. Forest is of the day, not a slamdunk hit for activists. It has a problem developing new drugs ever since its blockbuster lexapro antidepressant went off the market, it tried to go in and buy a other companies to build a revenue gap and it is still not. Icahn is getting a 25 premium on a company that is still not there yet. Tohe does not have investors answer to every month, every quarter. He is only answering to himself. He can write it out. Other guys to not have that luxury. Has a larger stomach because he does not have to answer to anybody. He can stay in stocks for the longterm, not care about what Institutional Investors that about him. Frankly, not care about what anybody thinks about him. He doest the fact that not have institutional shareholders, it is his attitude. You dont like what i am doing, that is your problem. Im going to stick to this. He is not the pump and dump scheme that people are concerned about. It has to be also the case with john paulson. It does not look like he can walk away from vodafone. He bought 50 million more shares in the fourth quarter. He has 35 million shares. Hold on a second. It is an allstar cast. Asness. Bass, it is almost like a herd mentality. Why not everybody follow each other . Is that the way it works on wall street . This is an interesting trade. It is unclear when these guys got in. Last month, at t comes out and says we are not going to make a bid for vodafone for the next six months. The stocks dropped. These guys had to play their cards carefully. Theyre smart guys and are probably going to make money on this trade. Because it is a takeout target. At t is not jumping in as it was, as it was rumored or speculated before hand. Hold on. As far as herd mentality goes, this is not unique to wall street. It is human nature. Ok. But it has been damaging to wall street. It does not matter if you decide youre going to wear wedges and then she is going to wear wedges and you will all look stupid 20 years later. It is different when entire it matters if they are investing other peoples money. Another name i want to talk about. Your favorite, gm. I dont know it is my favorite come up but i cover them very closely. Kyle bass was talking to you about it. , i see them up a percent in the next 18 months. I think of it get three rated you will be up 40 . This guy went big in early december. Has a great argument. Now that the government was out, they can pay their managers whatever they like. They can give as much money to marry barbara to inspire her ash as much as they want to inspire her. They are free of the shackles and are free to grow. This is the same trade a year before when he went long financials. When financials got out from under their shackles. He is liking the same trade, just a year later. I would make the distinction when you talk about pass and einhorn bass and einhorn those are the event driven guys. Icahn is an activist. Einhorn is interesting. He can play both guards. He has been active, he has been railing against management and boards. He is pursuing these event driven traits that a lot of the other guys are pursuing. It is interesting to see how he develops over time and changes his strategy. Getvists have been able to professional Board Members on the boards of these companies. Years ago, nobody could be activist took these activists seriously. Now they do not have a choice. They could not get professional Board Members to come and play with them and take the board seats. Now they are paying them to do it. They are getting professional Board Members to take on responsibilities of the company by paying them. We will talk about what we mean by saying activist shareholder. There is the difference between someone who wants to get in with management and someone who believes in something is going to happen. There are people who say how much they love the stock, they have a great name when we hear the carl icahn did so well with forest labs, he did well because he was there, my brother said. My brother is an equity trader. Full disclosure. He gets angry because these people pump the stock and then get out. A good example of that would be kyle bass in december. He talked about how much he liked herbalife as a longterm holding. He wanted to see the financials, by the end of december. Whyad a longterm view on he liked the company so much. Take a listen. This business is one that is fascinating. The generate significant cash flows with no debt. It is growing. So many people talk about this group of unemployed this natural Unemployment Rate and you look at these countries with unemployment, there is an interesting percentage of young people that are entering these businesses. Timingparticular perspective, this all played into something that fit into our macro ideology. There you have the macro ideology. Kyle bass having his big picture opinion. Guess what he did at the end of december . He got out. 100 . That is after they had their audited financials. A big longterm view of why he likes this company so, so much, stock goes up, he says peace out. It is interesting to see what he will do a General Motors. If he thinks General Motors is going to go up 40 in the next 18 months, you would think he would hold onto their shares. Walk,l ackman walks the with the likes what he has to say or not. He has an extreme view. When you look at his positions, he follows them. We have seen these guys become so much more media savvy, so much more in the press. You got to wonder, when a regulators going to step in and really paying attention to when these guys are talking and one they are buying and selling . How do you have a situation like this where you can tweet out whatever you want, whatever you want, you have 10 billion to throw around on the market of a when a regulators going to catch up . Girl, i hear you. They did that to the dotcom bubble. I want to talk about jcpenney. Julie hyman has more on that. Someu have to give up on point when you keep losing money and losing money and losing money. You are talking about kyle bass amid a profit on herbalife, presumably. A lot of people are getting out of jcpenney because they cannot take the losses anymore. The stock is down 69 over the last year. You see some of the people who have exited their stakes. Corp getting out of his stake in jcpenney. People may be tired of writing the strain ever downward, so they have been getting out. Like there are some improvements that have been seen a jcpenney, a little bit of an improvement in sales. There has been widespread dissatisfaction among investors of the pace of that improvement and what is going to happen with the companys cash position. I spoke to kyle bass when he went long in the fall. He said, i do not need j. C. Penney to be a homerun. I need them to fly straight. He got out. Julie hyman, thanks very much. We will continue on this path. Indeed we are. That activisms works. Activists take over forest laboratories. More coming on activist investing. We will be joined by ken squire. We will take a look a generation like. How brands are using social media to turn young people into social media tools. Maybe they enjoy being promotional tools. More on Market Makers. Stay with us here on bloomberg tv. Welcome back to Market Makers. I am Stephanie Ruhle joined by matt miller. There was a lot to talk about today with ken squire. Thatacks companies activist investors are buying. We will talk a lot about the trends that we saw in the latest batch of filings. I want to start with forest labs. Carl icahn pushed the drugmaker into being bought. Here is what he tweeted. Ken, first of all, before carl icahn started tweeting, did you use twitter . Do you now . I dont use it at all. I have a twitter account, i follow my wife. You dont follow carl icahn . I have people who keep me abreast of what he has going on. I dont even go there. Is it important to follow what carl icahn tweets in your position . You hear about it. He tweets a lot after it is public. We are not trying to get the short term bump on things. Forest labs is a great example. He does not give himself an enough credit. He needed to effect change and change the entire culture of the company, which he did. It has been a great outcome for all shareholders. He does not give himself enough credit because you think he is really key in making these moves happen. It is not like you just pumping up the stock, talking about on twitter, it is actually work that he is doing with the company. So, thehe first year or stock did not move at all. He was patient. He was a longterm investor. Very few people could have changed the culture like you did. There is a difference between coming in and saying, you need to make a couple of these changes, or what he did in saying, the ceo is running the second private company, his son will be his successor. We need to run this for the shareholders. He got guys on the board and he convinced the board to do that. The ceo resigned and brought in a new ceo. That is very difficult to do. If he is the right kind of activist investor to follow, who is the wrong kind . There are guys that do not have conviction. I do not want to mention names. Everybody is out there trying to make a living. I do want to badmouth anyone. There are guys who will come in, the stock will go up a little but, they will sell. They will put in a board for a ,ear, the run handpicked board and then it does not work out, and then they try to buy the company. That is not proshareholder. That is the type of thing you want to stay away from. Should that spark the government and regulators to get involved . The regulators are pretty good in the activism world. 13ds are pretty prompt filings. Explain the difference between 13d and 13f. Need to be filed 35 days after the calendar quarter. It is 45 days old. File within 10to calendar days of going above 5 if youre going to be activist and you have to amend it within two Business Days if you are changing by 1 . Relatively quick information on big sized moves that people have to have conviction about or they would not be in a stock for more than 5 . 13d. Le bass on a you would have known before now that he had gotten out of herbalife because he would have had to stay within two Business Days when he moved 1 . I do not consider him an activist. It is suspecthink in any way that he came out very publicly, very positive on herbalife, his longterm prospects, one at the time he could have been selling as the stock was dropping when he was saying positive things right here on Bloomberg Television. There are a lot of people in herbalife for the short term. Say what you want about the lachman, carl icahn bill ackman, carl icahn, both are in it for the longterm, one on the short side, one normal long side. Carl icahn getting into a Company Still leaves a bad taste in some peoples mouths. It is a muslim darth vader coming into a company. When he went into time warner darth vader like coming into a company. When he went into time warner they embraced him. The stock did great. Netflix, when he came in, they did great. It is situations where the management needs to be changed. The management is not happy. After parsons left time warner, they eventually did everything that carl icahn asked them to do. Management is the problem. What about with apple . Is that an issue . Do you think they are working well together . It is the ultimate company that you would think would not welcome an activist. Imagine if steve jobs were alive today. Steve jobs would say, get the hell out of town. It is also a massive undertaking. Is treating management with respect there. He is being very deferential to tim cook. He is not trying to micromanage. Finance as steve jobs is in innovation and technology. He is one of the shortlist guys of investors over the last 50 years as the best investors. And he says, your Balance Sheet needs to be changed a little bit , you need to buy back stock, they should listen to him. Just like they listen to tim cook or steve jobs when the talk about the iphone or ipod. That is an amazing comparison. What is your biggest take away . 13fs are dated. Gett of time activists confidential treatment in the 13fs. You are watching netflix. You were seriously concerned about the last quarter . I was. When you think about what everyone has had to say but herbalife in the last six months and then you look and soros is out and drunken miller is out and bass is out, it does make me wonder. I am not buzzing as much. Ken, thank you so much. Great to get your insights following these filings. Almost 100 Million People are buzzing about candy crush every single day. How the games maker is going public. That is coming up on Market Makers. Welcome back. It is almost 26 minutes past the hour. Its take a look at how the markets are trading. Bloomberg is on the markets every 26 and 56 minutes after the hour. The s p 500 trading very little differently. Turned to the arrow green their after having the best we can over a year and getting up near a tie again. The dow jones down but just about as flat as the s p. The nasdaq doing the best of the bunch, up 0. 5 . Carl icahns latest grand slam to my home run, knocked out of the park forest labs. Forest labs is the makers of alzheimers drugs and has been a Huge Positive today. Carl icahn waited it out and it seemed to pay off. And lexapro, right . Yes. Lets take a look at coke. Shares and cocacola are now down 3. 33 . That was the story i was buzzing about this weekend. The comeback of Global Markets and the rally you may not have expected from emerging markets. They have really powered up. When you see a company like coke have a billion dollar costcutting plan, the question is, is it a positive . Or negative because they need to do that . Stay with us. We are talking candy crush. Is it a new model for game makers . Live from bloomberg headquarters in new york, this is Market Makers, with Erik Schatzker and Stephanie Ruhle. Welcome back to Market Makers. I am filling in with Erik Schatzker for Erik Schatzker while he stays him in place candy crush. No. Maybe. Chances are that you know one of the people playing candy crush were you sat next to one of them on the subway this morning. The maker of candy crush, the parent company, is selling to planning to share cells to the public sell shares to the public. This is a massive phenomenon that i did not appreciate until this morning. When we started talking about this game for the story, i realize that producers and reporters and interns are playing candy crush. Our producer has dreams about it. And he is a smart guy. Must be a good game. Is that the logic . Is that the take away from this . It does not look very fun from looking at the screen. Dirty asget down and to the numbers behind this. This company, king digital, actually netted 568 million last year on revenue. This is a Profitable Company that is doing this. It makes a profit from people who buy stuff to get ahead in the game. Just like farmville was, when that was active. Chickens, all of that stuff. You get sucked into it. If you want to take it to the next level, you can pay. When you look at the top selling games that king digital has, pet rescue, and farm heroes. 78 of the companys revenue comes from candy crush alone. When you put these three together, you get 95 of the companys revenue. I am looking at these three pictures and these look like games that my sevenyearold will play. What is so special about these . I dont understand. This is not unusual. This happened with farmville. I was confused to them as well. Whatever. You play video games as well. I shoot friends and family on the internet. That is different. Could one say that this really is a model for business . This, seriously, are adults playing candy land . The cannot speak to psychological appeal of these games except that 93 Million People to play it. Why it works is not important that as it does. 93 million daily play this game. How many played farmville . We are trying to compare. Or iss the next zynga this the next big, big thing . The fact that the least mature areersonalities here doubting this is a sign. [laughter] say it is not mature enough, it is a problem. It is likely to be a flash in the pan, just like other games were. This company has been around since 2003. It is not a brandnew company. It is a 10yearold company. It has developed a lot of other games. 180 various games. How successful are the other properties . They are not on a relative basis. Angry birds has been more enduring. One could question why that is appealing to adults. You are sling shopping birds. Shotting birds. Angry birds tshirt, wasnt there a movie . Star wars angry birds. Pillows. [laughter] speaking from experience. [laughter] all of the products. [laughter] paths hat these big baskets, angry birds pillows. Sure. At your house. People every day. Ben pointed out the draw something was purchased for only 300 million. Almost the full value of the ipo and no one place that anymore. I wish i had that kind of free time. 93 Million People on candy crush. Thank you for the latest on candy crush. When we come back, brands of found a new way to put the products a mix of young people in social media. We will be coming covering the next on Market Makers. Welcome back to Market Makers. I am Stephanie Ruhle joined by matt miller. Young people, not matt and i, do not keep a lot about themselves private. In a new documentary airing on pbs tonight, frontline explore social media is changing the entire world of marketing. Likes, follows, friends, retweets, the social currency of this generation. Generation like. The more like you have, the better you feel. You cant wait to find out how many other people like you are not. Instant gratification. You get them, you give them, and everyone knows him and he you have earned. The numbers right there for anyone to see. Maybe teenagers and social currency, but for businesses, we are talking real dollars. The writer and producer of generation like is with us now. What made you decide to do this documentary . We talk about the importance of social media. What struck you . I was looking for whether or not teens are being empowered in this landscape. Documentary about teens and mtv 10 years ago. I wanted to see what was really different in social media universe. What i learned first was that you dont really need trend hunters in a world where kids are spending hours a day creating their consumer profiles and putting them up online. Doreally looking at teens understand what value they are giving and what value they are getting in return . How are all the likes and follows and tweets and things they are giving to this space how are those being used . It got kind of emotional there for a minute. Kids need to be liked to feel like other people like them. They live for likes. Your popularity and your sense of selfworth has a number on it. How dangerous is it . That is the question. Who is out there doing something bad because of it . How are these likes being used. Companies are more than happy to give kids new opportunities to gain more likes. If you are oreo cookies or coke or something, you will create marketing opportunities where you will say, retweet this or favorite this. What is a kid do that . Because they have a chance to be noticed by the brand and be tweeted by them. There are two separate components. An emotional, social aspect of Something Like facebook that probably would have happened in different ways 20 years ago, 100 years ago, 200 years ago there is also a consumer aspect of what is going on here because kids want to have touch the celebrity of these brands. Ago, theyears relationship between the kid and a brand and the kid and someone else were not quite as connected. You have a levis tag on you and maybe that would be back and forth. Brands were having you communicate with them through mainstream media. All of this liking, their social lives are the communications. Are these teenagers the consumer or are they the product . I would argue they are at product and the unwitting label. There are 5000 or 10,000 people working on facebook but there are hundred million kids spending hours and hours a day creating value for the social networks. Is this business exploiting them . What is exploitation . Yes and no. Yes, in that the time is going there. On a deeper level, what happens when you are living your social life on a platform that has been devised not to help you socialize, but to extract value from usa consumer . You as a consumer . Do they realize the possible ramifications . They do not realize it or care when you tell them. They are like, so what . They hear the nsa stories. They havent have an expectation. Forhey are doing something themselves also, i would argue. I am not 18. Long time ago that i have no privacy, i know the nsa is watching me, and i dont care. I put everything out there on twitter and they do something for myself and i like rands. I spent the weekend of rating films on netflix and rating shows on netflix. I aint doing something for them. Im putting my views out there so that they can see what i wanted other people can see what i like. I am doing something for myself. So their predictive engines can better serve you. What are they serving you using . They are serving you using data from the past. Nothing that will lead to more innovation and more novelty. It is based more on prior behaviors and on the creativity of the person making the art. Arent these brands making kind of the same trade . They risk doing something wrong on social matt works which they would not have had to deal with in the past. If i am on the messaging board talking about bumper for my new ford pickup truck and i say, i do not like this one and they give a better customer service, then everybody on the board thinks that and no one buys the kind of bumper. Are two different things. Customer Service Online and there is the idea of the social media space as a marketing tool. Danger look at more the to the kids is that when they express themselves on a platform where all you want to get as a number, the kinds of things they do end up looking less like art or thought. The kids in the show one starts out as a skateboarder lets talk about it. , baby scumbag im sure is thrilled with his popularity. He has one million views on youtube. It is not for his skateboard tricks. It is for his antics. Playing a class clown, teen point guard. Porn guy. Kind of 18 jackass . Yes. Got more hits when she showed her full body or in her bathing suit and now she does not sing. Is this a runaway train . The reason you get hits is by being provocative. Toare asking young teens throw it out there, be provocative, that is how you are going to be a hit. Tyler oakley is a youtube sensation. Who is he . He calls himself a fan girl. Ofis a gay guy who has a lot 14yearold girls or 15yearold girls who follow him. He understands how this works. He tweets out to bring bands or pop stars like beyonce in the hopes of getting retweeted or favorite it by them. Once he does, the millions of people see him. His audience grows. Eventually, he has a social media following. Do you think the traditional media and marketing world understands how to harness this . Weise boeck 20 we spoke to lucket. L oliver have people figured out how to unlock it . I would say it is a divergent path. Brilliant guy. He understands how to use this space. The people who will be stars in the social media space and not brad pitt and angelina jolies. They will be the baby scumbags. In summer holder ian sommerholder. He has 4 million followers on twitter. You end up with a divergent. You unzip end with to this. Es who revert you have others who say, i do not have to do this because i am a movie star. I would rather be in chile now than baby scumbag. You are closer. Angelina than baby scumbag. You are closer. You can watch generation like tonight or you can see it on the pbs website or on the ipad. It is available everywhere, like every form of media. What is not available on the internet . I have a feeling there is a symbol in an there. When we come back, what are we doing . The golden days of hollywood have been long gone for so long. Mgm needed to reinvent itself. Robocop return to theaters over the weekend. It pulled in a respectable 35 million globally for mgm. A studio from hollywood pulse golden era which was left for dead in 2010. It is fighting its way back from the brink, bringing big franchises like james bond and the hobbit. We are joined by a Senior Writer at the rwrap and by jon erlichman. It is surprising that a company which owns james bond would have problems. What is going on . What was the problem at mgm . The problem was they were saddled with about 5 billion worth of debt and they needed to clean up their books and under gary barber, their chairman and ceo, they have done a very impressive job of improving their financial health. They have about 50 million in cash on their books and they have a revolving fund, largely untapped of about 700 million. This is a very Different Company than it was just four years ago. When i think mgm grand, the last time i said it i was going to see a fight in las vegas. Does this company need to reinvent itself and is robocop count as a reinvention . Isnt everybody doing their own version of a robocop. . Mgm has this big library of movies they could tap into. Miramax is in the same boat. If the biggest part of a value of the business is tied to the stuff youve already got, then going back to the well is a good strategy because it allows you to increase the value of what you have got. You look at some of the other stuff they are doing. They are doing a sequel to 21 jump street. Hot tub time machine. Are the beste examples, but you have got to go back, you have got to find a way to make everything valuable when you go to sell tv versions of it. They are doing a lot of that. There, it cutting streaming deals. The biggest bonus they got was the success of those blockbusters, the hobbit films and sky fall put them in a much better position. You would expect that, right . Sky fall is obviously going to do well. Better than any bond in history. Nobody would have planned for that. It gave them a nice, impressive head. Look at their key franchises. Lord of the rings. Rocky. Maybe young kids do not remember. That was massive. You see that line the beginning of gone with the wind. That title has gone to turner. They still have an impressive amount of titles. They have about 4000 film library titles. About 10,000 television titles. Pink panther, which they are looking to reinvigorate. Rocky. Creed spinoff with michael b jordan. Is there a risk that those titles are too old to reconnect with . Robocop is pretty old. Not as old as pink panther. It has been 25 years since robocop. Fatigue onsee some the domestic audience, in terms of its performance. Less of an appetite to see a remake. Foreign audiences, which are really driving the box office right now, seem to be really inclined to embrace this film. 70 of its 100 million total has come from foreign audiences. They may not have seen the first robocop and they probably did not see it in 3d if they did. Is it all about international . Goodthink brent has a point. Carrie is another one they brought back. The Foreign Box Office for that film made it a winner. I think if you ultimately look at what they are going to do, they do kind of cap see upside a little bit i having to partner with other big layers, like sony, with a lot of these movies we are talking about. To your earlier point, they are going to say, if the audience is not there, at least were not shouldering the whole risk. But lets take advantage of the Foreign Box Office. What is the play for mgm Going Forward . Do they ipo . Do they get bought . If you talk to their investors, they are hoping for an ipo. No plans are imminent. That could definitely happen. Already in secondary markets, that stock was trading at 25 when they left bankruptcy. It is that 75 today. Who could buy mgm . Another studio, i mean . When they ran into trouble, they were trying to sell themselves and they were not successful. These days, a lot of people point to lions gate because it has been growing, they do have their own blockbuster franchises. Everyone is asking for their next trick is going to come from. They are big and television. Mgm has a huge opportunity and television. One of the biggest drivers and television in television has been fargo for fx Bettina Wulff on mtv. Wolf on mtv. Comment on the pink panther with steve martin. I think we will probably see another incarnation. The party is one of my alltime faves. It was great having you here, brent. Our senior west course correspondent, jon erlichman. Market makers will be back in just a moment. Stay with us. Rush to judgment. Under armour speedskating suits got the blame when the speech gators flopped in such a. Out appears it was not the Company Possible to rid possible. The Company Possible. Live from bloomberg headquarters in new york, this is Market Makers. On thin ice. Under armour is getting trashed. Tells us how to overcome failure in the social media age. Facebook for friends. Work, what is the social app for shopping . Well meet a woman who has the answer. Is america moving losing its edge because of Health Care Costs . We will find if obamacare is a cure. Welcome back. Im Stephanie Ruhle. Joining me is matt miller. Good morning we had yesterday off. It is time for your newsfeed. These are the top business stories. Time warnerng over cable, is that good for netflix . Netflix has been trying to get a place on twc boxes. Trying to been increase its own film download business that would compete with netflix. Tyson food is offering to buy the Food Processing distribution business owned by goldman sachs. It is unclear how much competition tyson may have. In about 2ring billion when all is said and done. A big deal in the pharmaceutical business, generic drugmaker is by forrest laboratories for 25 billion. They have spent 14 billion acquiring drug companies. The deal is a win for its investor chiral carl icahn. Moving on, has winters raff caused a financial freeze for businesses . The to talk about this is ceo of ethan and. He will be with us for the hour. Bostock about whether. We like to laugh about the automakers and ancona weather. Thele are not out hitting streets because the weather is so bad. I dont see people wanting to buy online. Lets start with the good news. This past weekend we were relieved that people came out. All run account three, around the country, people are getting tired of staying home. We had a relatively decent weekend. But we had three tough months. Rom december we had the worst possible conditions of whether. Our headquarters in connecticut was closed for a few days for the first time very and some manufacturing in the south was closed there and how you combat that . What do you do . You wait for it to end this illegal get back to business. You have to be in a position to do that. This is not something that is perishable. People can come back. And they do. She says people do not buy furniture online. People do look at furniture online. They make plans. How does this weather affect people inside going over ethan allens website. On tuesday im going to go to the ethan allen and by this catch. We been getting ready for this. Aboute been setting out 2000 entire designers that work for us. We have sent out 1000 tablets to our designers on top of our website. The tablet is a great tool for design and customers. Our designers can work with a customer online. They can interact. To ourur website and go projects. You can see how you can create and interact with our designers. Designers in chicago and boston were able to continue to interact with their customers. Customers go to our website. Interior designers traditionally sell themselves as someone who can bring that eclectic element into your home. How do you bring eclectic when alls coming from the same showroom . Ethan allen is eclectic. Words, we the right talked about it a few months back. In october, we introduce the marketing program. We were mixing products. People like to mix. We have a classic design. Whether it is classic contemporary or classic traditional. The great thing is today you mix them together and the products that we are designing have to be livable. They have to look as if they were antiques. Do youhat price point need to deliver . Luxury seems to be selling. Below, they are not necessarily spending their discretionary income. We will come to that. There are more people than the one percent. Veryne percent is that very superrich. 10 oftomer is the top the people in the United States. Fairlystill sell expensive items. We dont think of it as luxury. It is a luxury. It is a highend product. You go to our website and today youre going to see an ethan allen sofa. A great ethan out sofa made in the United States in advance with our craftspeople were the same level of quality, we are selling many of them for around 1500. They can now step down and get that luxury at an ethan allen price point. And better quality. And made in the usa. We will come back to the online topic. It is the next frontier of ecommerce. We will talk about social shopping. Under armour got attacked for speedskating. Now elected Officials Say the suits are not to blame for poor results. What does that mean for under armour . Stay with us. This is Market Makers on Bloomberg Television. It is time for the top tech and media headlines. The maker of the game candy crush saga is going public. There filed for an ipo with the new york stock exchange. Rose 7000 d last year. It is the highest secondhighest grossing app on the app store. A rare bright spot for sony, it is beating sales projections for the new playstation four. They will sell 5 million of them by march. Sony is forecasting a 1. 1 the billion dollar loss for the year that ends in march. Maybe thisll make that a little the better. Ratings are out for Jimmy Fallons first night as host of the tonight show. Nielsen says it in a 7. 1 rating matching theets, ratings of Conan Obriens tonight show. Actor will smith and the band u2 were guests. Fallon says he as amazed by how well things have worked out. Who told me i would graduate to be onol and go on saturday night live and be the host of the tonight show. I wouldve said i graduated high school . Funny. He is very funny. Feel how old i am. I miss Johnny Carson and David Letterman in the old format. Dont know what lenos show was like. I never watched it. That was 25 years ago. Did you also have a crush on joan rivers . She has a dirty mouth. Which i like. Going to say that jimmy fallon may be young, but i am a fan. You forget the perpetual choices of online shopping. The next generation of ecommerce may revolve around social shopping. We will find out. Here to talk about how technology is just changing the way we buy is the founder of an online startup. She is joining us from severn cisco. How does your business work question mark it is used by millions of people to find and purchase products from all over the world. The way it works is you follow all of your favorite stores. You follow people you like and you get a feed of their products very it is similar to twitter except it is just for shopping. I checked the site out to do some research. I was set to not like it. I thought it was just for girls and it was just close. Man brands which i identify with. I just fell off my chair. To be fair, when i first went on there i was looking at dresses and high heel shoes. There is such a breadth of product that you sell, it sucked me in. Our goal is to bring together all of the worlds shopping. There is something for everyone. I talk about the parallel to twitter, the reason this makes sense is on twitter you find content organized around people. You follow accounts that are relevant to you and that creates your feed. You show up and you find the brands that you just mentioned that are relevant to you and it creates your feed. It is a wonderful way to be exposed to products from brands you know what is also a way to discover products you have never heard of. However portal as it how important is it to embrace social media . I used to have an ethan allen interiors. You have to be a part of the social media to be relevant . There over 6000 followers of. Than allen interior it is critical. Site and froms there they can come to our site. Haveof the sites we do not this arrangement. I will look into this. They can come to our site and buy. They get compensated when they buy. How do you make money . We do have a affiliate relationships. I am sorry. Money . Do you make do you have a deal with some of these brands . We have affiliate relationships in place. That is not our end goal. We know that we are basically the only social network of our size that deals with fundamental product content. We have a Business Model in mind but it is not currently launched. You will take a cut in the future . I think there will be a Business Model in the future that is more than just affiliate induction. Advantage which is what i think dana is referring to. Locations. We have 200 and north america. We have 2000 and twoyear designers. It is seamless. The customer can go online and buy our product. They can go to their mobile phone. They can go to our Design Center. All of this is very important. The business we do in our Design Center to a great degree comes when people visit our website. This is tremendously important. I like to go on the ethan allen website to look at something and then what i want to buy it, i will go into the store. We were talking earlier about the comparison between your site andpintrest. You can go a step further and make a purchase on the site. Not only do i like this table, i just bought it. How many people make that leap . Our conversion is the highest from any social network. It is for a good reason. When people go to a social network, they go with a specific reason in mind. To ourtypically come site to shop. That makes a huge difference. That means they have an intent to buy. He has over 300 stores. You cannot walk into any one of his showrooms. Your site word lowers the barrier of entry. Absolutely. We are democratizing shopping. Were making it shut possible for any rant to get access to the right consumer. They can compete on the same level. I want to go back for the web grooming. Like aeb grooming showroom . It is show remain but slept. It is windowshopping. Exactly. This is doing it online and going into a store with an idea in mind. We are seeing some interesting statistics around that. A few years ago we would see about six or seven visits to individual stores. Today, the number of visits is down to three. This is just to emphasize that idea. When a consumer comes into the store, she is likely to know exactly what she is there to find. Is of muchposition more value to a startup than two a brickandmortar store. Shouldnt i be paying you more . You offer me a lot more. Adding a Value Proposition is the same for everyone. I think it is just as critical for a big brand to be resident on our platform as it is for an independent brand. We have some great examples of this. Looking at Urban Outfitters or nordstrom. Milliontfitters has 2. 4 followers. Just to give you a sense of how critical this is, they have to000 products distributed 40,000 40 million row files. That is how money times these products have been saved by individual users. Saved, but you have not sold those products. Correct. Think of the power of marketing. Think about watching a commercial and then engaging with the product. You are saving it into your profile. I think it is better than an advertisement. Are you actively engaging with it yourself, you are distributing the product to everyone who follows you. Your friends or anybody who visit your profile and so on. I want followers. Miller,hink about matt what do you think about high heels and dresses . When youpsion sign on it, you see the featured products. I want matt to know what high heels and dresses he likes. Thank you for joining us. Teslan we come back, shares are popping. We will take you on the markets and tell you why. Look back. You know it is time for. It is bloombergs on the markets. Stocks today are a little but mixed. There is a big week we had last week for the s p 500. It is worse than estimated manufacturing. Atthe other hand, we have least one big deal we are talking about. All that equals not much change. The nasdaq is the clear leader with a gain of half a percent. We are looking at tech and tech related companies today. Tesla shares are up after the sever cisco chronicle reports that they met with apple about a deal. That is very tentative and preliminary on the report. There is a reporting that apple might be interested in the medical devices market. You can see shares higher. The big deal that i was talking about is activist buying forest labs. The big deal for activist which is been a very aggressive making about 14 billion in acquisitions over the past several years. Thank you, julie. U. S. Of a big Officials Say dont blame under armour. How does a company repair its reputation after big negative headlines came out friday. What does it mean question mark we are going to talk about the rising cost of health care. Ceos and hit the middle class hard. This is Market Makers on Bloomberg Television. Live from bloomberg headquarters in new york, this is Market Makers. Welcome back. Im Stephanie Ruhle joined by matt miller. The ice in sochi has been exceptionally cold for athletic brand under armour. A poor showing by speed skaters in the olympics focused global Media Attention on under armours new suit. Some athletes said the suits themselves slow them down a. They switched to an older uniform still made by under armour for their final races. The company responded. He joined me for a live interview. Be nonmetal tines may decisions on training. The Olympic Committee issued a statement supporting under armour saying, has the damage already been done . Have the ceo of the ethan allen. He understands being a global band and a social and digital age. Let us talk about this. On friday, the wall street journal said it has to be the brand. The dutch coach overheard some u. S. Skaters saying it is the suit. Four days later, we are seeing the team Officials Saying it is not the suit. Does anyone care once the truth is out . Or is the headline already out and you have to move on with the bad headline whether or not it is the truth . Orit can be a great disaster an unintended consequence of a great benefit. I think will be a great benefit based only here today. , i looked at blogs. It is the athletes complaining rather than the companies problems. Company would have , they aret disaster going to have a much better Public Relations benefit. Stock did take a hit. It was down in the premarket. It is now up at an alltime high. Does this point to the fact that maybe it is too big of a risk to be a big sponsor of something ikea olympics. Do you need to put yourself out there . It was a big risk. D look at those risks we think about what branding or partnership you get involved with . Absolutely. It is about creating expectations. We are a public company. We are going to sponsor, you have to manage the expert texans expectations. What if there was a problem that was going to happen to your brand . They will not have a problem. But it could have been a major problem. Things, it is a question of delivering our products. You create expectations. They are tough. Creating expectations and managing them is one of my jobs. I feel like their ceo is pretty tough. He came out and did an interview with you on live television. That is way to handle a problem. Hit it head on. Go straight at it. Difficultgotten more as a ceo in the age of sizzle social media tom is a trickier to manage the media question mark he ran the risk that a big headline would come out. Now, those headlines are on the internet forever. It is a major risk. Today, one customer has a problem of delivery and they go on social media and talk about it to their friends and followers. Do you have to defend yourself . One customer . Six years if some he wrote a letter, nobody would care. Look of the benefits you have. Yes you have to respond to one person in wisconsin. On the other hand, your favorite can say look at my new living room. You can balance the positives that comes with social networks. That is very important. What you can do is you cannot leave it to chance. Our team responds. Haveve this issue, we discussed it with our customer service. This is a solution. If you dont respond, you can create negative issues. You have to respond. You cant just say it is one letter, forget it. And under armours case, the wall street journal had an aggressive piece. The bloggers came after with the truth. Do you need to befriend the largest megaphone . Do you need to have a great relationship with those who know your product best like speed skaters or officials . I dont think its an option. It has to be both. You are in the limelight and the spotlight all the time as a brand. We have a major brand recognition. , the sales we own issues. Te our peoples expectations are very high. We know it. They wanted to be perfect. We have to manage those expectations. The jobs of a business is to manage expectations. Becauseing to get worse we are living in an nontraditional world of all this media. I am on a great catch. We are going to order u. S. Speed skating outfit. Ceos hefted about deal with. Inflation debbie is better used to be. We will play the numbers and the reason behind that woman comeback. That is next on Market Makers. Health care costs have been a big Business Concern for years. The good news is Health Care Inflation appears to have slowed dramatically over the past five years. The bad news is a could be temporary. They are joined by neil richardson. Let me start with you. Why is this a concern . We have about 5000 employees. 4000 are in the United States. We are selfinsured. We play for a for the cost. This is the biggest costs we have. Health cars have been going up. Costs have been going up. Doug casa been going up. This is a major issue. We must manage health costs. There is a great debate going on , i think we have to have a major focus and shift the debate on the costs of health care and the structure. I thought that was what obamacare was . I dont completely understand it. Thesnt that the point of Health Care Act . To be that kind of major blow to Health Care Costs and turn things around . I think the point of obamacare was really to cover the uninsured. The question of whether or not we can rein in the expenditures is something altogether different. Employee sponsored health care is the bedrock of the United States system. We spend 2. 8 trillion on Health Care Costs. Thatis in an environment has slowing growth overall. What happens when the economy picks up . That is the question that people are tracking it now. Employee sponsored health care, youre seeing more and to pick up aabout bigger part of the tab. Is that on purpose . Is that a way we can curb costs . It doesnt seem to help the middle class. To shift costs and not curb them. Health care premiums have gone up over 100 over the past decade. It is debatable if the reforms taking place. These are mostly to medicaid. They will be subsidizing the uninsured. The u. S. Is paying about two and a half times what other companies countries pay. We are getting a lot less bang for our buck. You still dont have universal Health Care Like most countries do. This is still an ongoing fact of life. It is not near completion yet. I did we have to look at the overall structure. The structure we have, we are of the cost is for administering the billing. In a country like ours we have to take care of people who cant afford it. Take care of people. The system we have today has a vested interest. We are the ones that have to burner bear the brunt of all this. Are you started to feel the pressure on cutting back employees . You need to focus on the bottom line. We are using tremendous donation. Our we have to. That is what it is. Technology is very important. We have brought tremendous them technology into our manufacturing. 70 of our manufacturing goes on in the United States. We have health care and affects everyone. You talk about the fact that the increase has slowed. Were looking at about four percent now. Maybe the idea of shifting the costs onto consumers from companies in some part is being done. In some part it may be psychological. It is kept people from using the system as much as they have in the past. That could be. Costs peak in 2002. It has flatlined. That is because private expenditures slowed. Spending has slowed. With the Affordable Care act. Federal money will pick up. We dont know how this is all going to shake out. At the end of the day, people need health care. Society has to figure out how to pay for it. We have an aging population. Thank you very much. Indeed. We are going to get final thoughts when we come back. You are watching Market Makers on Bloomberg Television. As one more sign that the economy is Getting Better. The divorce rate is getting worse. According to the census bureau, the number of americans getting divorced has risen three years and a row. At his after hitting a 40 year low at the end of the recession. Divorce may be devastating, but nomists aa can be helped say it can help the economy. The divorce rate is going up. That doesnt sound nice. What does that mean for your business russia . About your going to be talking about the housing Getting Better. Was thinking that the housing situation is Getting Better even cost of a house is 35 lower now than 2006. We do see some areas like florida the cost were out of control. We were living in some kind of a dream world. Ofre is a tremendous amount benefit from divorce. It creates two households. Single people are creating households. We do see that. It is an unfortunate situation that people get divorced for business to improve. Housing overseas business doing . I know youre moving some production back into the United States. What what is your sense . Interesting perspective. I just came back from visiting. Openingnvolved with Design Centers in romania. Andave one in belgium dubai. I was in jordan for the second store. Europeans thought were your customers. Our Main Business is still in south america. We just opened up in canada. We have relocated. We are looking internationally. We have to leave it there. Thank you for joining us. I want to thank the ceo of ethan allen for joining us. It was good to be here. It is only three blocks away. Thank you for joining us. I will be joining you tomorrow. We will be joined by one of the largest ad agencies out there. Now, Bloomberg Television will go on the markets. Were going to send you to the newsroom where julie hyman has more. We are diving into options as we do every day at this time. Were looking at some of the most active spirit we are joined by alan from chicago. Some of the most actively traded today. It is not unusual that we see these on the list. To be also happens leading the gains today. Give us some insight into what is going on. Acrossnasdaq is leading variables. And the best year last year. Before a full recovery the other indexes. The nasdaq is comeback. That is a five percent measured move after having a five percent selloff. We saw some action. Options expire friday. People are looking for more upside. Five percent is the projected project. Vix. Were noticing the what is going on there. We have seen such dramatic swings. What is the current status there . High atde a year 21. 50. We are down about 35 . Typically this moves the way of the market. The vix is actually up. The stock market is up. We have had the vix come down. A sidewaysdve action between october and january, it traded between 12 and 14. We had to breakouts that came out. We are back inside the channel again. If it breaks below 12, that projects 10. That is 30 below where we are now. Today is the last day for the february options. Is one of the stocks were watching today. There is a report that ill on the head talks with apple. Were looking at the call option. Summoned to support their . Anything can happen with tesla. Of 280. Ects a target that is 35 higher. Of course apple will like to have an asset like elon musk. That dropped. It has come back to the 550 level. Apple looks like it is renewing its strength. It ties back to september. We are not far off those recent highs. It has not been painful for tesla. Gm shares are off to a rough start. You have a longerterm bearish strategy. Talking to that. It is my distress substitution strategy. I asked dr. Has suffered recently. Buy enough time for that to recover. The stock had a nice run. It is at a bit of a pullback. If you lean on the 30 level, that is the Halfway Point of the 2012 low at 19. It is six dollars in the money. It has 11 months. We have to leave it there. We will have more on the markets in 30 minutes. Welcome to lunch money on Bloomberg Television, where we tied together the best stories, interviews, and video in business news. I am adam johnson. In brand, under armour faces a chill from u. S. Speedskate rs. Ipo. Sternlicht eyes an you will need more than a 401 k and a check from social security. In fashion, if the boot fits, h for allrketing a bid seasons. Lego clicking at the box office, bringing in