Transcripts For BLOOMBERG Market Makers 20140509

Happy friday. Youre watching market makers. Yesterday, at the beginning of the show, i was not so sure. Up on the charts. Hamm,p, dr. Dre, john entertainment. My kind of day. Lets start with this big story this morning. Apple on the verge of its biggest acquisition ever. The headphone maker and Music Streaming Service people say the price tag could be as much as 3. 2 billion. Why does tim cook want to team up with one of hiphops biggest stars . Clearly dr. Dre has the beat. Why does tim cook want it . Dr. Dre is doing ok these days. True, adeal comes pretty big transition, we estimate that beats will do less than 2 billion of revenue this year. To put that into perspective, less than one percent of apples total revenue this year. In theelatively small grand scheme of things. A tremendous deal for the beats organization. Wantat exactly would apple in beats . A lot of people are asking the same question. At the end of the day, i actually think this is largely a financial transaction in nature. Apple is paying two percent of its 150 billion cash toward to buy it. 100 bits of Revenue Growth this year. It you think about apple, they growing seven percent this you. If they did by beats, that would add 100 basis points to that. They are not interested in the brand or the Creative Team or the fairy dust from dr. Dre . Im sure that is a factor. I think he has a lot of things, but not very dust. Fairy dust. Apple already has itunes radio. Theyre probably trying to bolster their effort there. That is such a small chunk of the overall revenue. We estimate the margins on these headsets are probably 70 . Apples Gross Margins are below 40 . Why wouldnt apple want to do this on their own . Earbuds. Anufacture those are pretty low end. Each is at the high end of the spectrum. They have a 50 share in the u. S. In order to get into the market quickly, that would be a challenge for apple. Dubai and already established leader to buy an already established leader in the states increases profit. It is not increase the stickiness of the apple ecosystem. Beats next to my ipad, that would be even better than just an ipad. If apple does what everybody thinks they will do, keep the beats name and run it as a separate unit, what does howy about the way tim cook is different from steve jobs . They are clearly different. The stuff that steve talked about has not unfolded. Some of the things he was adamant about have occurred. Tim cook has his own strategy. I think they do need to bring in more talent. The next transaction that google have been great. You would have brought back a backf talented engineers into the organization. I would have thought that transaction would have made a lot of sense. It will be interesting to see if apple does go through and by beats. How that will be integrated inside the company. I would expect it to be does this signal a change in the way apple runs the business . Could there be more acquisitions on the horizon . We will start to see the deal site expanded a bit. Apple has done over 20 transactions in the past year or so. Most of them have been small, technical purchases that apple can integrate. If this deal with beats goes through, this would be the first material transaction. They are starting to think in larger terms. Cash, they dont need to worry about their pockets. They need to worry about future growth. This is a good example of adding 100 bits to the revenue profile and pennies to the bottom line. 3. 2 billion may not be a lot of cash for apple, but do you worry at all that tim cook is getting sucked into this tech are race where valuations stratospheric . I dont think so. Apple is very prudent. Billion we estimate that beats will do less than 2 billion in revenue this year. That is 1. 5 times revenue. It is a hardware manufacturer and is profitable. We dont think that multiple is egregious at all. Apple is not going to step out on a limb and pay ridiculous multiples. If they were to make one more purchase in the near term, what company shoul should it be . What apple needs to think about is expanding the stickiness of its ecosystem. Anything that has to deal with software and services that they can roll out to their 800 users is going to be the most beneficial for the companys business model. I wish i had some good ideas. What about square . Is clearly looking at monetizing its user base. That could be a potential opportunity. It been rumored in the past. They probably have their own internal Development Efforts on this as well. It is certainly a possibility. Thank you so much for joining us this morning. Giving us the latest on beats. One deal perhaps on the verge of closing. Another has totally unraveled. Merger which would have created the Worlds Largest advertising firm. What happened . I thought this was a done deal. It sure seemed like a done deal. Lets find out. We want to start off with a photo taken just last summer. Were striking the deal of this entry in the advertising business. What happened . A lot of things happened here. You had the clash of cultures. These two companies theyre like investment banks. Its just people and culture. The assets walk out the door every night. Each of these companies have very strong cultures. Coming together as a merger of equals, so they were trying to split the responsibility and everything down the middle. That could be very difficult. Were people walking out over the last 10 months . They did have some defections of clients and talent. That was not the big issue. Disagreement as to who would be the cfo. Major roles that had not been established. You had two companies that were going to be incorporated into holland and split their headquarters between new york and paris. Was do not seem like there any commitment to a central come unified company. A were trying to run it as to wo separate companies. Too much uncertainty. We are tying to figure out the fallout. I was on bloomberg surveillance and we spoke to martin sorrell. Here is what he had to say. For reasonsiven surrounding power and ego rather than strategically. Neither company addressed the strategic issues. White was good for clients and people. Neither company could deal with the clunky solutions they came out with. What was good for clients and people. Having inequality mergers as equals dont work. Hes laughing to his next client. Says is true, that mergers of equals are difficult to pull off and this was done more for power, they should be delighted, shouldnt they . Stocks are trading up a bit today. There might be some consolidation that has worked well in the ad agency sector. Larger Companies Buying smaller companies. Abbas are still out there. Back a company will come and take a look at the smaller ones. When they are reaching out to their clients, what are they saying . Its like a big, never mind. Lets forget about the last nine months here. That is what was happening. The advertising clients want to feel like theyre getting the absolute topoftheline service and attention from their ad agency. People were read about their jobs and how to divvy up client lists. Worried about their jobs. Given that these guys are going to have to try it to put the broken pieces back together. Its going to be a nice benefit to some of the competitors. And omnicom have strong presence in their markets. You could argue that there could be more focused in running their businesses. These are run like Holding Companies. Do the individual, branded advertising agencies are they affected by whats going on with Holding Companies . They are not in the longterm. These small ad agencies are run independently. It is a holding company, structure leveled in new york. Its up to these local agencies to maintain a very strong relationship with their client. Keep the focus on the client and let the folks in new york big radware the strategic rationale is going. Or not. Thank you so much for giving us the latest on the deal. The deal that wasnt. Does the future hold for the most famous ad executive in the world . Im talking don draper. John hamm is here with some hints on how madmen will wrap up its run. Casino operators were hitting the jackpot, not las vegas. Its all happening in macau. Market makers on bloomberg television. Welcome back. Casino moguls in the u. S. Are betting big on macau. It two of the biggest names in the business told bloomberg how important this chinese city really is. It was launched in what we called the field of dreams. It, they will come. And they did. And they still do. The opportunity in macau is so terrific that it makes other things look less than terrific. Yes, it is true that we are primarily a chinese company. That is probably going to look even more so as our third hotel is being completed in the next 18 months. There will come a point where ratio of domestic chinese earnings is even greater than it is now. Companysterdays casino just the tip of the iceberg . Listening to these guys talk about now being a chinese company, that is where all the money is to be made is that why the selloff is beginning to make sense . \ there is concern about the ability to access cash. You will get these bums in the road. I certainly agree with steve wynns comments. These are significant longterm growth opportunities. Chinese become concerned with these things . I would not say it is and all of a sudden phenomenon. Use all the austerity around dating back to last fall. , whetherese pullbacks visa restrictions or other restrictions that tried to slow down the growth rate. Recently. Verheated this represents those managers to those measures to dialback. Its overheated when these guys are building palaces out there. A there is always going to be pretty high level of risk with these macau stocks. You never know what the Chinese Government is going to do. From our perspective, the growth is on track. We have no supply growth to speak of until the end of 2015. Starting late next year, you will see the next wave of capacity led by some of these properties that steve wynn was talking about. Chineseys the government is more predictable than the u. S. Government. Do you believe that is true . Its probably a bit of a political statement from mr. Wynn. They certainly are committed to making the macau experiment work. It has been a very successful story. You go back to that period 10 years ago, the market had generated 2 billion annually. We are at 40 billion. Its been a successful growth story for everybody involved. Macau and all about the numbers and projections suggested is, how much time do you have to spend over there . I try to get over there once a year. We have a colleague in asia as well. Getting over there next year to see the construction progress on these facilities will be key. We have been spending time in japan. That is the next great growth opportunity. Steve wynn is certainly looking at that market, which is currently contemplating gaming expansion. , is there one who is doing it right . Las vegas sands has been the biggest beneficiary. Other companies mgm resorts. They have a casino in macau. It has been our best idea right now. The only way its to play the recovery in the las vegas strip. If the selloff indicates there is pulled back here and there and the stocks recover. Its anticipation that something is going to happen. Are the chances greater that its going to happen today than two days ago . Perhaps. It comes back to that longer term commitment that we do believe the Chinese Government wants metallica succeed. Its been an amazing Economic Growth story in terms of the job creation and development that has occurred. They are in it for the longterm. Remainsink macau the only place for chinese to gamble. We dont see that changing anytime soon. The next milestone will be around the licensing renewals. That comes up around 2018. That is something people are starting to focus on today. Thank you so much for joining us this morning. Who does not like to talk about gaming in vegas . Forget about madmen. Jon hamm is a movie where he plays a good guy. His latest role cant wait. We are approaching 26 past the hour. I knowick look at a name well. Cap jumped the most gap jumped the most in three months. An unexpected increase in april sales. I do love this. The analysts are not talking about fundamentals. Why the company is doing so well. Its more of, let the price go up. Lets talk about cbs. Its a similar story. The stock is dropping this morning. The mostwatched Television Network in america reported firstquarter revenue that missed analyst estimates in part because cbs had a very tough job last year. They benefited from the super bowl. Now, theyre obviously not. Million revenue miss. Analysts were expecting 3. 9 billion. Cbs reported 3. 86 billion. Only 1. 5 of their sales. Ertheless if its not working for cbs, its only going to be worse for the other guys out there. Coming up, if you want to buy this mansion in beverly hills, make an offer you can they cat refuse. Live from bloomberg headquarters in new york, this is market makers, with Erik Schatzker and stephanie ruhle. You watching market makers. To cover. Its time now for us to take you to the newsfeed. The top business stories from around the world. Apple is on the verge of its biggest acquisition ever. It is in advanced talks to buy beats electronics. Price, 3. 2 billion. By dr. Dre. Nded it turned headphones into a , stylish accessory. That proposal to overhaul fannie and freddie may have to be dead for the year. Senate democrats decided they will not back a proposal without major changes. It calls for fannie and freddie to be replaced by a government mortgage insurer. Users thatomises their photos and videos will disappear after a few seconds. It turns out, that is not always true. Now snapchat has agreed to settle sec charges that it received ec customers. Fcc charges that it eceived customers. I think thats the key to the story. Netflix got into a lot of trouble with its customers because it split off its dvd by mail business. They said, guess what, your prices going up substantially. They walked away from netflix and stock ran into huge trouble eared they have been mor. They have been more than hinting that prices will go up for new subscribers. You have a couple of years before your prices going to go up if you already have an account. They are trying to ease into higher pricing. What do you think the Financial Impact can be . This company definitely has a bold stand 48 million subscribers around the world. 60 million subscribers in the u. S. Tracing is very important to that. They dont want to go past 12 if they can avoid it. The less likely you can help your subscriber numbers climb. , financially, this will make a big difference shortterm because they are easing into the warm bath. Say the prices are going up so they can give you more great content. That is definitely true. I have more than 7 billion and content commitments. That is a better story to tell to customers then, we have to spend this on technology or increase prices because we are interested in entering new markets. Its a great story to tell the folks here in hollywood. They might pay us more for new shows. Its a winwin strategy. What are analysts saying . Awarey are obviously very that a couple of years ago, you saw some major damage tied to the pricing. Analysts still have questions about these content commitments. How will they pay for all of this . They are curious about how much revenue can be generated by increasing the price by two dollars. They still have concerns about the content prices. Believenetflix truly that nine dollars is less sticky than seven dollars . They have always at seven dollars, they would. Spend want to go out and the kind of money that they are spending on these original shows and get licensed deals with all of those big content they have a huge library of programs from disney coming their way. Outhave to balance things and try to make people as happy as you can. Its not easy. I do think we are clearly moving to subscription world. You have apple going after beats. The challenges apple may have in getting people to buy u music you have a huge opportunity if you have a big subscription platform. You dont want to mess it up by increasing pricing too much. Thank you. Jon erlichman. Lets say youre a new customer. Im guessing they bought this great content from disney. I wast amazes me is that paying seven dollars for what netflix was. Its a great deal. Even watch anything on cable. Netflix has content that we care about. Raise the prices. Ok. Lew on whether the economy has turned the corner. Al hunt will be the one asking the questions. We will hear from al when we come back. You are watching market makers. Jack lew has not been in the headlines much lately. Im sure he is happy about that. The treasury secretary still has a lot on his plate. From budget talks to sanctions. He will be on political capital. Al, what is on the top of jack lews to do list . A trip to china. There is a whole range of topics whenever they meet. Ishink the russian sanctions very high on his agenda. That is important. I want to know what you are going to ask jack lew. You want me to give jack lew a preview right now . Eric and i have a big night planned for tonight. Its friday night. We want to raise the roof. We are tempted by a jack lew interview. It tell us why we should stay home and tune in. If i could get stephanie to stay home on a friday night to watch an old guy like me do a tv interview, i want to say the world has changed. Were going to talk about china because he is going there. That is important. Come is a number of issues occurrence he issues an economic and trade issues that are on the agenda. We are going to talk about the other sanctions against the russians. Why wont they move quicker . Only gossip is going to keep me home. Hillary clinton has a book coming out. Is the white house worried . I think a little bit. He says they gave him talking points about how outrageous the bonuses were for the wall street banks. He said, let obama do it. I understand why you dont want to be irresponsibly popular. Those bonuses back then were outrageous. Are you really going to get into it with me on a friday morning when im tired . A lot of bonuses are outrageous. What about these bonuses for Tech Companies that dont even make money . Money andd the tarp the program. Back then, those banks who were being bailed out, given fat bonuses at a time when a lot of americans were struggling with something that was offensive to people. As you know, there are a lot of people who consider tim gagner something of a hero. Not because they continue to get those bonuses. They dont feel the same way about jack lew. Timehavi have spent lots of talking to people on wall street. Is not the right man for the treasury secretary. What does he have to say about that . Im sure he would disagree. To say does he have about the fact that wall street does not have confidence in him . He would probably take issue with that. I have heard the same thing. Jack lew does not relate to people on wall street. Tim was the head of the Federal Reserve and was more synthetical. Out of think lew is step. He dont relates with those wall street guys nearly as well as tim or paulson did. Cant wait to see your interview. Stephanie and i have waited. We are staying in tonight. I want a full report as to whether stephanie stays in tonight. I can watch it at 4 00 today. Will be on street smart today at 4 00 pm eastern. Political capital with al hunt. , jon hamm ison a madm talking about his role in disneys new baseball movie. Thats not very don draper of him. Welcome back. You know john hamm as the swaggering and executive on madman. Now he is making another sort of pitch. Starring in a disney movie. Million dollar arm. Its about a sports agent who goes all the way to india to look for the next baseball star. N and askedwith joh how he made the transition. Its one of those places that decides what they think youre good at doing and try to shove you into that box for the rest of your life. Its nice to be able to do successful that makes the box bigger or expansive. You have said don draper has learning experience. Drinking,ssues, poultry living your life is living your life. Drinking, adultery it shows me how not to behave. When don cheats on his wife, the marriage falls apart. He gets drunk and falls over and loses his job. Those things can happen. Its a cautionary tale. What have you learned in this movie . The lessons in this movie are opposite. He awesom the actual kids that he found in 2008 will tell you this. The big lesson they learned was that this is an opportunity. They were given this opportunity to succeed. It looks on paper like an impossibility. Hard workdd in and dedication. Use all ofgence to those things and maximize all of those things. They were given this opportunity to come out of these villages in the options were driving a truck or be in the army. Here is a different way to go. They said, there was no way they would squander this opportunity. Theres too much pride. They were invested in it too much. Pretty fantastic lesson. I have come a long way. From st. Louis to being able to shoot a movie hollywoodnd live in and come to bloomberg headquarters is living a dream. Is it hard for you to Stay Grounded and connect with characters and bring your best . Steve wynn has criticized a list actors saying they live in a bubble. You start to feel like youre in a bubble . Its interesting that a billionaire casino owner would say that. I am not familiar with his comments or what he is talking about. Probably ank that is challenge. Its hard but not our job to nect with regular people our job is to connect with the character and portray it as accurately as we can. Get outard is it to from under don draper . We have seen Jason Alexander from seinfeld go to such extremes that he now wears a to pay so he is not considered george for stanza. On in thed was 1990s. 16 Million People watched when the two episodes of seinfeld for nine seasons. I watch a lot of madmen. For our and numbers, you dont represent tens of millions of people. The exposure for jason was obviously significantly greater than it is for me. Up a fairly large footprint on the media landscape acause it is popular with certain demographic. It will be significantly easier for me to shrug off whats left of don draper than it was for or jason. S dreyfus will don and on a high note . I dont know. There is a reason that the show begins with a man falling down. I dont know what the future holds for don. I have always said this and i agree with that i hope he find peace. I have such a hard job. That was my interview with john hamm. The movie opens up next friday. He had a hard time focusing. Sean penn said the same thing last week. Asked, can Box Office Numbers you transitioned really well. Doing some research into sports movies. Tales of redemption. The typical american story. Audiences like it. They dont tend to sell well overseas. If you look at the top five baseball movies, a league of their own tops them all. Its more of a comedy movie than a baseball movie. Hanks. S madonna, tom it was ages ago. It still tops the list. 42 is the second best. No international release. Money ball did very well. Critically acclaimed, but did not play well overseas. Then you have the rookie and field of dreams. No sequels on the list. A league of their own is not my favorite. What is your favorite . I like a league of their own. I liked money ball because of rapid. They had a lot of gratuitous shots of brad pitt looking good. Thats not a gratuitous shot. Mm inth john hand in their. In there. Football movies tend to do better. Our 66d side, to million. 266 million. Andhe water boy is up there varsity blues is not . Its not really a sports movie. There is adam sandler at number three in the longest yard as well. I have not seen any of those other than the blind side. They dont sell well overseas. That surprises me. And furious, charlies angels, they like that american culture. Thanis more american football and baseball . Its boring if youre not into it. How much baseball do they play in china . They played in japan and korea. China and india are the big markets. Does not do too well. Space jam. You like hockey movies. Miracle did pretty well. What about the greatest sports themed movie of alltime . Slap shot. Paul newman. Ever isest sports movie caddy shack. I give you that one. Boxing movies do very well. Rocky 3. An iraq stallone is still writing that wave. They are milking that franchise for all that they can. It was Christian Bale mark wahlberg. If you have not bought a gift for mothers day, shame on you. We have the perfect guest on the way. Theyre getting divorced before they even got married. 35 billion merger in the ad business is dead. Could not decide who would get the top jobs. Hiphop billionaire. Im not talking diddy. Moving to a whole other level, apple on the verge Headphone Company beats electronics. And a huge Holiday Weekend for 10800flowers. Com. Welcome to market makers. Tgif. Are you a flower guy on mothers day . Of course i have to give my west flowers, but am i in general . No. When i lived in the house in another city and had a garden with flowers, i like growing things, for sure. Generally speaking, i am not a flower guy. Now that we have established my feelings for flowers, it is time to talk about him in a. Unraveling. Or deal it would have reshaped the ad industry, but the Companies Announced they could not make it work pretty much because of a power struggle between the two ceos. Great to have you with us on the phone. Talk about how the unraveling of the deal changes the ad industry or at least reverses what was supposed to happen. It is nice to be here this morning. Look, this industry has always been about brains and talent. The scale has never been a benefit. We have always believed big is not a benefit, the talent is more important in the process and the creativity is everything. The reality is, this has just proven that size and innovation are really mutually exclusive. I think what transpired here is the two firms have been on a standstill for 12 months, on hold until they figure out what their strategy would be going forward. I think what it has done for the industry is created an opportunity for the smaller firms to pick up share and talent and take client relationships during this time of uncertainty. We have seen it as a big positive for ourselves in terms of attracting talent and attracting clients. Area,ition to the m a weve seen no competition whatsoever. I think what this has also shown his this is an industry where talent and the Human Capital is everything. Although this was conceived by two brilliant ceos, they had to sell it to 60,000 people and it wasnt bought into by them. As a result, it was unsuccessful. Is size has nothing to do is therewhy on earth so much consolidation and the ever testing industry, including by your firm . Or are two parts. Theres consolidation everywhere in the world. The reality is, if gdp is too big percent and 3 and companies are trying to grow at 10 plus, feel the way to do so is acquisition. The capital has no value sitting on their balance sheets, so acquisition is a faster, more profitable way to grow than any other alternative. Offocus on m a as a way enhancing the offering to clients, diverse rain broaderying at a geographic basis in expanding our expertise. But were not buying mergers of equal. What we are trying to buy is smaller firms that are brilliant talent that have identified a niche where they have a sustainable point of initiation. We are buying expertise and talent, not scale. Is, this is not gillette and Procter Gamble getting together. These are assets whose Human Capital goes up and down the elevator. Nobody has ever proven that these big, big megamergers have ever created value for the talent or for clients. Youre being very positive and supportive. Lets be honest. Sing these companies go through this, are completing competing at agencies going to try to strike while the iron is hot and make the argument these guys are hot mess . Theres no question that has been going on. The uncertainty is bad in all industries. It is exceedingly bad in Human Capital Management Systems situations. Both have been under pressure from an exodus of talent and client over the past 12 months. Off the merger, calls into question, what do they do next . They put a toe in the water and finally drew themselves over the line and said, we believe this scale will drive the ultimate solution for our shareholders. No one is ever talked about why it was going to be good for clients. Idea talkings, the about competing against big data, that is a misnomer. You give going after google and facebook and some of the other new media companies, that was also something that i dont really fundamentally believe in. I think partnering with those is as important as having your own capability. The reality is, this is a business that is all about creating Brilliant Ideas that make brands famous and drive Financial Results for clients. This concept of this merger never was articulated why it would create more value for the growth of clients and their brains going forward. At the end of the day, in this kind of environment where clients businesses are under siege, where there is more activist shareholders on consumer goods companies, youre going to see more more pressure for accountability of marketing going forward. Theres a famous expression, half my advertising doesnt work, i just dont know which half. Theres more accountability for marketing spin than ever before. This will highlight the fact that clients need more and more account ability and need more tangible results, which has been away of the past but is going to be the way of the future on an exhilarated basis. Miles, if a merger like this was not the way to attack or to meet the challenge of the google or facebook, what is . There are two things. What was illconceived about the merger is, you did not get a buyin from the culture of the organizations. Two ceos getting together with five people on either side and saying this is what were going to do. What was illconceived, it was never sold into the talent pool, the employees, and the clients about the benefits. In addition to the fact they never really talked about the most important issues about whos on first like who is the cfo, who heads operations, who is going to be responsible for what parts of the business. When they announced this and then all of a sudden theyre trying to put the pieces together, theyre both very vulnerable and this is the worstcase scenario of what you always dread when you announce things. We never announce a partnership until it is completed in its entirety. We would never do Something Like this. But this was inevitable that they had to go to these revelatory issues. What was not inevitable, they couldve talked about the structure of the management team. You ask the question about how you compete against facebook and google. The answer is, it is these are to partner with them than compete against them. The combined market cap of over 500 billion. That is greater than the market cap of all of the rest of the amortizing firms probably times two. I think it is these are to partner with them and figure out ways to collaborate and to compete with them. But what we do do as a network urbanization at nbc, we use their tools and technology to improve effectiveness of this we do on an ongoing basis. We work with our clients to figure out how to utilize those tools for their the rest of their business to try and see how we can improve the efficacy of the work theyre doing and the return on marketing investment. Miles, great to have you on the phone this morning. Chairman and ceo of mdc partners. Now onto other big news, apple on the verge of buying beats electronics founded by dr. Dre. Blows my mind, 3. 2 billion. Who better to bring in than the beats queen herself, our deals reporter, but this woman knows music, cristina alesci. What is the angle . Who makes these headphones . Pioneer. Music has been part of apples dna since the beginning. It also has been a contributor to their bottom line. What has happened here is apple has fallen behind in the music category. Not just on the hardware side, but also in the streaming music world. With the beats acquisition gives them a piece of hardware, the headphones, and a chance to catch up on streaming these at. Do you remember how much we saw all use itunes . I never use it anymore. We us in a decline in Digital Music sales. People want to rent it. From apples point of view, they itunes music radio, and we have no updates on users. I pressed the company and they dont want to release the numbers. Theyre not making a dent in streaming music that they could be making an beats as a strong brand which, by the way, has a lot of analyst scratching their heads because theyre saying, why is apple buying a brand . We could understand of Advisor Technology or is it brings in something truly different, but theyre buying a brand, at the end of the day and paying for it, too. 3. 2 billion. Who is going to cash out or cash in besides dre . If you look at the video posted last night of dr. Dre celebrating, we can assume he is going to make a lot of money off this deal. Lets take a listen. The forbes list just changed. It came out like two weeks ago, and they need to update the forbes list. The first billionaire and hiphop right here in the west coast. So it is not a done deal, right . It is not a done deal. Carlyle invested about 500 million less than a year ago. The number being floated right now is 1 billion profit for carlyle. You also have others from access industry in this deal, lots of billionaires in this deal. Lots of money to go around for lots of people. Do we happen to know if or how much dre put in . We dont know the exact number, but we will. It could be like where diddy said i dont have to put money, my face and my brand is worth more. That is truly cashing in. You know who is the huge loser . Monster. Monster had to deal with beats. Now theyre selling for 3. 2 billion. Sorry, monster. Sorry, monster. Cristina alesci, our own deals reporter and beats queen giving us the latest. When we come back, were talking about the mothers day rush. The ceo of 1800flowers. Com. It is friday, so time to play the year but game. Check them out. Look what a cutie pie will stop his a film maker, graduated from a California High School in 1962. That is all our producers are telling us. It looks like a little lamb or just a cutie. We will be back. Guesses. Yolur stay with us. Friday,ig number this 3 billion. Were talking about the amount of money that people will spend on flowers collectively for our mothers this mothers day. Looking deeper into the business of flowers and mothers day and, put it into context for us. 3 billion is related to what . It is up almost 16 . Steadily increasing the past few years. We are more disposable income, so we are willing to spend that kind of cash on flowers. It is not just flowers. And you get your gift, by the way, for your wife . Not yet. I have branch reservations. Over 3 billion will be spent on jewelry. Who knew it was a big day for that . It is never been a big day and my house for that. Iphones and tablets on mothers day that is not a creative gift. And iphone . I would take it. No problem. 18 billion is what people will spend on mothers day on average. An unbelievable amount. Is that higher than we have seen in the past . It is. We are recovering from the recession. We have more disposable income. Flowers tend to be relatively seasonal, so it is dependent on holidays like this. Stores get about 9 of yearly sales on mothers day weekend that is according to ibif. It is bigger than valentines day. Who would have thought . How does mothers day as a spending day compared with other holidays where we often give gifts . Like a more important day, fathers day . No. I hate to break it to, fathers dont get anything. In terms of for the flower industry you know what im not interested in . Fathers day. Im going to bring in our next guest from 1800flowers. Com, james mccann, how he is prepping for this big holiday. Welcome. The prep is over. We are in peak form. One of the busiest days of the year for us. Now it is on the delivery side of things. We take these orders and get them all delivered. How challenging is execution . You have run into trouble before never. Never. How challenging is it . It is a much bigger holiday for us in the flower business. People think valentines day is the biggest. There are a lot more moms than sweethearts. We are not worried about winter storms, although, denver is forecast to get snow on sunday, so we have that on our radar screen. This is a Better Weather time. Supply is good, logistics or easier. Plenty of demand but plenty of product. We are coming off a really rough winter. One of the reasons valentines day was so hard. What does apply look like . It looks great. One of the reasons why, we source product from all over the world. Logistics are in place to get that local market easily. The weather has been terrific and the growing regions. 80 of the flowers in the west actually come from colombia because of a freetrade agreement to you years ago that took place. You try to make it easier for colombia to sell us some of their commodities, flowers included. Were not getting as much hold on. Quick it is cheaper for input costs. Can you give flowers fresh that are being imported . One of the reasons i dont like to give flowers is because theyre beautiful, but they are expensive and they are dead in a day. You guys are perfect for one another. From you import flowers columbia maybe some jimmy choos. How long are they going to last . Country or contrare. Flower production in the u. S. Is going up because of the very issue of the freight cost. And now makes it economical to grow certain kinds of products youre talking toronto growing iris. The flowers grown in latin america imported to the u. S. , is done in a cold chain the hallway. It is actually terrific product and a shelf life is probably double what it was just for or five years ago. You can have it in the cold chain from the time it is cut on the farm till it is delivered to customers. 75 of flowers were grown domestically. Ellicott only 25 now looking at only 25 . Really taking a hit. What is your biggest competition right now . Iphones. For real . We staff the market on things we could do the same day next day, now competing with every product. The good news is, the product we have is terrific and lasting longer. Our expansion to food gifts has accelerated our growth. Our chocolate, get basket gift basket products. Do you own any of the production facilities come any of the land or the operations were the flowers are grown . We have a few that we have investments in, but we contract with growers. It is not good for us to own the land. Knight capitalefficient. We will contract with those growers to grow our product for us. Water margins like . Florist retailers, theyre looking pretty grim. Overall for our category, you ee people in the 4 to 7 margins have improved because the ranks have thinned. We are partnered with the local florists around the country or around the world to fill our product orders for us. You sold me. Thank you so much for joining us. James mccann, founder and ceo of 1800flowers. Co. The place where one Million People go to sell their crafts online. You can buy flowers online and craft, too. It is friday. Time to play the year but game here on market makers. Check this guy out. I will say he is a film maker who graduated from a California High School in 1962. Is that a city in california . Maybe a galaxy far, far away. We will be back with more. You are watching market makers. Welcome back to market makers. I am stephanie ruhle. I am Erik Schatzker. Lets take you to washington, d. C. Astrazeneca doesnt like the hostile takeover bid and neither do members of congress. Can they do anything about it . Peter cook has more. This is about pfizer trying to avoid pain u. S. Taxes, isnt it . That is part of the story. Pfizer makes the case that is much more. Part of this deal would allow pfizer to reincorporate overseas and save them as much as 1 billion a year in their u. S. Corporate taxes, and that is not sitting well with some very powerful members of congress mainly, the Senate Finance and crow widen missing a family try to take on this issue of u. S. Companies not paying what he believes are their fair share of taxes in terms of profits earned overseas. They are saying as soon as next week, they will prepare proposed a distillation that would a sickly make it harder for companies to engage is what is called tax and version. Reincorporating with a foreign partner overseas and basically moving legal address overseas while reducing the Corporate Tax ale here in the united states. Why might leaven have more success now with astrazeneca and pfizer than he did when he held hearings on apple . Tim cook kind of ran circles around carl levin and it seems at that moment like his effort lost a lot of steam and momentum. This is not going to be an easy effort. But what is different here is thatis a oneoff proposal he is talking about as well as both haveden and they a lot of juice on this and more important, that a tax bill on the floor as soon as next week that has nothing to do this issue, but could offer it as an amendment. The other thing to remember is issue, it is a oneoff there is bipartisan concern expressed here about what pfizer has done. You have the two governors concerned about the state of job losses. By targeting this one provision, they think there could be a partisan conflict consideration. Any other company thinking about doing the same thing, but what about companies who have already taken advantage of this provision in the years past . So for the oliver proposal is that from senator wyden and that would be retroactive to yesterday, may 8. It would not have those companies that have reincorporated over the last couple of years and enjoy the tax benefit. This is a particular issue. Those Companies Joining with a foreign partner has much less to do the broader overhaul of u. S. Tax code that everyone has been talking about, including carl levin. Can you get a oneoff provision like this and not tackle the larger issue . Critics are saying, you can target pfizer directly. What we need to do is go for the larger overall that is been so elusive here in washington, and that will be the more difficult this could not happen because people will be waiting for the much larger overhaul and reducing the Corporate Tax rate low 35 . How old is carl levin . I believe he is in his 60s. He is on his way back to michigan at the end of this term. You have to love this guy. Not afraid to go on a crusade ever. He has so much fire in his belly, it is amazing. I like it. Who hast is ron wyden more power. He is the chairman of the committee that has to restriction over taxes. Jurisdiction over taxes. Carl levin is 79. I love the heat. Remember the london whale . He was up there for six hours. Think about it. We will be talking with them next week about it all. Coming up, handmade crafts, vintage goods. One place to find them, etsy. Closed doors. Ind if you missed any of our interviews, you can now watch them on both amazon fire tv and apple tv, on demand, streaming live, anywhere, anytime. Who wouldnt want to spend their weekend with a little bloomberg tv . Welcome back to market makers. If you are a struggling artist looking to cash in, etsy is a place to go. Last year artist sold 1. 35 billion worth of goods on their site. I went inside etsy headquarters to find out if the office is just as crafty as its vendors. Headquarters,y home to the Online Market that has revolutionized the way arts and crafts are sold across the world. Pays aus Brooklyn Office much to the one million craft people who sell on a site. Tables, chairs, came from etsy sellers. Earn bombing y installation. They moved into this brooklyn warehouse in 2009. Today, its where footage has swelled from 15,000 to 80,000 in its headcount stands at 350. I want everyone to feel a sense of community. It is harder because this office is getting bigger and bigger. Oneway etsy tries to keep it real is through eatsy. Have a program where we local food, delicious food, brought in twice a week and we all eat at the same time. You always get to meet new people. One of my favorite stories is certain features have come about because of eatsy conversations. The people in this office arent just employees, but etsy sellers as well. Doesnt sell on the site. Employees post host creative classes for one another. We had knitting classes, and enameling class where i made this necklace. This is the executive force behind etsy, taking over as ceo in 2011. Hasr his leadership, etsy added 20 million members and Merchandise Sales doubled. How do you balance with getting really big and significant, and staying true to your brand . At the end of the day when you buy on etsy, it is a person buying from another person. As we grow, as long as we maintain that sense of personal intimacy that no matter how long large etsy gets, you still have the sense of intimacy. How big you want to grow . A publictcome could be company, but in many ways that is just a legal structure. We look at it as being independent and serving the community. It is a super cool company. Five or seven years ago, people had to use craft shows, their own blogs, flea markets to get their stuff out there. I go to etsy all the time just like i would go to j. Crew or bloomingdales. Covered ine is knitting . No, but i need a fascinated her and they sell them on etsy. 20 of their business is international. He wants to make it bigger. About 20 of our business is international. We are available in h linkages. He should expect to see etsy continuing to expand internationally. Bringing the happiness and the creativity that you see here to the rest of the world. Have you ever used the site . No, but im totally into arches mill stuff. And our offices next to your apartment. And their office is next to your apartment. It is a huge disruptor to existing brands. If your Major Company and want to have emerging artist, you cannot. J. Crew or target. They are bringing in emerging designers. Etsy, you can find an artist 10 blown glass mustache necklaces, and you can get them on etsy. It is enabler. Very cool. Coming up, the entrepreneur who is still in elementary school. She and other young investors just got their turn in the spotlight. You will see her in two short minutes. Time for a special treat. Kid inventors got to share the stage with jimmy fallon last night. A 10yearold stole the show with her easy new gadget that is made to make pouring milk even easier. She joins us now along with the globalgineer at ge research. First of all, congratulations. A girl from idaho making her way to the big city at age 10. Show us your invention, little mama. This is my easy moo milk dispenser, to make anyone who wants an easier way to get milk. It is pretty simple. All you have to do is try it out. We have a special nozzle you put on the milk carton. Then all you do is flip it over and set it on this base. So this is in your refrigerator just like this . Yes. Here we go. It is working. What gave you this idea . One day i was trying to pour myself a glass of milk and i missed the glass because the milk jug was too full. I just thought that there has to be a better way to get milk out of a job without spilling it. Genius. How did you discover our number one girl . I had a lot of submissions sent into the jimmy fallon show. Herica is so personable and invention is amazing, so was easy to pick her up. What is your next big plan . This is clearly a huge success. What is next, oj . But we havent, patented this yet. A 5,000 weto take got last night and get a patent for it. Really . Have any Companies Reached out to you . Any dairies and otto singh, girl, in idaho that says, girl, we want to partner with you . Not yet, but we are pretty into getting our product marketed. So many other kids in america themgood ideas, they need to come to light . We need a lot more. There are plenty of kids that are curious. That is why kids are. At ge, we know we need more and more inventors, more and more workers who understand science, technology, and invention. It is awesome we can partner with jimmy fallon to take great kids like jessica and give them a little attention. How to jimmy fallon get involved with this . Ge and jimmy fallon got together to try to put together some kind of segment to bring ,ttention to stem fields science, technology, engineering and math. They came up with these ideas to find kidind out inventors. How many winners were there . There were three. How many were girls . One of them last night. Another segment earlier, two of the three were girls. Do you want to be an inventor . What is your favorite subject in school . I really like history and art. It is very inspiring, learning about the history and how they got all their architecture, all their art. It is inspiring. And for ge, is there a next step . Contest, but is a is there Business Case here for you . Is there something you can build out of this . Were not doing this to get new products for ge, but just feeling a great pipeline of inventors for our future. Im still going to be hiring engineers for researchers when jessica comes out of school. I need a lot of great kids like jessica to be ready to help us orent the next great engine refrigerator. Good for you for launching this program. Jessica, congratulations, joining us from idaho. She has won me over because shes wearing leopard print sneakers. What a special morning. Thanks so much. It is friday, time to play the yearbook game. A film makerow you who graduated from a California High School in 1962. That is all we are going to tell you. Tweet us your answers. Identity andl his a couple short minutes after this break. Do you know who it is. That is it for market makers. Filmmaker from downey high school, class of 1962. I could not get it at first. Is george lucas. Star wars fame. Way to go. Our boy george lucas. Our producer thought it was going to be impossible. What does he know . We are done for the day, for the week will stop monday, did you check out the return of 24 this week . Executive producer is brian grazer. We will hear from him about the new season and other projects coming up monday. Have yourselves a great weekend. We are taking you on the markets. Didnt have any. It is time for options inside today. Stocks falling on this friday. The s p and nasdaq both on track to end the week in the red. Strategists joining us. What do you think about the market in general . We had a few days in a row now of drops for tech stocks, but the Broader Market also headed down for the week. The thing is, if we look at markets, and it is kind of hard to get the sense, but these are dull markets. If we look at the price action of the past two weeks, it has been relatively boring. We have been caught in a 20 point range in the s p with the vix trading below 14. I dont think investors need to be impressively long this market because there still is some macro risk. Headlines out of ukraine and russia from uncertainty of the future of interest rates, but they cannot be short this market, either. Never short a dull market because it is easy to get caught in a squeeze should the market decide to head higher. Quite a slew of earnings and economic data. The camp seem to break it either way. They cant seem to break it either way. You pointed out we are caught in a range between 1885 and 1860. You think it is headed down or what is the story . I actually do think theres some pretty stiff resistance at the 1885 level. Every time we have touched off there, which is about seven points below the alltime high, the market has found sellers. I think we could break through that range if we start to get more upbeat economic data. The data has been very mixed. We are looking for some better data coming into this quarter and coming into the spring up to the winter. I think theres a possibility we do see an up to uptick in the data going forward. Apple is close to striking a deal to buy beats electronics. s headphones company, looking at about three point 2 billion. What do you see in the apple options . The Options Market doesnt seem to care too much about this. Were not seeing anything unusual. I dont think the deal makes sense for apple. 3. 2 billion, seems like theyre paying too much for this company. Theyre really after the streaming service and business they have built. Beats international builtup platform often investment they made to acquire technology for 20 million. Why apple doesnt do Something Like that or develop their own technology for streaming service, doesnt make a lot of sense here. At 3. 2 clean dollars, that is a little bit below where pandora traits. Trades. Everybody is paying too much for everything right now. Do you think shareholders may be paying too much for the stock at of earnings . Seen a macys flight from 61 down to these levels, i want to get short Retail Stocks have been week. Got it. Thank you so much for joining us. We are on the markets in 30 minutes. Money clip is next. Welcome to money clip. Miller in for adam johnson. Take a look at the menu. In tech, it is a lot more than a g thing. Apple may pay billions for beats. Dr. Dre is a ready celebrating. Are you ready for football . Round one of the nfl draft is over, but the best value is yet to come. We will tell you what it is. In world, russia flexes its muscle as putin parties like he is back in the ussr. Nasa is now a landlord