Little bit of white house exploits. Lets get headlines from olivia sterns. After the close of u. S. Trading, jcpenney, the struggling retailer posted its first quarterly profit in more than two years and shares rallied in afterhours trades. Retailers return to discounting at last. The income was 35 million in the quarter compared to a loss of 552 million a year earlier. A little bit better numbers from jcpenney but coming off of a very low comparative figure. Tesla out with details on its socalled giga factory plants. This could help to drive down the battery packs. They hope to make investments my the year 2020. They will invest 2 billion. They also see volume at about 500,000. An activist investor carl icon escalating his attack on john donahoe, the ebay ceo. Carl icahn sent his letter to shareholders highlighting the leadership of Mark Andreessen and scott cook. Ebay holds the claims quote blatantly false ebay called the claims blatantly false. My next guest turned what kids did for fun into a moneymaking sport. He turned pro by the time he was 14. Since then, he is taking skateboarding mainstream. He is taking his clothing line global. Tony hawks one generations chairman of the board and he joins me now from los angeles. Great to have you with us. Tell us a little bit about how you managed to turn skateboarding into almost everything, a videogame, on online experience as well as the clothing line. What havent you done yet . Well, i just did things that i felt were intuitive and that were easily associated with our culture and our sport. Skateboarding is not so much a sport as a lifestyle. There is so much night that transcends in terms of music and fashion and entertainment. That is what i wanted to do. I wanted to promote skateboarding in the best way possible through different media as well. Using different medium, you have put together a foundation. Tell us what you are doing. My Foundation Supports publics state parks. We try to empower communities that have already gotten the ball rolling in terms of petitioning the city or holding fundraisers. We give them the resources and funding to get the parks built. Today, we hope to build over 500 skate parks and we have given away over 4 million. I guess you can buy the clothing, tell us about the clothing. We do clothing. For the last few years, we are branching out through cherokee. Im excited because i feel like it is a brand and it is something that is rather iconic with our sports but we have never been able to do it outside of the u. S. On a bigger scale and now we will do that with their resources. Tell us about the ride channel, about using the internet to bring specialized programming to the people that want to you watch you and other skateboarders. This is a Youtube Channel that we started. We did it in conjunction with google. Basically, it covers all sorts of state centric content from new tricks to interviews, bands that enjoy skateboarding and i interview celebrities as well, people that interest me. People that i admire and have access to. What kind of expense does it take. How much money does it cost to create these kinds of channels . Can you give us an idea of what happened at the beginning and what kind of numbers were talking about currently . In the original and the beginning, we try to create a ton of content. We started to realize what works, what people are watching and what they holding onto. Our budget is half of what it was. We have more viewers than ever. When you say the budget is half of what it was, what are we talking about . Half of what it was meaning it might have been in a Million Dollars . Just give us a range. Looks like a million a year. Like a million a year. You have to keep the pipeline full. People always want to be the next champion. I am always looking for new talent in terms of appreciation but also for ideas and inspiration. Due it the top guys now are tom shargh, nikki brusco. Another guy was just in sydney. He has really come into his own. Still playing video games. People will ultimately challenge you. We are working on a mobile game. We are working on a game from all of devices. We have never gone exclusively that direction yet. Im excited, from the amount of time that people are spending on their phones and tablets playing games, we have never had our own game in that space. Three and a half million followers on twitter. Is that considered a good thing for you, tony . When you get three and half Million People doing anything, i love to share what im doing but also stuff that is outside of just my personal world. It is a great way to communicate, to be honest. It is the best focus group ive ever had. Is that we use it for, to check out what is working and what is not . You can measure the direct financial benefit of twitter. I have not been able to measure that and that is not why i got into it. I do not concern myself that much. I have given speeches about social networking. I like to do fun stuff. I hide stuff all over the world and just tweet out of the clues as to where it is. Skateboards and other products. When will you be putting this out . This is on the skateboard treasure hunt. This is the 17th. Maybe this is just in time for the easter eggroll on the lawn. Im about two blocks from the white house. Tell us about your experience in entering the nations capital. There is some celebrity athletes to talk about fatherhood and i went to the white house so i brought my skateboard. Mostly because whenever i travel without my skateboard, everybody asks me where it is. I just brought it for good measure and i found myself in a hallway alone and realized i could skate down the hallway and get a photo of it. It sparked some controversy. People thought i was disrespecting the white house. I was doing the actual thing that brought me there. I felt like i was honoring it in some way. Lets say that you can date for down the hall from the white house. What about in the summer olympics, would you like to do that . I might be past my prime is a professional in terms of competing. , i think the olympics will benefit as much as skateboarding will benefit from being in there because they dont have thatly affected by any changes. We will get some details. This is taking stock from washington, d. C. Im here to take part of a defense summit. Now, virginia, virginia economist. Virginia collected 57 million. Tummy but the proposal by chuck hagel in his defense proposed budget. I take three things away. For the next fiscal year, for the next calendar year, i am concerned that he has put forward starting a debate around some of the pay, retirements, tricare, commissaries, and what is so challenging about that, it would appear that if somehow they are getting singled out ahead of the rest of us and we have not been willing to take on the more major entitlement reforms that i think the country desperately needs. From a virginia standpoint. Even if they are not taking major cuts this year when the dreaded sequestration comes back in fiscal year 16, all of these things will be up for grabs. It reinforces the issue that i think is the most important issue we have to still grapple with. We have continued to kick the can on the need for the grand bargain or the gang of six or Simpson Bowles. Frankly, we havent done that yet and we will see with sequestration cuts coming back in place that if we dont do that, such is the jerk on the ciccone in nature which will do to our defense. Is it realistic that anything else will come out of this debate over the Defense Budget when you are looking at midterm elections. I think the budget will change clearly, those of us in congress will weigh in. People were highfiving the fact that we would not do a shutdown, that is great. We have about an 1824 month window. We have punted on the ultimate issues which are driving the deficit with 17 trillion in debt. That is a failure on the democratic side and i am a democrat. They look at tax reform that will not only simplify the tax code. This is to simply pay our bills. Lets talk about bills that specifically the kind that get printed. I must and the new chair is scheduled to testify tomorrow. What we will hear from her is a projection of the continues to recover. Frankly, the fact that we have moved from washington being net negative on the economic recovery, maybe the neutral. That can be a positive aspect. A number of members will press on when we will see some additional relaxation and quantitative easing. Is that what youre going to ask . Are those the questions youll ask . By the time they get down to me, im sure that they will be asked. One of the areas that i want to highlight is one of the coming fiscal crisis that we have to get ahead of her. We have now had a true billion dollars in student debt that exceeds credit card debt. We are starting to see the price diminish state and the federal support. With the Rising College costs, we bought that off with debt. That is coming to an end. I would like to get some more comments on that subject. We look forward to that. I want to thank you very much, senator mark warner, democrat from virginia. Coming up on taking stock, jcpenney reported their first courtly profit in two years. What does that mean for the retailer . We will look at shopping on taking stock. Jcpenney posting its first quarterly profit in two years. We want to bring in k he was joining us from new york. She is a board member of fifth and pacific, a Company Formerly known as kay koplovitz, a pleasure to have you with us. You have some details on their results. What do you think of their progress . I think they are making some rugrats. It really takes a long time to turn around the company that has slipped to the degree that they have in terms of the Customer Base and their sales. I think they are on their way and making some changes. As they said, it will be slow growth. They have a turnaround plan for the next 35 years and i think they are on that plan. What would it take to get them shopping at a jcpenney. I think they have some lovely brands. They have a former brand of hours, liz claiborne. Bring you up to date on that. It is now known as the company. Jcpenney i think it is really just getting the customer back. They are doing that. It just takes time once people have sort of left the store. It takes time to get them back. Talk about Abercrombie Fitch. , talk about the Abercrombie Fitch brand. I think it is a recalibration of not only the number of stores and the customers that they are serving. This is a fairly fickle one. You have to really work hard to get that customer back. That is where there challenges. Do you think that they are going do you think that they are going to have an initial Public Offering for j. Crew . That isnt offering for them. Theyre are doing well as a brand. This is brought privately. They are bringing some changes on their own. A little bit easier to do in a private company than a public company. They have had a turnaround. That is very difficult. I think they j. Crew is going to come back stronger. I want to thank you very much. Coming up, you will hear the future. We will speak with William Cohen next. This is taking stock on bloomberg. For a look at the market moving headlines, i want to go to olivia sterns. Purchases of new homes rose unexpectedly during the month of january. It increased 9. 6 to the highest level in five years. This indicates strength in the industry. One company aided by housing, this posted a fourthquarter profit gain. This is a housing rebound. The secondlargest Home Improvement is announcing plans to buy back 5 billion worth of shares. Paula deen is heading back into the kitchen. She opened her first Restaurant Center scandal in which she made racial remarks. They called the family kitchen it will cost 25 million to build. Thanks very much, olivia sterns. This is taking stock from washington, d. C. I am pimm fox. Chuck hagel has sent a proposal. William served as secretary of defense William Cohen served as the secretary of defense under william clinton. He also served in the house of representatives. Toning us now to discuss the state of the military and the state of politics. You get that money, you figure out how to spend it. What is your take on the budget. It is the devil made me do it. The congress of the u. S. Has mandated that the Defense Department take a half 1 trillion out of its spending programs. Chuck hagel is now fixed on the problem. He has come up with a proposal to cut back on the number of personnel and that is where you get the quickest spin down in taking money out of personnel because that is where you have a very high costs involved. He is reducing the size of the military by some 70,000. Some 30,000 out of the marines. He is cutting some old systems, retiring them and putting more money into new systems. If congress doesnt like it and congress controls the purse strings, the president proposes, congress proposes. Congress will have to decide do we propose more money or do we have a different balance in keeping some of the older systems, some of the more heavy programs that we have, or do we go with the threats of the future . Chuck hagel has said my Intelligence Community tells me that these are the likely threats. We want to shape our forces in the way to meet those threats most successfully. We are moving closer and closer to net centric warfare. This question becomes, what happens if those get disrupted . So, you have hacking taking place in some the most expensive systems. The question becomes has reduced the size of our force going from right now, 520 thousand in the army, activeduty, down to 400 and 50 is a proposal. You going and taking that. Is that too far . In 2016, we will get down to 420 thousand. Now youre getting to the level where there is a plan b but you will not have the kind of forces you will need the numbers to carry that off . Yes proposed a balanced approach. I think you will run into opposition. Is that going to be for political consumption because there are constituents involved . Where there have to be some independent base closing commissions as we have already had which takes the details out of the hands of congress . There is another base closure. I think is important that they do so. The question is, if you are carrying all of this excess capacity and you are paying for it even though we will not be relevant to the future, if we have them, we are really squandering taxpayer money. Either you pay more money, you say you want a bigger force and are willing to pay for it, not put the tax burden on our kids meaning we are willing to pay for it by taxing ourselves to pay for it and not simply borrowing the money. We have been borrowing from our children or you and i were growing up. The parents used to borrow for us and now they are borrowing from us and the parents are taking away from their kid. There is an opportunity for congress to say, ok, we are serious about cutting the federal dead and that is a Serious National Security threat. If you look at the half a trillion mere adding to the national debt, summit he has to pay that. At some point and time, your kids and grandkids will not be able to pay for it. They have to look like theyre going in that direction. Heres the plan where we get to that point. So, i think that chuck hagel has come up with a proposal which is bound to be controversy over. , that is how we propose cutting it. This proposal might be taking it to about 500 billion but im told that it is not really 500 billion, it is more like 580, five hundred 90 billion. This would look like 486 billion. The president has talked about putting money on top of that for procurement purposes. That is afghanistan, basically, and some of the other hotspots that we might be called upon to go. If you are above that level, what is the possibility that this is going to get through in the form that it currently exists . It will be difficult. Congress will belly up to the bar, so to speak, saying you are mandating that we make these cuts. This is how i would do it as the secretary of defense, he is speaking. Here is my proposal, that we slimmed down the size of the force and make it lighter and more lethal. Give our troops the most Capable Military equipment in the world to make sure we are still the number one fighting force in the world. Here is how we can do that. If you list those constraints, i cant do something else. Do they change the thinking or reinforce the thinking that the budget proposes . I dont think there is any concept of the u. S. Committing any land force into the ukraine. That is one of those issues. The russians, should they be committing a land force into the ukraine . I think he will squander the 50 billion or 60 billion he spent in the olympics. This will accelerate the development of the fellow of alternative sources of energy. You will see fracking going on on steroids. We have to reduce the power of the russians that are behaving this way. The power comes to guns and gas. If we can reduce the dependence on their oil and gas, they will have less power and president cutin will not be that popular and the russian people might think there is a better way to go. Does let them rip you to know that . I think he knows that and i think he is flexing his muscles to show that he still really powerful, in the military sense at least. Basically, that system, depending upon guns and gas cannot survive in the longterm. They have got to reform their system so it is not stateowned, it is not a bunch of oligarchs and a bunch of corruption that infiltrates the entire economy. That is what is happening in the ukraine and not what happened in russia and that is what has happened in russia as well. Thank you for joining me, the former senator, congressman, secretary of defense, William Cohen. Coverage continues from washington. This is taking stock on bloomberg. My next guest is a veteran of the defense sector. He has worked in industrial stocks, prudential security, this is before establishing the Aerospace Security fund. He joins me now. Byron callan, great to have you with me. We spoke about the changes in the coming Defense Budget. If there are changes, there will be winners and losers as investors, what should we look for . I think the winners are the large defense primes which have a focus on the large programs being protected in this budget. Some have been cut. They really dont have that much consistency. There is not an easy way to look at this. There is no reason to sell your general dynamics. People knew the army is taking some cuts as they discussed. A lot of that had been discounted by the stocks, in particular, general dynamics. This is probably two or three weeks ago. What is the contract for . It is for light armored vehicles. It is being done out of the plant may have in canada. It is probably a 10 or 13 billion program with the saudis. As the big defense companies, they understand what is going, what about mergers and acquisitions . I think we will see increased merger and acquisition activity ammann not among the large primes. The department of defense is clear that they dont want to see Lockheed Martin with northrop grumman. There is clarity that has emerged with this budget. We will probably start to see more portfolio reshaping. Then the Smaller Companies from the services area, you will see more consolidation. What about Small Companies that are not necessarily thought of as being in the military industry but have services and products that can be adapted easily to military use . It has been running during being. Pbeing. You have some very interesting Enterprises LikeElon Musk Space x which developed tesla. They have been very active in the military space market. That is not a new theme, necessarily but i think it will probably be reinforced. The last point, the kinds of Human Resource services that veterans need, the bookkeeping, the payroll. That tends to fall not among the defense. You have to look at the Large Health Care providers in the u. S. Firms like accenture, ibm. They provide more services to the veterans it ministration. Thank you for joining me, byron callan. Now, to the tax fight going on in washington, d. C. Dave camp is proposing a Major Overhaul of u. S. Tax code. He wants the tax rate for corporations as well as individuals to reduce to 25 . One part of his plan is a new tax on the largest u. S. Banks. For more, im joined by frank keating, the president and the chief executive of the american bankers association. He is also the former governor of oklahoma. Lets talk a little bit about this proposal by congressman camp. Do you see any merit in what he is trying to accomplish . I think one merit is that the conversation about eliminating the deficit and in eliminating the debt has begun again. Simpson bowles was the president s creation, nothing happened. I was on the panel, a lot of excellent ideas, very similar to Simpson Bowles. He is a very capable person to talk about. I am puzzled by what he is doing. What he is proposing is a 10 surtax on joint filers who make 75,000 dollars. In the banking space, to take a trillion dollars of lending out of the economy over the next 10 years doesnt make any sense. All of these other panels and debates that we have had in a bipartisan way had made some excellent recommendations. This one is a nonstarter, at least both parties appear to say that is the case. I wish we would have a serious debate about entitlements. That is what is bankrupting the country and getting red of all the deductions and exemptions and credits that provide no economic value to the country. Do you think that this proposal by congressman camp, if you say it is dead on arrival, why did he do it . Well, he is leaving office and maybe it is a legacy statement. He is a very thoughtful person. I am puzzled by why he did not bring our panel and Simpson Bowles and take the best and brightest ideas that of those. Im sure there will be a lot of blood on the floor when you start fundamental tax reform as a national debate, a national conversation. Remember this, by the year 2025, every cent of federal tax revenue will go to medicare, medicaid, social security. That insolvency statement is looming on the horizon and it is driven by demographics. The good news, we live longer, the bad news, we live longer. To attack the saving side, the investment and the lending side to help pay makes no sense. They are creating jobs and opportunity. Thank you for joining us, frank keating. The president and chief executive of the american bankers association. I will tell you why apple is still the worlds top brand. Can the blackberry brand make a comeback . Were are joined by that Technology Analyst for bgc partners. We are joined by the global chief executive of interbrand, jez frampton. They work in every industry including automotive, beauty care, inking. What is the brand value of blackberry. What about the brand very . There has been discussion about applying the multiple to the messaging portion of blackberry. The connotations associated with blackberry is one of a company that are struggling to turn themselves around and to find their niche. Well, is blackberry really on the way to becoming like kodak or blockbuster . We know that blackberry recently appointed the chief executive. He had something to say about the prospects of the company. He says they can rebuild the firm. I take that the direction that they are going in might get a sense of their future. This is especially in government and being a solution provider. This plays well to their historical sense and is a wise place for them to play in the future. It dropped off of our top 100 list. If they do focus, that is the thing that will be required. This could be a brand focused, very much on the business into price space and playing on its virtues like very good security. Lets talk about who is at the very top of the list. What makes apple so fabulous . There are three things that we look at when we value brands. One of which is how much money you make and where you make it . The second things are more to do with the degree to which it encourages you to choose. The brand is a major part of the reason why we choose their products. They dont necessarily have the individual operations, the individual devices. The ipod was never the best mp3 on the market. What they do is bring together everything in a way which is easy and pleasurable to use. As a brand, it is extremely desirable. Is a big part of the choice. The other thing is how long people are liable to choose it into the future. Apple has a very strong brand. Apple as a strong brand, does it affect the stock . If you look out at apple and blackberry and you see the performance of the two stocks, you would think, if i told you that one is up north of 30 and the other is down eight percent, you would not think about apple being down for the year. The reality is that they are number one. This is a problem with the stock. There is very little room for the company to go. You can only maintain a position and ultimately fall back. I want to thank you very much. Thanks for taking stock