International franchise. Lets get headlines from carol massar. Apple out with its earnings. Quarterly profit rose to 7. 75 billion. The jump in iphone sales making up for the drop in ipads. Microsoft out with its earnings after the close. Profits fell shy of estimates. Half it down by the acquisition of nokias handset business. And herbalife shares rise getting more than 25 as bill ackman failed to convince investors there was fraud. Cory johnson joins us from san francisco. Lets go through microsoft. How did the Company Performed during the quarter . Gross margins slipped but we have seen that going on for the past couple of months. We were talking about the surface. I was just asking. 409 million spent. Somebody out there is buying a lot of surfaces. Maybe validating the surface team we will file later. How much . 409 million. A lot of money to develop things like the surface and the xbox and a lot of software. Talk about the profit margins. They are declining. As the business shifts to a different kind of business inclusive of more hardware and phones and xboxs, it is 67. 5 . The lowest gross margin in my model that goes back a decade. It could be the lowest ever. It took a dramatic change in the kind of Business Microsoft is but the Company Still throwing off tremendous profit and it will can it continue to do so. They have promised to deliver. They deferred that revenue, it is coming but not yet. I wanted to bring in our guest. I want you to tell us about microsoft and its effort to get mobile users through nokia. It did not seem to work out the way they planned. Microsoft missed the boat by saying they missed the entire mobile revolution. They should have given it away and competed with android. They will have three billion more people coming online and using android. Not apple, not microsoft. This is the battle that microsoft lost. They are struggling. It is not an easy battle. Cory, compare that to what is going on at apple. They seem to be winning the war. More iphones, 35 million of them. 13 yearoveryear rise. They have a new product on the way and a bigger phone as well. It could come out soon. They sold 35. 2 million iphones, a big rise in the yearoveryear basis. There were interesting other things going on in terms of where we saw growth. Macintosh unit sales up. We are seeing the growth in the macintosh business possibly because of the ipad and iphone thatis helping it bring along sales in ways we have not seen. There is a big rise in sales. David, tell us about apple and lets start off with the mac business. It is great to see the mac business growing with that halo effect of people saying it. Maybe that is too strong but people are getting their heads are on the concept they want to use devices in the same ecosystem. If they have an iphone it makes a lot of sense to have a mac. Vivek, 37 billion in sales for the last three months and then they take nearly 8 billion of that and put it in their pocket. Have you seen a company like this . Apple is amazing. If apple does not come out with the next new big thing it will be in trouble. I give them another year of beautiful growth and amazing success. Unless they come up with the next trick they will get eaten away by the lower end of the market. You can buy smartphones for 50. The poor are going to android. Microsoft is squeezed out. Now you have the two ends winning. Cory, go ahead. The average selling price of an iphone was 561 dollars. That is the lowest asp apple has had with the iphone. There is a blended revenue. It is lower than ever. We will see what happens with the next device. What asps are like. They are letting the price slide little bit and i think they recognize they would rather have lets call it 30 market share and seven percent of the profits. The android with 7 market share. David, turn your attention to the ipad and the ipad mini. Apple released the ipad and ipad mini almost a year ago. We will see updates to that coming out. They sold ipad units were down yearoveryear but are we going to see that increase, maybe as they add touch id to it and that becomes part of the ecosystem. Iphone sales going up and with larger screen iphones perhaps being the next thing, the highend Android Market is dominated by larger screen phones or smaller tablets. Will a larger iphone cut more into sales . Possibly. It will cut into the higher end android sales and not just here but in those emerging markets in china. That is what you will see is this cannibalization. Vivek, pick up on apple and china. Particularly chinas government and claims that apples system may not be exactly conciliatory to the chinese legal system. China is doing everything they can to block apple and block western companies. They are rigging the deck against these companies. Apple manufactures in china. If i were tim cook i would accelerate the return of manufacturing to the united states. China will try to keep them out of the market. Last point to you. Apple users versus Android Users. Is it a common theme that apple users spend money whereas Android Users do not . That is what we are seeing. There was an interesting thing in the eu where google could not call apps free anymore or nobody can. Inapp purchases cannot be free. It is what they do and they do not just spend money on the apps, they spend on the ecosystem. It is all right there. Ecosystem, apple. How much is it worth to them to maintain that close system . They want to control the experience and keep the customer and we had Ryan Marshall who is a good analyst on wall street. A good analyst who does good work and brian was telling us the story of how he was standing in line ready to switch to a Samsung Galaxy and he thought my photos are on here, my apps are here. He stuck with what he has got. You can see that working through the business. I want to throw two numbers out to you. Apple has sold 225 million ipads. Meanwhile they have sold 551 million iphones sold since inception. An amazing number of product sold for very high price. We can count three of them tonight i am guessing. Thank you very much, cory johnson. My thanks also to David Hamilton and vivek wadhwa. We have details on how bill ackman failed to convince investors that herbalife is a fraud. Later, i will talk with dee snider. His latest project involves shakespeare, puppets, and lots of violence. That is next. This is taking stock i am pimm fox. Breaking news on the downed plane and peter cook has an update. For the First Time Since the crash officials are providing more details on the crash site itself and what took place. What theyre saying is they are confident they detected the Missile Launch from a rebel held area in the eastern ukraine. They believe that missile did take down the plane. It is the most likely scenario they have come up with. They are not saying with definitive proof they knew who fired the missile and all the circumstances surrounding it. It is consistent with what we have heard from the president and members of the administration and circumstantial evidence from investigators on the scene and International Investigators looking into the scene. According to american intelligence officials, they believe that the damage is consistent. The damage they have seen is consistent with a surfacetoair missile. Not the kind of damage you would sustain from an air to air missile from another plane. They are confident they detected the Missile Launch and the ukrainians had no missiles in the vicinity. That could have taken out this plane. American intelligence officials talking for the first time providing details on the intelligence surrounding the downing of mh17. More details on the circumstantial case. This week bill ackman said he would reveal enronlike fraud at herbalife. He billed it as the most important presentation of his career. He focused on the nutrition clubs. His presentation seemed to fail to really influence the market or convince investors of fraud at herbalife. The stock gained 25 during the day. Stephanie ruhle is here with more. Bill ackman said it will be an epic takedown. He compared the big reveal today to something similar to what we saw from enron. That may be the case six months from now when the ftc takes his case and looks at this but today, stocks up 25 . Many people are saying it was an epic takedown, maybe it was an epic fail. I had a chance to speak to the cfo of herbalife. He had a long day and it seems he has gotten more relaxed as the day went on. I had to say why dont you sue bill ackman . Heres what he said. It is an option. I think your case gets stronger every day. What stopped you between when this started 18 months ago to today, with everything that he says, why not stop him with a lawsuit . We may. The stocks performed well and the company has performed well. It is something that we sent about frequently and i will leave it to the lawyers. It is a possibility. They have talked about it, if youre the cfo of that company he is spending the majority of his time defending himself against bill ackman, why would you not sue him . Maybe they do not want to face discovery. They have to air their dirty laundry and they may not want to do that. What about the idea that they can sue bill ackman for defamation of character . That is what i am saying they could or should sue them for, for slanderous remarks. They are considering it. You have to wonder why they have not. Maybe because they didnt want to put themselves out there where bill will have the chance to ask questions. This is an extraordinary story that does not seem to want to end. While bill may not prove in the company is illegal, there are more out there saying it is a sleazy business but it might not mean illegal. Is there any chance that carl icahn and those that were backing herbalife will now respond . Who knows . It is being done in public. We have not seen one single other bigtime investor from the minute bill ackman did this presentation a year and a half ago till today. Not one other name investor has also gone short herbalife. It is interesting, is a full reality tv, almost real housewives of the hedge Fund Managers. Hedge Fund Managers are struggling. Why is no one else on his side . And the stock goes up 25 . Thank you. Coming up, turning the traditional fleamarket into a hub of economic development. Food vendors, craftsman, and the cofounders. Twisted sisters friend mandy snyder working on a unique shakespearean production using puppets. We will find out more next on taking stock. This is taking stock on bloomberg. I am pimm fox. New Yorks Brooklyn flea is a juggernaut. It was founded by a former political speech writer. Thanks for being here. What makes Brooklyn Flea different from other flea markets . When we started, we realized up front that to make Something Special we would have to curate the selection of vendors. When we announced in the fall of 2007 on my blog, we had within 48 hours, 100 vendors respond. We knew we were onto something. We had hundreds and hundreds of vendors applying for the launch and we would look through and figure out what was best and limit the number of vendors in each category and try to create this perfect balance. That was a novel approach. We happened to be in the center of the creative world so we had all the stuff to pick from. Eric denby, described the logistical challenges of putting on a fleamarket. We were not junior fleamarket operators. We had not assisted anyone who had run a fleamarket. We had started from scratch. We had gone to college. Did anyone think you were crazy doing this . I had a perfectly nice career as a journalist and speechwriter and consulting and that sort of thing. That was the straw. My mother and family all raised in brooklyn not far from where i live now. Jonathan was born and raised in new york. I was writing speeches for the borough president of brooklyn. We had this early sense if you go back to the fall of 2007, brooklyn was not an international brand. We had an intuitive sense that there could be a gathering space going on in brooklyn and we had some sticks on the ground and cones and pylons all over the yard. We went through a lot of iterations of how to organize the market. Now we are a more of a well oiled machine. You also have a lot of participation. Give us an idea of the scale. 300 vendors in the regular rotation. We have a food market that we launched in 2011. The other fortuitous decision we made early on was to include food in the beginning in 2008 and the food became probably the most popular piece of the fleamarket in some ways and we spun it off in 2011. If you include the food vendors and fleamarket vendors we have 300 on any given weekend. Almost all of whom are local and making stuff. You have people who are dying to go. Thank you very much. This is taking stock on bloomberg. I am pimm fox. Shakespeares Titus Andronicus is being performed. 14 deaths occur onstage, including a sacrifice to the gods. Joining me now is one of the producers dee snyder. Hes the lead singer of the group twisted sister. He is here with his son shane snider who has one of the puppets in the production. You had to figure out which one is the puppet. Lets begin with the idea of doing shakespeare. How did you be connected with broadway and this particular shakespearean play . My son is a standup comic and he was asked to join this troupe and it gave him a chance to use his techniques and comedy. Quite honestly i hate , shakespeare and i love puppet shakespeare. They break the fourth wall and almost explain what is going on. A lot of it gets lost for some of us. Explain what Titus Andronicus is about. A lot of stabbing, murder. It is kill bill meets sesame street. Titus has lost 21 sons to the gods and sacrifices the queen and ruins everyones lives. What is more metal than this . No puppets are actually harmed in the presentation of this play. They come back the next night. They are all acting. There is puppet gore. We are trying to turn it on its head. You will laugh at death while having the time of your life. I like that dark sense of humor. We are trying to look at it in a whole new way. Imagine if you were when you were young person that you had the chance to see shakespeare performed by puppets. Is this something that would have attracted you to play more of those kinds of roles on broadway . One of the visions we have for puppet shakespeare is that if this thing works, we could apply this to any of shakespeares plays. If you saw puppet Titus Andronicus, six months later we could do romeo and juliet. We could send troupes to schools but for high school kids, open their eyes to shakespeare and the value by showing you through the puppets and they do explain it a little clearer what the shakespearean language does. There is something with shakespeare, there is a stigma these days. Certain people have expectations of shakespeare that we are trying to undermine. Were trying to approach it differently. You want to create something that is less formal and less structured and more conversational and anecdotal. Which they were originally. In many cases it is where people would enjoy themselves. People would come and go. There was music and eating. It was not highbrow, it was for everybody. And the puppets bring the shakespearean action down to earth and open it up. Mom and dad do not think for a second this is a kids show. As far as the business end of all this, is it expensive to put on a production . Thankfully, our overhead is pretty cheap. One of the things that we help build our brand is branded characters. When we have puppets that come back over and over again that brings down costs and shakespeare was built on a very minimalist structure. It is one set, one stage. We do not have a lot of overhead. Theater today is very expensive. They say it is not big budget but there is an angel who put six figures into this off budget production. For them it is a lot of money. Nothing by regular broadway standards. A lot of producers coming down and critics and hopefully we will take this to broadway proper. It is also home to jersey boys. What about twisted sister, any chance that will come to broadway . I wrote a holiday musical and it is launching in chicago november 4. It is the story of a struggling heavy metal band who sell their soul to the devil and find the magic of christmas instead. Maybe it will be performed by puppets in the future . Maybe. What would a puppet of your father look like . I think i was a puppet. It would look like sweetums from the muppets. It would look like me which is bizarre. See the resemblance . Especially in the eyes. They do have a musical element but it is not traditionally a Musical Forum of shakespeare. This is my son and this is his passion and his creativity. My wife and i are supportive of all our children whatever their passion is. My youngeset daughter said i do not want to sing in a band, i want to get my masters in business and i said go for it. She said, really and i said whatever makes you happy. This is what makes them happy. I am making appearances with puppets. Something i wouldve punched you if you said this to me 30 years ago. I want to thank you very much. Dee and shane snider of puppet shakespeare. I will talk to the chief executive and the owner of california vineyards. This is taking stock. I am pimm fox. If you have seen those food carts with long lines of people waiting, you have seen the halal guys. They are looking to expand nationally and internationally. We have hesham hegazy, the general manager. Thanks for being here. Lets start off by talking about how the halal guys came to be. The halal guys came to be in 1990. The founder in 1990 was a similar hotdog cart. There was so much demand for during the early 1990s. They were always asking, they have to eat halal meals so there was a question of where we could get halal meals. The founder noticed there was a huge need for halal food to be around. What makes food halal . This is a good question. It food permitted under islamic guidelines. Make sure that all the blood comes out of the chicken. Once the meat is halal it is up to us how to cook it and prepare it. Where are you in terms of the scale of the business . So far we have five locations. The main one which is the one across the hilton. Always have a long line. The first one which is there from 7 a. M. Until 5 30. During the nights, the line is longer than daytime. The second one which is across the street from 6th avenue. We have the southeast corner which is day and night and we have one by 7th avenue and 53rd street. They are all over midtown. Tell us about the restaurant. You decided to go from the cart to having restaurants. It is not just overnight. Our customer is being demanding for years for us to open up indoors where they could sit and enjoy. The atmosphere people come from all over need to sit and we were waiting for the right time to make the right move. We have been approached many times and many years with a Franchise Development approaching us. Will that happen now . If you go back to the New York Times june 15, there was a great article. We made it in the International Franchise festival on june 19. We are franchising. Thank you. Hesham hegazy is the general manager of the halal guys. We have some food earnings to talk about. Mcdonalds, the restaurant chain saw store sales fall 1. 5 . Stocks slid as much as 2. 5 . The biggest intraday drop in a year. Cocacola, the Worlds LargestBeverage Company reported secondquarter sales that missed analyst estimates. Seeing sluggish demand for drinks such as juice and diet coke in north america. Electronic arts reported earnings that beat analyst estimates. The company delayed the release of battlefield hardline until next year. That game was expected to be a major holiday title this season. We had Juniper Networks giving a forecast of thirdquarter revenue that fell short of estimates. That is a look at the top headlines on this tuesday. Back to you. Thank you. We spoke about food, lets speak about wine. Silver oak cellars can help you with wine. The vineyard has been producing its signature Cabernet Sauvignon and is unveiling a new wine. Joined now by the chief executive officer and president. Tell us the story of silver oak. We started in 1972. My father was a colorado entrepreneur and went out to the napa valley at the request of a friend and ended up meeting his winemaking partner and they started it in a small dairy barn. In 1972, the price per acre was a lot less than it was now. It was one percent of what it is today. Would you go into the business again today if you had the same challenges . It is difficult to get into a Business Today and make a go of it. We have been fortunate. We have been at it for 42 years. Economic reality of paying land costs today, the cost of entry has gotten very high. And made it challenging to start today. That is the Cabernet Sauvignon. We make two wines. We are next weekend we will be releasing a new wine. We always love unveiling a new wine and getting into someones glass. Who is putting this together . Daniel barron. This spring, we hired daniels replacement. His name is nate weiss. The harvest will not come until the end of the summer but how are the grapes looking . We have had some drought, it is more affecting the people. From a grape growing standpoint we had a warm spring and a warm summer but the last three weeks have been very temperate. Ideal conditions, 83 during the day and 55 at night. That is what we love to see to have the grapes be happy. Where are you seeing demand coming from . Having gone through the recession and coming out of that, demand is strong. Discretionary spending is up and people are going out to restaurants and drinking fine wines and enjoying themselves a little bit more. The pennypinching is pulling back and it is a fine time for wines. There are so many different state laws and regulations. You can buy wines at most grocery stores. How do you deal with that is to with that . Accessibility has changed. We have gone from 13 states where we could ship wines to 33 states. Massachusetts is about to open up. Also the distribution network. The way that we get wine into restaurants or peoples glasses has opened up and made great wines available for more people. Thank you for spending time here. The ceo of silver oak cellars. Thanks to banksy, we will examine the economics attached to public art. This is taking stock. This is taking stock. I am pimm fox. Street art enjoying a big moment. We are bringing in evan pricco from juxtapoze magazine. What is street art . There are different definitions. It is not graffiti in the traditional sense. It is not traditional public art as a city planner might define public art. It is sometimes illegal and done by people who are not necessarily the traditional Gallery Artists and it tends to be more urban in nature. It is organic meaning it grows up from the street. It appears one day and you show up and you would see that someone has painted an entire mural. Theres a little bit of that but the social media has allowed street artists to become their own marketing agents in a way. They have had a chance to become famous beyond the typical city where theyre doing their work. It tends to put a spotlight on the artwork in different ways. Instagram and twitter have changed the way people do this. Does it also drive people to a particular location . When banksy did his show, he generated an extra 10 Million Pounds for the city. People were coming from around the world to see the art. It is changing the way people travel to see art and traveling changing the way that people want to see art. It is not taking a wall down and putting it in your house. There is the allure of seeing the art. Who are upandcoming artists . Banksy nominated an award. Shepard faireys poster was traded around social media. There is no question that was a helpful moment for obamas campaign. Tell people about the magazine and what it is aiming to do. It is covering the best in underground and prevailing culture that is going on in the world. Not necessarily an art form or the other art publications. This is not just taking place in the u. S. Or britain. It is taking place all over the world. That is the draw of it. You can be in a small village and these murals could be going up and people can see it on social media. They do not necessarily have to be there but they can also want to go there. Are there copyright issues associated with this, you take a picture of someones outdoor art and use it for your own purposes . There is a lot of questions about that. That is an evolving conversation. Are there certain cities that are more favorable for street art than others . Philadelphia has a wonderful arts program. Los angeles is great. You can always look at it in juxtapoz. Thanks for taking stock. Good night