>> let's look at how we finished the day on wall street. it was a recipe for weakness. the dow finishing down about 26 points, nasdaq off by 15, and the s&p 500 backing further away from the strong resistance point of 1360. sitting there at 1357. >> bob pisani is our eye on the floor of the new york stock exchange here. as we wait for these big numbers from meg whitman and company. >> and boston beer, which by the way, has been a big outperformer over hewlett-packard on the year. the committee adopted the draft law in the private sector, hopefully the parliament might vote on it tomorrow. the market doesn't seem to have energy around this deal. now that we've got it, so what, let's move on. >> you knew that would happen. >> s&p 500, bottom line here, we're up about 8% on the year. last few days, this is the first day in four it's topped out. there hasn't been a lot of strong volume or momentum, really, in several days on that. a number of sectors are starting to look a little bit toppy here. here's your headlines here. let's say not a lot of energy from the greek deal, but the groups that i liked that have been the market leaders so far this year are your banks, materials, builders, haven't moved forward since then. energy stocks, oil moving forward. home builders, good news today, toll brothers reported decent numbers, 90% increase in orders year over year. that's a good sign here. sales are up for them. their orders are up. but when we have existing home sales for january, the sales were up but the prices are still dropping. that's a big concern. one-third of all the sales that are made are not closing either because the appraisals are not right or they can't get a mortgage. there you see toll brothers, which had decent but not great reports out, moving to the down side. these stocks have all, as i said, topped out several days ago. home buying season for the spring, not good enough. financials, another group topped out several days ago. really haven't been doing much today. they were noticeably weaker. this is unusual declines. we haven't seen these kinds of declines in quite a while. we also want to look at the exploration production group. oil has been moving up. and i think perhaps as importantly, guys, natural gas is finally bottomed out. it's not dropping anymore. it's been fairly stable for the last month or so. >> okay. thanks very much, bob. let's look at some of the business headlines today. microsoft says that motorola is not playing fair. microsoft lodged a formal complaint with the european union trust regulators saying motorola is trying to block consoles that run microsoft softwsof softwa software. when the eu cleared the takeover, it expressed concerns about motorola's aggressive use against competitors. apple just last week launched a similar complaint against motorola. nokia is working with microsoft, preparing to unveil a cheaper smartphone using windows phone software. next week it will unveil the lumia 610, which at&t will sell in the united states. microsoft's share of the smartphone market has been falling, though. higher prices of phones using its software. check out this diamond in the rough. found in western australia. a rare argyle pink jubilee diamond, the biggest one ever uncovered at the argyle mine, weighing in at almost 13 carats. it will go through ten days of cutting and polishing. once it's sparkling, it will go on a world tour later on this year. it will go up for sale, and could bring in as much as $1 million. a carat. >> how would you like to be the guy having to cut that diamond, huh? >> you would have shaky hands. don't drink too much coffee. >> we're moments away from hewlett-packard's first-quarter earnings results. the world's largest pc maker has been, as you know, down a tough road lately. meg whitman. the stock has been punished since then. let's turn to the panel of experts joining us right now, dan morgan, portfolio manager, joining me on the floor of the new york stock exchange, lewis. and jon fortt is standing by to break down the numbers when they do come in. lewis, you have a neutral rating on hewlett-packard. >> they already signaled almost every area of their business is going to be weak, whether the pcs, printing, services. their expectations are down so low, that we're not expecting much. it's really a second-half story. >> the expectations are so low, that presents the biggest possibility of an upside surprise, doesn't it? >> it does. we also think when you look to next quarter, the april quarter, that this situation really doesn't get any better there. so we're going to sit on the sidelines and wait. >> dan, what are your expectations? obviously meg whitman has her hands full now, right? >> it will be really challenging. if you look in the last quarter that's closing out in terms of pc unit volume, you know, apple sold almost as many ipads, actually a little more ipads than hp did. so it will be interesting to see how that works into this number. >> are we just getting the numbers? >> we are. i'm hearing 92 cents, gang. 92, the expectation was 87. jon, what have you got there? >> i'm seeing $30 billion even in revenue. i'm also seeing that psg, the pc group revenue is down 15% year over year. but i really need to dig in a little bit more here to break out the segment numbers. it looks like the server business is at about $8.6 billion. that looks like a good number based on how you would expect that business to hold up. i want to look more at ipg and some of the other businesses, bill. >> do that, as the stock comes off a low here. dug a hole at the beginning of the after-hours session, now down 2.5%. lewis, initial thoughts here? the bottom line number is a beat so far it looks like. >> sure. i think they brought the expectations down tremendously. i think what the investor wants to see is top line growth again. you can cut a lot of businesses in and get margins higher. until you grow revenue again, i think you'll get a lot of investors waiting on the sideline. >> dan, what kind of pc market do you think they're going to be outlining? >> the message from del was, this is a sluggish pc market. >> it's interesting, because lanova had a great quarter in laptops, and what was going on in china, up 35%. so expectations for this year i think are around 10%, 11%. growth about 3% last year in terms of pc unit volume. we know the public sector is tough. we know the consumer is tough. but you've got other things that could create a catalyst in the corporate market. we'll just have to see what the ceo says going forward with hp in that space. >> what's your biggest concern on hewlett right now? >> it goes back to services. we thought they were doing very well with the dds a few years ago. kathy and the cfo talked about this is a multi-year turn-around. >> you got more, jon fortt? >> i do. interesting numbers here. so it looks like psg was at $8.87 billion. ipg, the printing group, was at $6.2 billion. what's interesting here to me is the 12.2% operating margin, and the hardware sales being down 5%. i've seen some concerns in the analyst community around the printing business. it will be interesting to see how supplies held up. also, the software business, close to $1 billion in sales. which is nice. given some of the acquisitions, that's what you would hope to see. but it's nice seeing that figure. >> dan, any numbers there, ringing a bell for you? >> i think the key here is, you know, how are they doing, as you mentioned before, service and software. those are the big high margin spaces, earnings about 39% margin, business for them. we know pcs is the lowest margin business for them. obviously hp's goal would be to drive the gross margin, focusing on the businesses that have the highest margin area. based on so far, it's hard to tell, but it looks like kind of an okay report. >> lew, is there any other sector you would prefer over that company? >> we've had a buy rating on enc and ibm. actually i've talked less about the macro economy. >> you know, the thing meg whitman has to do is decide what the structure of this company is going to be, the identity of the company. does she go to the dell computer or ibm route? >> i think the gravity is going to the ibm route. you have to get higher business in the services. >> jon fortt, you got something? >> a little bit more on the consumer business. the consumer client business, basically consumer pcs, was down 25%. consumer printers was down 15%. those are some pretty big numbers to be down. so it will be interesting, again, the impact in the coming quarters, on the supply, the ink jet supply business, which is where a lot of the profitability is, all of the profitability business is in the consumer printing business, and what they plan to do about the big drop-off in consumer pcs. >> the stock acts a lot like dell computer did last night after the report. we'll watch what it does for the sentiment tomorrow. thank you dan, and luma, jon, let us know if there's any more news on this. be sure to tune in tomorrow. david favor will be interviewing meg whitman at 9:00 a.m. eastern time. look forward to that very much here. >> indeed. coming up on the "closing bell," what president obama's cut in corporate taxes could mean for your business. maybe even your paycheck. plus, the iranian impact on oil. >> i'm sharon epperson at the nymex. globally oil prices are at a nine-month high. we'll break it down coming up on the "closing bell." >> and later, energy 21 stock is up about 20% this year alone. we're going to talk to the head of the oil producer about where his company goes from here. and before we head to the break, here are highlights from other guests that appeared today on cnbc. >> we've been up like 36 sessions without a 1% down side day in the history of that is pretty constructive of the 12 times it's occurred in the past, stocks, all but one of those occurrences were higher by year end. >> now as we're approaching the highs, it really is telling us this market probably can sort of run for another two or three years further. >> we could have 10% to 15% upside market for the next two years. seeing the 13 1/2 times earnings move to 14 1/2 to 15 times, at the same time that ic corporate profit growth are around 6% to 8%. >> i just think that the market has had a great move since october, november. it will give us a chance to get some as expected news at the end of the month on production as opposed to the good streak that we've been on. looking for a better place to put your cash? here's one you may not have thought of: fidelity. now you don't have to go to a bank to get the things you want from a bank. like no-fee atms -- all over the world. free checkwriting and mobile deposits. now, depositing a check is as easy as taking a picture. free online bill payments. a highly acclaimed credit card with 2% cash back into your fidelity account. open a fidelity cash management account today and discover another reason serious investors are choosing fidelity. welcome back. stoc stocks, major markets have been surging since the march of '09 lows. here's a look at how far we've come in that time. nasdaq and s&p up over 100% while the dow is up over 90%. we're just wondering whether that momentum can continue, right? >> that is the question. or is the rally just kind of running out of steam. it certainly is today. steve is the manager of the compass emp, also joining us with the conversation is maggie partell from wells fargo. the way it goes on the show, it's always ladies first. maggie, what's your call on that? are we running out of steam? are we going to have a major pullback here or just recouping our strength for bigger rallies? >> well, i do think we're due for a correction, especially because some of the groups that have led into this year have started to roll over. energy's a little strong, it's the exception. but then you have iran in the background. i think this would be a nice time to have our pause in a correction. and then i think we'll have a strong second half of the year. >> why? why second-half strength? >> because i think we're going to see surprises in u.s. strength. i think developing markets are going to reaccelerate after mid-year. inflation's low. profit margins have maintained at very high levels. and so with interest rates very low, that's a very attractive back drop for stocks to do better. >> steven, it says you have a slightly positive outlook. what does that mean? >> the u.s. market is definitely trending up. we are long the u.s. stock market. but a lot of it really depends on what happens in europe. and does the debt crisis still come to the forefront. we're still spending significantly more money than our revenue in this country. but a lot of it depends on europe. we have a slow growth economy. i do not expect significant growth from the stock market. we've pretty much gotten what we'll most likely get for the entire year, in the first two months of the year. but europe has a significant impact later on this year, to what the u.s. stock market does. >> the feeling is that we've had this rally lately, because we've gotten past the point where the worst case scenario doesn't appear it's going to happen. we're not going to have a double-dip recession, job growth is starting to perk up a little bit here. you seem to be discounting that. >> you've got to ups, we may have down to unemployment of 8.3%, but underemployment is still over 15%. europe is still over 10%. >> right. >> and so, you know -- >> but none of that seems to matter to bill's point, because the fed is here and providing accommodation of stimulus for the market. >> well, that's true. but you've got to remember, we've got slow growth. we're only expecting about a percent and a half or 2% in growth in gdp this year. >> maggie, if you believe there's going to be a second half strong rally in the market, how would you position yourself for that? how do you catch that updraft? >> i think you have to look at the economically sensitive, the cyclicals, energy, industrial, capital goods, technology. those sectors that are the ones people still have a lot of fear about. because i think the recovery's going to be very slow. >> okay. steven, are you buying anything here? >> i do believe a recovery will be very, very slow. but what we see in the last couple of months, it's a lot of hype. we haven't had a lot of bad news. we've got to remember, in the middle of last year, we still had slow growth, but there was a lot of debt issues coming to the forefront. it just went away in terms of what everybody's talking about. but it's still there. and it's getting worse. we have to account for that. >> thank you both for your thoughtful conclusions on the market here. we're keeping an eye on hewlett-packard in the after-hours here, as jon fortt's parsing through the earnings report. you've got guidance now from meg whitman and company. what's it look like? >> yes, indeed. forgot to mention that before, bill. they guided to a mid point of between 90 and 91 cents. that's bad news, because the street was looking for 95 cents in nongap eps for the coming quarter. meg whitman said they'll only give eps guidance, not revenue. but this is not the guidance people wanted to hear. the printing and supplies revenue down, especially in consumer and also consumer pc revenue down. we'll have to look for explanation on whether they expect that to continue in the current quarter, and that's why this guidance is so low. >> the stock down 1.5% now. david favor with meg whitman the ceo tomorrow on "squawk on the street" at 9:00 eastern time right here on cnbc. >> just ahead, getting defensive when it comes to iran. >> i'm jane wells in los angeles. not a single missile has been fired yet, but if israel attacks iran, it will impact the defense industry. later on the "closing bell," we ask the question, can anyone predict that impact now. >>ment obama's proposed corporate tax cuts, everything they're cracked up to be? abram joins us with his report coming up in the "closing bell." stay with us. welcome back. as you've heard today, the white house is proposing big changes to the nation's corporate taxes to including closing loopholes and lowering the overall tax rate. we've been crunching numbers. just how much new tax revenue would this plan raise? >> bill, i asked that exact question of treasury secretary tim geithner earlier today. he didn't want to put a specific number on it. he said it depends how this thing ultimately shakes out. behind the scenes, senior administration officials tell us that an estimate of about $250 billion over ten years is probably a good number to look at. so this is raising overall tax revenue that would come into the u.s. treasury, even though they're talking about lowering that corporate rate from as high as 35% down to 28%, or 25% for manufacturing. >> now, the president really was singling out manufacturing when he presented this plan to the public here. so what benefits would he give that sector under this plan? >> well, that's the key one, the 25% rate that would be lower than what everybody else in corporate america is paying under the president's plan. they also have some r & d credits manufacturing to bring some of the manufacturing capacity back into the united states. they want to have a minimum tax for overseas revenue that would guarantee that companies have some kind of financial incentive to bring revenue and perhaps economic activity back into this country, bill. >> i haven't heard much in terms of response from corporate ceos in this country, a response to this plan. have you? >> we saw something from the business roundtable earlier today. they said that they would like to see a 25% rate, not a 28% rate. so they're holding out for what they would like. but generally speaking, corporate america has said they want the overall rate to come down. they don't mind some loophole closures. but what will happen is this will pit the loophole haves against the loophole have-nots. it's going to gouge them when it comes to tax time next year. >> thanks, ayman. >> you bet. >> here are some of the stocks we're following on the ticker right now. gunnar shares on a tear. plans to grow annual revenue by 2% to 4% over the next four years. the ceo said they will pursue to expand the revenue, it also plans to return $1.3 billion to shareholders by 2015 through dividends and a $300 million stock buyback program. intuit leaping to a record high after the tax preparer's second-quarter profit jumped by a stronger than expected 62%. raising into the price target to $65 a share from $60. currently at $60.92. as you can see, its market close was up about 6%. fourth-quarter prices blue past smec expected for garmin. surging over 9%. >> we'll take a break and come back with full team coverage of a critical story. the ripple effects from rising tensions with iran. we go to the middle east, to los angeles, and to the pits of the new york merck. >> tune in tomorrow morning for david favor's interview with hp ceo meg whitman. back in a moment. welcome back. bob pisani down on the floor of the new york stock exchange. hewlett-packard after-hours, trading down just a little bit. bottom line beat, top line a little light. it's the guidance that's the problem here. we're looking at 88 cents to 91 cents for the second quarter. analyst estimates substantially above that. better news from boston beer. sam addams the maker of that company. guidance above expectations. this company firing on all cylinders right now. elsewhere, we've seen weakness in the last several days in some key sectors here. in transports, which have been breaking down a little bit, year-to-date. materials has been topping out. that was a sector leader just until about four or five days ago. and basically it's stopped doing anything. banks, same situation. guys, back to you. >> thanks very much, bob. inspectors from the nuclear watchdog agency left iran with no satisfaction after two days of talks with that country. russia is now warning, of course, catastrophic consequences if there is a military attack on its middle eastern ally. increasing tensions have an impact on global financial markets. cnbc reporters are in place all over the world to help you understand what exactly the iranian crisis means for your money. well, we've got jane wells in los angeles, with the potential effects on defense companies. sharon epperson has the latest on the oil prices. and we start with michelle caruso-cabrera in jerusalem with what iran may be capable in terms of an attack on the shipping complex. >> israel is about 950 miles from iran. and iran is believed to have solid fueled rockets, that means they can be hidden in silos and fired very quickly. they also have missiles by all accounts, that can hit all american troops in the middle east, all over israel and parts of europe. some of the most dangerous missiles are long-range, which can be used to attack shipping in the persian gulf and straits of hormuz. the range, 125 miles. iran has small ships that practice swarming techniques. the goal would be to overwhelm the u.s. navy with speed and numbers. bashar al bassa is capable of attacking israel. then there's lebanon, also north of israel. southern lebanon is almost wholly controlled by hezbollah. hezbollah is armed and financed by iran. there are 35,000 missiles aimed at israel, and ready to go in southern lebanon. israel does have perhaps the world's most advanced form of missile defense in the world. the arrow is capable of shooting down long-range missiles including the kind that would be fired by iran. israel has also had success shooting down short-range missiles, the kind fired from gaza. that's a whole other area of concern for southern israel. now, over to jane wells who's got more on defense stocks. >> thank you, michelle. a report is out called issues which keep me awake at night. many analysts are pondering the impact if the u.s. navy guides four missiles to the mediterranean. as israel cuts its own defense spending while projecting an air of readiness. this video by israeli defense forces comes as the jerusalem post reports the military is preparing for, quote, a near shutdown in two months. in a standoff over budget cuts. israel has ordered 20 lockheed martins, but those planes are so delayed. some israelis wonder if that purchase was a mistake. it could buy more boeing f-15s to fill the gap. bill sweetman says it is way too early to see what kind of impact any war could have on defense companies. >> the conflict itself, i think most people would expect it to be fairly short. so the ability to produce weapons, the ability to resupply weapons, probably wouldn't affect the outcome very much. so it would be very much a come as you are war. the lessons you're likely to learn, usually are the ones you don't expect. because wars never go the way you expect them to. >> sweetman points the conflict in libya, which he says surprised analysts because the drones were not as effective as elsewhere, and quote, they needed more and smaller weapons. a quick look at how the top companies performed today. maybe the sector which will be impacted sooner, or like right now, is oil. sharon epperson has that story. >> that's absolutely right, jane. we're looking at a significant impact due to iran. the risk premium due to iran could be contributing as much as $15 to $20 to the global benchmark price. that, of course, is brent crude futures. let's look at where they are trading right now. they topped $123 a barrel today. the highest price since may. and we are looking at prices that are impacted by a major factor, and that is the potential closure of the strait of hormuz. the fact that iran could retaliate against the west and close that key waterway that is responsible for 20% of the world's oil supply passing through it every day, is what many traders are worried about. let's look at atime line here. when you look at brent crude prices back in late november, they were trading about $105 a barrel. that is when french president nicolas sarkozy started talking about an embargo of oil by the european union. the proposal came after the iaea issued a report noting, quote, serious concerns about iran's nuclear activities. oil prices continued rising as 2011 drew to a close after the u.s. promised sanctions targeting iran's central bank and financial sector. oil prices have jumped more than $10 since late january since iran has gone on the defensive. iran countered, threatening to close the strait of hormuz. this weekend, iran announced it's banning exports to the uk and france, and of course as you heard, the talks between iran and u.n. nuclear watchdogs have broken down. so as iranian leaders remain defiant in terms of their nuclear ambitions, we're continuing to see the price soar above $123 a barrel. and at a premium, to the nearby contracts, really underscores the immediacy of this potential threat. keep in mind as well that iran is not only a factor in the oil price, look what's happened to gasoline futures, so far this year up 16%. and this is a major reason, not the only reason, but certainly a major reason why prices at the pump are now at their highest level ever for the month of february, bill. >> sharon epperson and the rest of our team, thank you for those series of reports. we will continue our focus on the oil patch, talk about the acquisition strategy of the third largest oil producer in the gulf of mexico. has it run its course. john schiller will be our guest. we'll talk about that, and his outlook for the price of oil coming up. >> you know, bill, later on, twice the number of digital households by 2015, just three years from now. we will talk to the head of you on demand about his plans to capture a chunk of the chinese acti action. stay with us. time now for "going global" europe. >> hi, everyone. these are the stories we're watching in europe. tomorrow, a busy day for the fourth quarter results due out, analysts looking for the german bank to post a 47% jump in the net profit. will it announce more writedowns on the greek debt holdings. we'll speak to the company's cfo. also joining the lineup is the cfo of the german company. speaking exclusively to the monetary policy committee member david miles. why he's been pushing for more quantitative easing for the uk economy. tune in to cnbc world to capture all of the action overseas at cnbc world headquarters. "going global" with your money. the surging oil prices have certainly been a boon, not just to major oil producers, but small companies as well. energy 21 is currently the third largest oil producer on the gulf of mexico shelf. it operates six of the 11 largest oil fields in that part of the world. the company's been involved in a flurry of acquisitions in its few short years of existence. we want to talk about that in a cnbc exclusive with chairman and ceo john schiller. good to see you again, john. >> good to see you, bill. >> first, basic question, why is the price of oil going up right now in your view? >> i think it's basically got a short supply. about 1 million barrels a day of excess capacity. so you see the little flareups in the middle east, you'll see the world respond to them. >> you don't think it's a risk premium being built in just in case whatever happens with iran, and maybe syria, and all that? i mean, is the supply and demand ratio in the world right now fully reflected in the price of oil? >> i mean, we see brent, which is what we price off brent crude, kind of trading in $100 to $125 window. but you're going to see little flareups if something does happen in the middle east. i think with 1 million barrels of excess capacity right now, it's a razor-thin margin. it's not just the middle east. you go to nigeria, you start seeing production disruptions and you'll see impacts on the price. >> if i read you, then you think we're on the upper end of the range for brent right now? i guess smart idea since the higher priced oil right now? >> yeah, you know, it's never been this way before, but you bifurcated a way from wti in the gulf of mexico, because our refineries are primarily burning water-borne fuel. we kind of price against the same amount of the same barrels coming in on tankers. >> yeah. we highlighted all the acquisitions you most recently bought, property of exxon mobil on the gulf of mexico shelf right there. are you finished with that? where do you go from here? >> no, we're happy with where we are right now. we think we can have 10% to 15% organic growth off the assets we have. that doesn't mean we don't do another deal. we're looking for small deals all the time. but i don't see an exxon sized deal, $1 billion, $1.5 billion deal in the immediate future. >> you do see more acquisitions at some point though? >> yeah, i think you'll continue to see when the opportunities are right and oil properties become available, you'll see us go after them. they've been very good to us. we've had a lot of success on the mature oil fields that have a lot of oil left in them. >> mature oil fields, what are you doing to extract the oil that the big guys don't want to do? i mean, often with a deal like the one where you bought the properties of exxon mobil, i'm more interested to hear why they sold than i am to hear why you bought. why would they want to sell those properties to you? >> well, actually, it's pretty easy for them, bill. i call these $20 barrel, it costs us from $15 to $20 a barrel to find it. plus another $20 to bring it on production. those economics won't capture capital in a company like exxon or bp or chevron. god bless them, they have so many projects around the world, that they can do a lower finding cost in their worldwide inventory. so these properties don't end up capturing much capital as production falls off, they capture less. so it's a situation where we come behind them, have lower gna costs. we roll up our sleeves, do a lot of down and dirty greasy work, and end up getting more out of the wells. >> that's a pretty good margin, bringing it out of the ground and sending it off. 40 bucks, that's a good margin right now, isn't it. >> yeah. you know, our last quarter we were very close to $60 a barrel in ebadau. >> at some point, though, you have to believe, john, that there's going to be demand destruction if prices go high enough. where do you think those price points are? >> you know, we've read a lot of research. we obviously aren't experts on that. we try and hedge our way around it. i will tell you that, you know, hedges we're putting in place for the next couple of years kind of cap out at $135, $140 a barrel, wti. so obviously we kind of see that as an upside. and somewhere in that area, maybe as high as $150, you probably start seeing demand strength. >> if wti gets to $135 to $140, what do you think brent is going to do do you think? >> that's the big question right now. i think the differential will go down. i think long-term, in our mind, you're somewhere between $5 to $10 a barrel now. we'll see. >> so you don't see $200 brent then? >> no, i don't think you'll see -- not in the $150 wti scenario at least. >> john schiller, thank you for joining us. always good to see you. >> thanks for having me. >> ever hear of you on demand? it could be the next big video on demand provider in china, and we're going to be interviewing its chairman and ceo, bill. >> plus, we have brian shactman in the house with the after the bell sweep. >> we have so much going on in terms of action. i'm trying to stuff some of these stocks in. we'll update hewlett-packard. we have burgers, oil, coffee. i'll give you the stocks and their moves when we come right back. a lot of earnings out tonight. let's check on some of the movers in the after-hours session. brian shactman with the roundup. >> thank you very much, bill. still too early to judge the turn-around, only down a third of a percent. continental resources hit a high of 93 during the trading day. a lot of items x'd out. guiding well above expectations. the stock down three-quarters of 1%. polyfor international makes filtration equipment, down big. should end up showing growth down 13%. jack in the box, never had their burgers, but they sold a lot of them. of them. comp guidance looks strong. but it's down 3%. had a good run as at late. no guidance until after the acquisition closes. down 1%. strong numbers on top and bottom lines. which did show compressions. caribou coffee. revenues strong. eps guidance. they spent 13 million to 15 million. up 1 3/4%. i think i only got through seven. >> you did a very good job. hollywood is making pretty big headways into china. the country's opening the doors to more foreign movies. and it's in a partnership for a new studio with dreamworks animation. julia boorstein joins us with a look at that exclusive story. >> china is one of the world's biggest markets for piracy aims to make video on demand so convenient lu chinese cable companies that people will pay instead of stealing. today the company is announcing its bigger content partner yet. disney. the studio is signing on for both subscription demand services. chads with a market cap of about $95 million already has dealed with warner brothers and lionsgate. 60 days after the theatrical releases. you on demand charges between $1 and $3 a movie. it's planning to reach 11 million homes by year's end. and the potential is huge. saying china is the largest cable market in the world with 178 million households. >> okay. just stay right there. i want to bring in now the chairman and ceo of you on demand shane mcmahon. very good of you to join us today. given the chinese government's insistence on censorship, how do you manage those sensitivities? >> it's not really sensitivities. as you see, china is embarking on allowing a lot of foreign content, u.s. hollywood content to come into play. they need distribution outlets to get that done. that's where you on demand being the first international cable and video on demand service in china, that's where we're going to distribute that content. >> shane, how do you compete with free and immediate content if your videos cost between one and three bucks and users have to wait 60 days, longer than if they get it through piracy. >> you're never going to eradicate piracy. but china's starting to curtail the pirate dvd market. that's really our competition is the pirate dvd. you have other internets -- yes? >> i was just going to -- please finish your thought. >> you have other vehicles that are starting to emerge in the chinese market such as sohu from an internet standpoint. we're a cable company. so the quality is better for your home. >> so what kind of potential for subscriptions do you see in the next one to five years, shane? >> well, i think it's very big. nobody has the crystal ball. but we're excited to be emerging in the market place. and building what's not there right now. we are pioneering this space from a cable standpoint in china. >> okay, shane. thank you for joining us. shane mcmahon there ceo of you on demand. coming up, we're going to preview the day ahead on wall street. >> be sure to tune in tomorrow for our consumer double header. donald knaus joins us. and in the 4:00 hour, we'll hear from darden ceo clarence otis jr. we're back in a moment. time now for going global asia. >> these are the stories you want to look out for. australian politics front and center as kevin rudd resigns as foreign minister. much remains to be seen in a highly anticipated conference today. staying in australian on the corporate front. look out for earnings. and we'll be breaking lots of economic data out of taiwan. revised q4 gdp and output for january. most keenly watched is what will be said about inflation. tune into cnbc world to check all the action overseas. i'm going global with your money. ♪ [ male announcer ] offering four distinct driving modes and lexus dynamic handling, the next generation of lexus will not be contained. the all-new 2013 lexus gs. there's no going back. see your lexus dealer. intuitive trading platform that thinks like a trader. fine-tune technical analysis with the integrated chart tools sidebar. to seize an opportunity, i have to see it. with this, there's no more hide and seek. pinpoint your target more efficiently with clearly categorized, highly customizable technical studies. i'm looking for two things-where to get in, where to get out, so i find the study i want and make it look exactly how i want. plus, scan any stock or etf against time-tested indicators with built-in chart pattern recognition. you've gotta go beyond gut and get to the data. now i can see if a stock might go where i think it will go. customized charts. intuitive control. get started with streetsmart edge and get it all for the schwab price of $8.95 per trade. call 1-888-800-8026. open an account and trade up to 6 months commission-free. talk to chuck and get started with streetsmart edge today. my dad and grandfather spent their whole careers here. 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[ brian ] there's a bright future here, and there's a chance to get on the ground floor of something big, something that will bring us back. not only this company, but this country. ♪ here's what to watch for tomorrow. i'm courtney reagan at cnbc global headquarters. here's what i'm watching. tomorrow continues the string of retailers reporting quarterly earnings. we hear from kohl's, target, hsn, and gap. we'll look at compressed margins and if guidance continues. we'll find out tomorrow. i'm mary thompson. here's what i'll be watching for thursday. aig reports its 4th quarter results. investors will wait to hear of improvements in the company's core property and casualty business. before we let you go kwb let's recap the day on wall street on this quick market stat check. the dow industrials snapping a three day winning streak. bringing concerns about a recession overseas. when all was said and done, the dow gave back 27 points or a fifth of a percent. meantime, the s&p 500 slid about five points backing off from the neighborhood of a ten month high in financials and teches. and ripples through the nasdaq composite which drops half a percent. despite the pullback, the major averages are on pace for the best january and family member percentage gains since 1991. >> that is astounding. well the stock we're watching and i'm sure the "fast money" gain will be all other this one. the bottom line earnings beat expectations by a nickel, came in at 92 cents a share. the revenue was a little bit light. and stocks off those lows right now. a little like it was the guidance that was disappointing as jon fortt was pointing out to