Transcripts For CNBC Squawk On The Street 20130521

disaster. >> reporter: hi, david. we're getting a better look at how some of the damage is here. we have been coming into slowly into some of the neighborhoods here. you can see some of that behind me. the death toll still officially at -- >> all right. i believe we've lost jane's odd why. you saw some of the devastation there right behind her. there will be a press conference from oklahoma and the president will also be speaking to the nation from the white house at 10:00 a.m. if you want to help, by the way, there is some information we can give you from the red cross. you can text red cross to 90999 to give their 10 to disaster relief. you can also call 1-800-red-cross. >> as we said at the top of the show, carl quintanilla is over at the market, and he has a lot coming up later in the show. carl? >> as you know, it's a tough morning. a lot to cover and oklahoma will be a big part of our coverage this morning, but we will talk to marisa mayer of yahoo and david karp of tumblr. a lot of questions today after that deal was announced, and not just about price and how marisa got comfortable with the price in the valuation of tumblr and how it stays independent and what about the fleeing of users and other websites and blog sites and as for carp, what do you do with a second act. you're 26 years old and a quarter billion cash and i'll talk to both coming up in the next hour as we keep our eye on a slew of stories regarding oklahoma. we'll talk j.p. morgan and apple is on the hill. it is a very, very busy morning here. >> it certainly is and carl will be with us here and joining us with that big interview. let's start with j.p. morgan chase shareholders. they're meeting in tampa and they'll meet jamie dimon, and it is seen as a close one. those who support a split said having an independent chairman with the scandal such as the london trades which cost j.p. morgan $6.2 million in losses and they're urging shareholders to stand down. at this point it preliminarily does indicate he will hold on to both at that point. until the polls close, so you can actually pull back your vote and change them should you choose to do so. >> what do you make of the fact that certain people, certain board members did not get a lot of votes. honeywell didn't do that well. ellen fudder didn't get enough votes. what does it even mean or is it all just draws. i think it is the voes of shareholders who want to be heard, it was a big deal. let's not -- perhaps it was made too much of a deal, but one of the great banks losing $6 billion and not really aware the risks that it was taken from the ones that any of us had heard of. >> so you would expect that those people who were on the credit committee, risk committee might suffer loss of confidence from some shareholders. >> and by the way, if they don't get significant votes and even if they get above 50% and pride, many of these people say we'll step off. >> did it matter that jamie put out the word that perhaps he would resign because no one wants the stock to go to 47. >> where would the stork have gone if it had split and then see you later. 47, 45, and even lower. he was praying this didn't happen. jamie dimon is the best banker in the country. best banker in the country. >> right. >> he can't find out -- if you get the wrong sheets from someone in london even jamie dimon can't detect it. you can't detect it. people at home do not understand that when somebody enters bogus numbers it is really difficult to find it. >> that is true. although in this case there were opportunities to at least have understood the trade in a better way. >> did someone just simply not understand? >> i think that was part of it. i do think that was part of it. and then to your larger point and we don't know if there was outright fraud. >> no, alleged, alleged, alleged. we'll throw all of that in, but the fact is you do not have any clarity when someone enters something in the sheets and the model is giving you a different number from what you expect. at the same time the company had been advisinging people to not be in precisely where it was, which i thought was dupe liss us to. i was very hard on dimon. >> he was very hard on himself as well. and that stock is looking up again and you see the preliminary votes being indicated by some that he will retain both the chairmanship and the ceo position and will not be split. we'll see what the numbers are because even a very high number will be enough to get him kind of cranky. >> in the meantime we have the tragedy of oklahoma and you don't feel about being buoyant about home depot, but sprint getting news there, too. things are happening very fast. >> yes. >> it is very difficult for people at home to make decisions on the fly here about what sprint's worth. i know that's a popular stock on "mad money." >> i'm glad you mentioned it because remember yesterday we were talking about clearwater. >> you were because you have this. >> it does appear that the meeting today on clearwater would be adjourned because you were going lose that vote. we can share with you now that sprint has raised its bid from $3.97. >> the stock was worthless a year ago. >> unfortunately, i'm in a position where it's difficult to make phone calls as i normally would, but we'll update people in terms of what that would mean here. i know many number of those hedge funds that are significant holders of clearwater stock and it was sprint and can't vote its controlling shareholder shares. >> not clear that that 3.40 number, but we'll see, very interesting and massasan at softbank, they'll have to give the okay and it is not clear that they'll fully take control of sprint. >> rite aid was $1 and now $2.89. it was a penny stock. what a market! the power of this market. the board of directors of clearwater is at $3.40 and it looked like they were going to adjourn today pushing out until the sprint shareholder meeting where you might have more leverage from softbank assuming they are the victor in acquiring 70% of print. i know it gets very confusing. why don't we move on to other news this morning. that lack of a tax bill at apple was just amazing. >> look, a lot of things have hit apple here and i looked at that and said outrageous, right? everyone is allowed to do tax avoidance. this is taxable. not tax evasion and they've been able to use the code. tim cook has done nothing wrong. they're done nothing wrong. the code is bad and he's exploited the code and congratulations to apple. yeah. >> carl being coup, of course, will be testifying before the senate subcommittee this morning on offshore taxes and it should be interesting to hear what he proposes. >> a couple of reflections on this story. apple is not a well-known entity in washington. that's one reason tim cook talked to politico and "the washington post" late last week. they're really not well known on the hill. they'll have to do a best an introduction to that extent and it might make more of an uphill battle in terms of questioning. jim, i wonder what you think about this,'s large part of the notion that margins in corporate america are not going to come in, but still expand revolves around the idea that there is a change in corporate tax structure in this country and that's certainly what apple will argue for today. >> i know one of my last conversations with tim geithner was listen, over my dead body. jack lew is very liberal. this is corporate welfare of an extreme. it is exactly the opposite of the message, the president is trying to sell in front of the american people. i know our tax rate is high. it's 35%, but you know what? in the end corporations are not loved in this country. it's not a big vote getter. instead it's been used for dividends. it is not going to work. >> carl, the administration has been consistent in its opposition to attack anything of any significance. it is unclear if this will change it, but it is fascinating to see the numbers themselves. what you can do, if it's not a company operating anywhere. it's in ireland and it's not operating there. it's not in the u.s., but it's fascinating. >> carl, you work in new jersey and new york. you're two-state and i'm a two-state guy. they're a no-state guy and we're a two-state guys. >> that's the down sides of working right across the river. you know that, too, jim. interesting. the panel, too. names we all know, mccain, mccaskill, rand paul, obviously carl levin. there's a good chance, sometimes the senate hearings are more tame versus the house hearings, but this one may have fireworks to it. >> i think it has to. this is a way to dem going populism. i love it. apple. the stock goes down and there there are so many con stitch wents that lost money in the stock and they voted 700. it's a crowd pleaser! >> to the point it is helpful to have these hearings because it does bring these things to light and whether or not we will get tax reform would be nice. >> remember that was always the wrap on ge. >> 14.4% tax rate for ge versus apple's -- much lower on -- >> i come back with corporate tax at law school, and i mean, the key thing about tax law is that you hire an accountant and you don't pay any. you hire a clever accountant and you get a refund. it is outrageous. the code is played with. >> the code is so out of date right now and is not appropriate for the globalized world in which we live. >> the irs is targeting corporations. >> 1.9 -- were they targeting? apple tea party. >> maybe that will help. >> the apple tea company. >> 1.9 trillion overseas by many measures. just imagine what that would do if it came home properly. >> it does appear confirmed that jamie dimon would retain the chairmanship and the ceo role and we'll be interested to hear how close the numbers are. i think we'll hear from kayla tausche in the not too distant-future on that. >> and when someone gets $200 million who is a scan-year-old dropout. it made me feel leak a chump for finishing high school. it used to be you were a chump for finishing college because of gates. the amount of money these people are making versus the amount of money the american people are making. woe we still have people making 40,000 feeling like they're making 30,000. >> a lot of it is the structure of these companies. instagram was a billion dollar sale and 13 employees and that's all you need to run some of theed kinds of -- they're global, but they're run on an infrastructure that lets them operate lean and i don't know if it's realistic to expect an instagram to start hiring a gazillion employees when all you need is engineers. >> when are they going to be oligarchs? >> that goes along with a number of other things some of which are not appropriate for morning television. >> it's not powerball. it's not lock. obviously there's some skill set, right, carl? they have ideas that we have only dreamed of. >> we're going to definitely ask karp about the the f-bomb, is that the standard for the new corporate press release an internal memo? he's setting a new kind of tone, that's for sure. >> i told david, i dropped the e between the m and the r for cramer. i have to get my 1.1 million. i think that language is more effective when it is used less often. carl, i want to send it to you real willy quickly, clear wire's annual meeting has been adjourned until the 30th, next week. may 30th, i did want to get that out there where now shareholders have the opportunity to vote on the $3.40 proposal that has been raised significantly from $2.97. >> money has been given away. >> the leaders behind the internet deal creating a lot of buzz. >> a live interview. you do not want to miss. take one more look at futures as we split the show today between the nyse and the nasdaq. implied open on the dow. a lot more "squawk on the street" in just a minute. ♪ ♪ fly me to the moon ♪ let me play among the stars ♪ and let me see what spring is like ♪ ♪ on jupiter and mars ♪ in other words [ male announcer ] the classic is back. ♪ i love [ male announcer ] the all-new chevrolet impala. chevrolet. find new roads. ♪ you what makes a sleep number store different? 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tampa, florida. i've just gotten off the phone with a source who confirms that j.p. morgan has narrowly defeated a proposal, a non-binding proposal to split the chairman and ceo roles at the bank. now, narrowly, we don't know exactly what that means or what that margin looks like. i am told the proposal garnered more support than the 40% it garnered last year and it's still not enough to have the majority to in effect, put the issue up for discussion at the board level. now, interestingly, we don't have that number, but we should get it a little bit later today when all of the results are read from all of the voting in the middle of the meeting which we're expecting around midday. we should get the number of exactly how many shareholders did approve or reject that proposal. so we'll have that number for you a little bit later. we know that the bank has been outspoken about its defense of dimon. the board has come out in defense of dimon. several ceos in corporate america has come out in defense of dimon and it looks at this point he will be able to hold on to those roles albeit by a narrow margin. david, we'll send it to you. >> kayla, what if it's 45% against, is he going to get very cranky, mr. dimon? >> reporter: it's unclear. there's not a magic number in these situations. when the momentum starts to move in a certain direction it it has to come up for discussion. i know lackhewlett-packard, a company you covered far and wide. ray lane, former chairman of hp. even though he was reelected by a 58% margin meg whitman said we think you should resign. i don't think that will happen here. of course, it's a very different situation, but that being said there is a certain level of support that a company will look for in terms of really having a solid shareholder base supporting that notion. >> kayla, thank you. >> i know we have to go to break. the irony here, you vote for splitting, your stock goes down. don't you have a responsibility? you have a responsibility to your shareholders and investors to send your stocks up. here you are voting to lose money. who the heck would ever do that? >> which was one key dynamic that was part of the vote that you did vote to separate. you have at least the threat of mr. dimon -- >> i'm going to vote against jamie. what kind of nonsense is that? >> we haven't gotten to a lot of stocks that are mr. cramer's radar, we're talking best buy, home depot. we have "the mad dash" coming up next. take a look at futures before we head to break. but we can still help you see your big picture. with the fidelity guided portfolio summary, you choose which accounts to track and use fidelity's analytics to spot trends, gain insights, and figure out what you want to do next. all in one place. i'm meredith stoddard and i helped create the fidelity guided portfolio summary. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. all stations come over to mithis is for real this time. step seven point two one two. verify and lock. command is locked. five seconds. three, two, one. standing by for capture. the most innovative software on the planet... dragon is captured. is connecting today's leading companies to places beyond it. siemens. answers. 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[ thunder rumbles ] ♪ [ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪ all on thinkorswim. from td ameritrade. you're watching "squawk on the street" leaf from the financial capital of the world and the opening bell is set to ring in seconds. >> you want yield, david? these trusts give you yield. when i see a yield like that, jim, i have to question it. >> no, i'll tell you why because these are in the end, companies that are just spewing cash because oil's high, and you don't know how long it can last. there you go. how long can it last? >> 9. % would seem to me that would entail a great deal of risk in that piece of paper. >> you're not dealing with u.s. treasurys. >> there you hear the opening bell and take a look at the s&p at hq. the greens and reds just a little bit and here at the big board, pacific coast oil trust is celebrating the first anniversary of its ipo. with a 9.6% yield. that's a life time and these companies that are -- microsoft, once tagain. microsoft seems like it bubbles, bubbles, bubbles. microsoft has so much momentum out of nowhere. >> oh, my god! just look at that thing! it's gone pair bellic. >> it's gone parabolic from one of the largest companies in america. >> a lot of this took place after value act, and jeffrey who wins the $15 billion activist fund took one of the largest positions they have and one of the largest shareholders in microsoft. i still wonder, that is got come what will happen there, and their participation and although, and they would start selling after this move. >> we have a new form factor pc coming out later on and we know there was a lot of brouhaha about whether that first windows 8 was any good. i've done the touch screen. it is electric. the xbox is for real. a lot of people screaming for xbox on levels that you wouldn't believe. the company steve ballmer, but he may have something going. >> okay. i'll leave it out there. i'll just let everybody take that in. >> he may have something going. >> he may have looked at this target. >> can't keep a cfo to save his life, but he may have something going. >> hey, i'm just watching the moment up of a stock going from ten times earnings to 13 times earnings in a straight line. they don't have a multiple expansion like this except there are coiled springs out there, david because if you have a good second half in tech and you see a turn in europe and even urban outfitters said they have a turn in europe and remember, emerson saying europe has bottomed out. >> david, i'm going to give you one will that will knock your socks off. >> general electric. >> never going to happen. it's at the top of its range. >> i'll make you a gentleman's wager there because i think that stock can break out there. >> if how many years has it been? how many years has it been? >> rip van winkle. >> go back further. >> give me a chart that goes back further than that. you want to talk about disappointment and heartbreak? >> i'm looking at appliance sales going up and we know aerospace going up and europe has been a problem. it's 2370 for 2 million. >> look at that thing. how many new highs do we have on the s&p? >> look, i'm trying to come up with something that hasn't hit a new high. >> is it worth more broken up? >> at this point, maybe yes. >> no, the question was always about the multiple on financial services, but i don't know. >> the dividend. >> let's see some dividend news from the parent. you dividend up $6.5 billion, and i want to see the common stock shareholders get some of that. >> yes. >> that has to happen. let's move on to carnival because we have yet to mention a big loss in terms of the share price after the quarter. >> they're not making it up in volume and they've had to be able to discount and this is a reputational issue and i think the world of vicki -- they've had actual issues. >> and by the way, the stock was looking down a lot more in the preopen. >> it's a european play. people are traveling. you want to look at the priceline, does that ever go down? no, 52-week high and in the end the preannouncement is a preannouncement and it's difficult to rally in a pre-announcement. we've had ibm back to where it was when they reported the bad quarter. so anything's possible in this incredibly buoyant you would say frothy market. >> i might even say that, but to your point you might expect the carnival might regain the level it had yesterday. >> why do i need to be in carnival? why not be -- it's a zero sum game to some degree for these companies. in the meantime, sprint, clear water. this is a market that just keeps on giving. >> it does, clearwire is a fascinating situation and we've been reporting on it since the outset of the day when we told you and learned that softbank would buy 70% of sprint and i immediately reported they wanted to buy clear water and they've given their consent to this higher offer from clear wire. $3.40 a share. i will tell you it's still not clear at this point that that's not enough given the way this vote goes and the large concentration of shareholders and i'm not talking about crest which is out there and guys that were much more reasonable and what they want. thursday, may 30th is now the vote on clear wire. >> now you have spoke to the role of the short sellers or herbalife obviously caught wrong. first solar people didn't expect the government to wake up with the chinese. a long-shorted name, autozone. up 12 on the quarter when the comps weren't even positive. there's first solar. who with knows where that can go? solar city down 30 seconds. we're saying to the chinese, we've had it with you. >> that is a hell -- autozone. autozone, i don't know whether eddie lampert is still in, but it's a company that has defied gravity with a fantastic buyback and a very well-run company and people are going to the zone except for the shorts. talking about shorts, by the way, and hlf another 4%, another 4% move that crosses the the$51 threshold. >> i wonder if judge wapner would call that? >> between net flishgs and herbalife alone, carl, the numbers are staggering that would actually bail hem out of dell. wow! >> holy cow! >> i like to have fun here every so often. talking about fun. nobody more fun than been pisani. >> good morning, guys we have people here from pacific coast oil and trust taking a look at their stock now trading. we have cyclical stocks and energy, materials, financials all doing strong today. the big story is of course, the dance of the fed officials. we'll have bell on art, the head of the st. louis fed will be speaking at 11:30 and we have bill dudley and he'll be speaking at 1:00 at the japan society and everybody is doing the fed head speak and the street is desperate to do the fed head commentary on the hawkish side and mr. bernanke will be the most important thing tomorrow and everyone wants to know under what conditions will it be the takeneringing of bond purchases. my sense is they'll dance around this, but everyone on the street wants to spin everything essentially hawkish right now. here's what i think will happen. mr. bernanke will indicate that he's somewhat please with the trajectory of job growth. that's going to be the real issue. how pleased is he going to be will depend on how the market takes it. he'll also say inflation is under control. if he says he is generally pleased or very pleased with the trajectory of job growth and that's an indication they'll end earlier and everyone is being looking at some way of spinning this on the hawkish side. ? for this anxiety about tapering, what has happened in the stock market? it's practically moving into the filtration into the market. what's happened is nothing. have you watched bank stocks? the bkx closed at a new high, a four-year high. wells fargo is at a new high, and j.p. morgan is at a new high and bank stocks don't seem to be surfering at all from this ak ziety about tapering that's going on. i'm not saying the stock market won't drop and there won't be something happening if bernanke comes out aggressively. so far the market is dealing with this information quite well. >> they moved on and talk about retail earnings, saks, urban outfitters and home depot all this had good numbers and we did have sales below expectations and best buy, dix, urban outfitters. comp store sales up 5.3%. the housing home improvement story is continuing and this will drag more people into the home improvement side of the equation overall. full-year same-store sales guidance raised from 4% to 3%. guidant was raised almost 5% as far as i can see. share repurchases are up and right across the board was a good report. >> here's the problem with saks. the department stores had hit their peak, and i think you talked about this before, jim. right now they're looking very expensive and people had been rotating out of the department stores and into the home improvement sector and overall still an improvement story. >> so much news this morning just in telecom alone, we told you about sprint's raised offer for clear wire and we did want to go back to a story we were tracking for quite some time about verizon's attempt to get some sort of conversation, and that being vodafone which owns 45% of the giant wireless company. vodafone reported earnings and in part, many shareholders of vodafone and management and management of verizon to a certain extent where their advisers have been waiting for the conference call and wanting to know what the ceo would say about the prospect of sitting down and trying to negotiate a deal in which they would sell the 45% of verizon wireless to verizon. we talked about the size of that transaction that boggles the mind. is it their 110? $120 billion? how much would -- it doesn't seem like there's much coming. let me take a lock at what he said. we're very happy with that situation, that being the situation they currently have. this is their best-performing asset. when you take a look at the quarter that vodafone has, of course, if a better situation arises we'll consider it been we're not opposed so long as that situation is not worse than the current situation. our minds are open and we listen and jim says okay, it doesn't look like much is going on there. >> we have kelly evans here and i think the vodafone-european portion. >> i was going talk about the same thing, but go ahead. >> it's going to be an upside. >> oh, come on. look at how weak some of these numbers are. service revenue down 13% in italy. these numbers are so bad it tells you why verizon is so valuable to them. these are so bad for southern europe. >> they're so bad that it's looking up to me. this is when you have to make your move. >> dunn so low it's looking up. >> what happened if at this point you said, fine, the numbers don't -- we don't have another 12% decline on the quarter and we still don't know the margins are under pressure and we know it's an incredibly competitive pricing environment. >> john malone took it in cable. >> yeah, but a great time to borrow enormous sums of money and leverage up a bit and cable and broadband is different than the wireless wars that take pla place. we've seen this happens with carlos lemon and kpn. the assets have looked attractive and they have to mean doubling down on these. and frankly, averaging down, exactly, and ultimately they just keep looking at these with an eye towards the long term and underperformance in the near-term. >> the question at vodafone and what kind of pressure does the shareholder base does it do to sche sit down and negotiate. they're saying now is the time, but to your point, kelly, when you have such a weak business otherwise, what do you get when you sell your price asset. we'll see. >> how can you come to the table with the position of strength when it is so obvious that the core business is doing. >> these guys, verizon really wanted to get something done, but we shall see. >> verizon is so much small are than at&t on the market dapp. >> by the way, we haven't talked about charlie ergin and the split for the spectrum. he just continues to create options for himself whether he takes advantage of any of those options it is unclear. >> equal time for billion acres david. >> equal time for billionaires. >> 14 billionaire. >> one point to spreng wire. if sprint is allowed to get clear wire which is highly likely, that will raise the spectrum caps and that means that everybody can own in terms of the telecom companies and that becomes important if, in fact, mr. ergin ever wants to hit the exit button and sell to at&t. >> what are you talking about? >> i'm talking about whether or not any of this stuff doesn't work out and charlie says i'm selling at&t, at&t could want that spectrum. >> he could give away the spectrum to -- >> and at the same time wouldn't regulators look at that and are worried about the concentration of regulators at spectrum. >> they would be allowed. the question is whether at&t has interest in the other parts of the business, but by the way, that's a road we haven't gone down. >> kelly, you're over here and give us more of what you've got in japan. >> i can almost draw a parallel. if you look at softbank trying to do thissage session and there's a lot of focus at the end with the outbound japanese m & a will be revised here. and just to pivot, ten-year jgbs, 0.89% and if you look at the year to date price chart here it is crazy. just the last kind of things we've seen in the last couple of sessions about whether japan is starting to lose con terrell at the long end of the curve. and the question becomes this. for japan, they're sort of a phase a, phase b for japan. phase a is getting this triple arrow thing to work in the first place. there are some signs that's starting to work. >> yes. yes. >> if you look at sort of inflation expectations and there's a convergence that we're seeing in the u.s. and the next step of this is the convergence between ten-year jgbs and still 11 points there. japan would like the story to end there. where kyle bass comes in and seaing phase two, this works so well it then triggers a crisis. if yields go up enormously, they have so much debt that they reach the keynesian point, and if there are two fundamental things to worry about and this goes back to the funding crisis issue, a, the fact that population is aging and instead of drawing up savings, they're driving them down. fukushima is running a deficit account situation than it has in the past. a weak funding situation where again, if they succeed for now, great. look at what the nikkei has done longer term. >> 47%? >> no, 72% over the year as well. >> 70% year to date. >> we'll go m & a with the yen falling makes it less likely and it doesn't buy as much. for his part, massasan at softbank and the hedge that made hem a fortune. some people say if he walked away between the hedge and other things. >> what a win. >> if china comes back online, what does it mean for japan? >> that's a big f, though, the status quo, this kind of 7% is the best they can do and it anies in impeach the question is as it conditions to weaken with regard to the currency story and also the competitiveness story, and by the way, one of the side effects of abenomics is what you're starting to see in japan what it's doing in regard to the china issue and the geopolitical complicates it there. >> fascinating and so glad that you're not just here, but doing this story. >> this is why the europe een bonds are -- japan has turned the world upside down and we don't talk about it. >> keep an eye on those jgbs and is it not going to be the next strong yen story? i'll be back in a little bit. thanks, guys. tim cook is awaiting it in the capitol hill hot seat. apple's global tax strategy. we'll bring you live coverage once cook begins his remarks. a live interview with yahoo ceo marisa mayer and tumblr ceo david karp. how will that take yahoo to the next level? ♪ [ engine revs ] ♪ [ male announcer ] just when you thought you had experienced performance, a new ride comes along and changes everything. ♪ the 2013 lexus gs, with a dynamically tuned suspension and adjustable drive modes. because the ultimate expression of power is control. this is the pursuit of perfection. because the ultimate expression your chance to rise and shine. with centurylink as your trusted technology partner, you can do just that. with our visionary cloud infrastructure, global broadband network and custom communications solutions, your business is more reliable - secure - agile. and with responsive, dedicated support, we help you shine every day of the week. >> welcome back to "squawk on the street." i'm sharon epier son and it is all about the fed. that is what with we look at with gold and silver prices. traders are waiting to hear what ben bernanke has to say and waiting to see the fed speak that we're expecting from officials today. we're looking at a corrective pullback as traders say as prices have come down a little bit after the reversal we saw yesterday afternoon in gold and silver. a very volatile monday and much of europe was on holiday yesterday and in the oil market it seems that oil prices are stuck between the futures at the $100 a barrel level and support for brent crowd prices. we are looking at the june wti futures expiring today so we could so more volatility, back to you. >> thank you very much, sharon epier son. coming up, mr. cramer will rattle off his stocks in 60 seconds. also ahead -- >> still to come, yahoo ceo marisa mayer joins us along with her newest friend, tumblr ceo david karp will this $1.1 billion acquisition attract the young, mobile social crowd they're missing? we'll find out later on "squawk on the street." [ engine revving ] ♪ [ male announcer ] every car we build must make adrenaline pump and pulses quicken. ♪ to help you not just to stay alive... but feel alive. the c-class is no exception. it's a mercedes-benz, through and through. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services. at bny mellon, our business is investments. managing them, moving them, making them work. we oversee 20% of the world's financial assets. and that gives us scale and insight no one else has. investment management combined with investment servicing. bringing the power of investments to people's lives. invested in the world. bny mellon. time for "six in 60," six stocks in 60 seconds. >> bf. >> ralph lauren reports later this week, but it is good. >> footlocker, it used to be venator. when they report at the end of the week they said nike is a buy. >> ndt. >> they finally did the blow-out quarter. people suddenly love it it. >> priceline, you mentioned earlier. everyone loves priceline and don't expect it to last for long. hotels.com is on fire. >> downgrades beazer homes. >> to me the homebuilders have room to build. this is my favorite in the group. >> deutsche bank, david, there is a move to cyclical says like you wouldn't believe percolating underneath and even this one may have its day? people think europe is bottoming and kelly was talking about china if it just baselines at 7% and people will talk about david, i will say two words and it will drive you crazy. second and half. we haven't had one in a long time. >> do you think people at herbalife will sell more? is that what it is? is that a cyclical play? like aerospace? >> don't drive me into that. >> what will we be watching tonight? >> whole foods. so many people shorted it because they thought they missed the quarters. walter rob does not miss quarters. >> what a grit place to shock. 6:00 and 11:00 "mad money." president obama set to make a statement on the oklahoma straj dee. we'll bring you live coverage first white house and we'll bring you marisa mayer and the ceo of tumblr, david karp. keep it here. but there are some things i've never seen before. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel, spend less time on the ground and more time in the air. suddenly, faraway places don't seem so...far away. ♪ the act of soaring across an ocean in a three-hundred-ton rocket doesn't raise as much as an eyebrow for these veterans of the sky. however, seeing this little beauty over international waters is enough to bring a traveler to tears. we're putting the wonder back into air travel, one innovation at a time. the new american is arriving. how old is the oldest person you've known? we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer, one thing that hasn't changed: the official retirement age. ♪ the question is how do you make sure you have the money you need to enjoy all of these years. ♪ welcome back to "squawk on the street." you are looking at a live shot of the white house where president obama is declaring a state of emergency in oklahoma. he is scheduled to speak in a matter of moments. we'll bring that to you live in just a few. >> the federal aid is being provided and that will come through. the latest we have coming from the scene of the devastation is that the medical examiner's office is confirming 24 fatalities at the moment from the tornado. the figure that we have, of course, is 51 suspected. there are obviously concerns that it may be higher than that as we work through. as they work through the devastation piece by piece to try and determine if there are any survivors and indeed, ultimately the number of fatalities. so the president came through with that state of emergency yesterday and then the federal aid will flow and obviously, a very devastating situation. >> and continued concerns about violent weather in the middle of the country today as well, hopefully not with this result. certainly we all hope this. just as we wait for the president to speak let's go to tampa, florida, where of course, the j.p. morgan shareholder annual meeting is set to get under way. kayla tausche is covering that. kayla, we have word that jamie dimon is going to hang on to both the chairman and ceo role. do we know yet how tight that vote is? because the story may not end here, presumably. >> we do not know, simon, but we do know if you we look at the stock the shares are up 2% in just the 30 minutes they've been open for trading on that news that dimon is set to hang on to both the chairman and ceo roles as it narrowly defeats the proposal to split them for pension fund groups earlier this year. if you take a look at how it performed under dimon. jim cramer last hour said if you vote for the proposal you, ironically, are voting against value in the stock and the stock was set to go down and you can see there's a vote of confidence under those shares at dimon at the helm. they were up 34% since he was chairman and they are 10% at the time the financials are down 8%. they're kecking off right at the top of the hour, we have dimon with prepared remarks and we'll be addressing the news, and the company has yet to confirm and after the proposals put forth are discussed on the floor by shareholders and the company, we are expecting to get the results of all of the votes that have come in thus far to date on all of those proposals. we won't see a discreet breakdown of exactly which shareholders we're for and against, but we will see what number supported and what number rejected on both of the proposal to split those roles potentially and also to re-elect the directors and three directors squarely and the risk policy committee has come under fire from proxy advisers and shareholders alike because of their role not overseeing the london-wales debacle and since then, unclear what the numbers for those directors should be and we should get them when the results are read midday. we'll have all of the news as it comes out, but that's the latest from here. we'll send it back to you. >> kayla tausche down there in tampa. kayla, thanks and we'll be watching for that figure when we get it. the president is getting ready to speak on the devastation in oklahoma. cnbc's john harwood has more. as we wait for the president what can you tell us about the situation? >> i think you can expect president obama to react just as he reacted after the boston tragedy at the marathon which is making all federal resources available, not for an investigation this time, but for search and rescue and recovery and all of the ways in which the federal government can provide disaster aid, can mobilize first responders on the ground and assist what state and local authorities are doing and also speak to the national sense of grief and loss which is a recurring role for the president of the united states. we saw bill clinton after the oklahoma city bombing. we saw president obama after 9/11 and it falls over and over to the president to speak to what we all go through as a country in moments of tragedy and grief. >> we'll come back as soon as we see the president getting ready to deliver those remarks. we'll try to take a quick break. up next, carl quintanilla will sit down with marisa mayer and david karp on the deal with the social media blogging site. they'll join carl on the nasdaq right after this. stick around. ♪ [ female announcer ] you're the boss of your life. in charge of long weekends and longer retirements. ♪ ask your financial professional how lincoln financial can help you take charge of your future. ♪ ♪ [ male announcer ] every car we build must make adrenaline pump and pulses quicken. ♪ to help you not just to stay alive... but feel alive. the c-class is no exception. it's a mercedes-benz, through and through. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services. welcome back to "squawk on the street." you are looking at a live shot of the white house from president obama declared a state of emergency for oklahoma yesterday and is expected to speak shortly on the devastating twister there. the president walking up to speak. here are his comments. >> good morning, everybody. as we all know by now a series of storms swept across the plains yesterday in one of the most destructive tornados in history sliced through the towns of new castle and moore, oklahoma. in an instant, neighborhoods were destroyed, dozens of people lost their lives, many more were injured and among the victims were young children trying to take shelter in the safest place they knew, their school. so our prayers are with the people of oklahoma today. our gratitude is with the teachers who gave their all to shield their children with the neighbors, first responders and emergency personnel who raced to help as soon as the tornado passed and with all of those who as darkness fell, searched for survivors through the night. as a nation, our full focus right now is on the urgent work of rescue and the hard work of recovery and rebuilding that lies ahead. yesterday i spoke with governor fallon to make it clear to oklahomans that they would have all of the resources they would need at their disposal. last night i issued a disaster declaration to expedite those resources to support the governor's team in the immediate response and to offer direct assistance to folks who suffered loss. i also just spoke with mayor lewis of moore, oklahoma, to ensure that he's getting everything that he needs. i've met with secretary napolitano this morning and my homeland security and counter terrorism adviser lisa monaco to underscore that point that oklahoma needs to get everything that it needs right away. the fema administrator craig fugate is on his bway toec oklahoma as we speak. as the state was already facing down the first wave of deadly tornadoes. yesterday fema activated urban search and rescue teams from texas, nebraska and tennessee to assist in the ongoing search and rescue efforts and a mobile response unit to boost communications and logistical support. so the people of moore should know that their country will remain on the ground, there for them, beside them as long as it takes for there are homes and schools to rebuild. businesses and hospitals to reopen. their earns to console, first responders to tom fort and of course, frightened children who will need our continued love and attention. there are empty spaces where there used to be living rooms and bedrooms and classrooms and in time we're going to feed to refill those spaces with love and laughter and community. we don't yet know the full extent of the damage from this week's storm. we don't know both the human and economic losses that may have occurred. we know that severe rumbling of weather, bad weather through much of the country still continues and we are also preparing for hurricane season that begins next week, but if there is hope to hold on to, want just in oklahoma, but around the country it's the knowledge that the good people there in oklahoma are better prepared for this type of storm than most and what they can be certain of is that americans from every corner of this do country will be right there with them opening our homes, our hearts to those in need because we're a nation that stands with our fellow citizens as long as it takes. we saw that spirit in joplin, in tuscaloosa and in boston in breezy point and that's when the people of oklahoma are going to need from us right now. for those of you who want to help, you can go online right now to the american red cross which is already on the ground in moore. already we've seen the university of oklahoma announce that it will provide housing for displaced families. we've seen local churches and companies open their doors and their wallets and last night the people of joplin dispatched a team to help the people of moore. so for all those who have been affected, we recognize that you face a long road ahead. in some cases there will be enormous grief that has to be absorbed, but you will not travel that path alone. that downry will travel with you, fueled by our faith in theal meet sfe our faith with one another. so our prayers are with the people of be onning oak today ask we'll replace that with deeds for as long as it it takes. thank you very much. >> so the president tells the people that oklahoma needs to get everything it needs straight away and that the countrymen are side by side with them as they work their way through. john harwood, much as you would expect? noting, of course, that fema was on the ground right from the very start and fema working with ipads in order to get people as connected as they can, as rapidly as possible, john. >> reporter: exactly. what we saw from the president was a message combining practical governance and spirituality and comforting and consoling and the key words to key thaiaway for me was as long as it takes the federal government will be there and you will not travel that road back to recovery yourselves. that's what his message was from the nation to moore, new castle and that's what we expect to do in's moment like that. >> and the acknowledgement of the incredible wave of green that has to be realized as we work through the feeing urs and the numbers and the pressures ahead. >> exactly right, this will not be the next time the president speaks, as the ex10 of the devastation becomes better known. there will be more opportunities and i would expect the president to go there at some point as presidents do when the dust settles and the emergency responders have done their thing. so this is just the beginning. >> john, thank you very much. >> we are also awaiting live testimony from apple ceo tim cook. we'll that should be's little larry on. >> now the moment you've been waiting for. on the heels that yesterday's big announcement that yahoo will acquire tumblr for $1.1 billion. carl is at the market with the two names behind the deal. >> we are here with yahoo ceo maresa mayer and yahoo tumblr ceo david karp. thanks for being with us. >> thanks for having us. >> you've made updates to flickr. you've announced this and a new office in times square. the day is still young. you could do a lot more! is this cooking with gas? is this what you consider yahoo finding a pace? >> we really wanted to be able to move faster in terms of shipping products and in terms of making decisions and we've achieved a lot more velocity and that's what's being felt right now. >> you talked on the conference call and 20% upside to traffic, organic traffic and enhancing revenue. >> when will we see that? when will you start to give metrics on that guidance? >> i think we can give guidance maybe later this year, early next year? we think that this is part of enhancing our growth story? the growth will probably be felt in 2014. >> the street is trying to get their heads around valuation. you open the paper today and all sort of comparisons to deals that yahoo did ten years ago and geocities and things we didn't work out. how would you get comfortable for the price, there are's lot of analyses looking at different things like dcf and methodologies supported this valuation. >> david, obviously, your story is getting better known by the minute. 26 years old. a couple hundred million in cash in your pocket. why would stay and how long should people expect you to stay? >> this was a mission for me. this was a mission to serve an incredibly creative community and that's the community that tumblr's big audience is built around. i've always been incredibly open-minded about the structure and the organization and the company that we're building. for me it's been about the mission and this is an incredible opportunity to serve that mission for a long time. so this is a long-term thing for me. >> you were talking earlier. your role is going to be at tumblr or should people expect you to have input into other areas of yahoo or other areas of yahoo that being use your guidance. >> i haven't even thought about it. i have no idea what marisa's expectations are, but this is still my baby and i'm giving all of my heart and attention. >> what do you do with that money? >> perhaps learn something about philanthropy. i don't know. not thinking about it yet. >> you are figuring out your tax bill, if you need guidance of you can get a lot of help. >> you promised not to screw it up. >> how did you come to that language? what does it is a about the concerns that users that have been loyal to tumblr bristle at the notion of a new corporate parent. >> i think it's clear that tumblr has a really good thing going and they have a passionate community and that was one of the things that made it very interesting for us, and so i'm cognizant of the fact that we don't want to mess that up, and so we saw that there was some speculation over the weekend. there were people saying what's going to happen? what's going to happen? we wanted to reassure people right in the headline that we wanted to make it clear that we'll operate tumblr independently. that is not going change. there are certainly going to be some things behind the scenes, maybe be at search or discovery or pulling some of the content into yahoo!'s core properties, but the way tumblr works will still be aligned with david's vision and road map and operate independently and so we're excited about that. when you look at the very successful, large acquisitions that have happened in the past, ebay-paypal, it emerges especially when you have a hyper-growth company and things are going well you want them to work independently to run as fast as they can and that's how you deliver the value. >> those are deals that you think have worked out? >> i do. >> are there other examples that you were trying to avoid. i would not call those examples out, but it's sort of strange to think about, but tumblr in terms of employee size is 1% the size of yahoo and it would be very easy for our organization to overwhelm tumblr and instead to say it is a separate company, a separate service and it's run independently. there may be some idea exchange and there may be collaboration between the teams because that's what made david and i excited about acquisitions. we didn't start off talking about acquisitions, we started talking about partnerships and it just made sense to merge and at the same time we wanted to give the tumblr team and the community room to breathe and to run. >> right. it doesn't mean we won't see synergies from back office sales force leveraging the kinds of thingious normally hear when one company buys another. >> remember, we're building our sales effort. our ad business from scratch. we launched those products at the beginning of last year and coming up from a zero start in ad tech and sales force and relationship with advertisers and that's all brand new for us. you look at a company with advertiser relationships and business of yahoo! , that's going to be huge for us. >> somebody wrote yesterday that the latest get-rich-quick scheme is to build an ad-free environment, grow it, you know, incredibly quickly and sell it to someone else and figure out how to monetize it? is that a fair statement? >> i would say it's not a fair statement, but i do think that really advertising platforms that worked really well worked at scale. tumblr has 25 sales people. we have about 2500 and that provides turn-key monetization. if you start to say let's build up demand for that advertising and let's figure out the pricing model and all of those things, that does take time and the bigger entities have that figured out and we can come to a situation like tumblr where we want to do this in a native way that feels organic, natural in the experience, can you help us with that? how should we price? how should we sell it and how should we think about it and that's something that yahoo and other companies have a lot of experience and that's one way we can help tumblr run faster. >> you mentioned native. how do you get around some of the content that people find offensive. how do you pitch that to a marketer or brand safety? >> i think the big thing to recognize here is that tumblr has less in inappropriate adult content than almost any of its peers and it's got great community tools to point out where that content is. in terms of advertisers it comes down to targeting to basically say we know where it will appear and users in the user experience. if they want that type of content they can find it, but they don't just stumble upon it. >> if i'm procter & gamble, do i want to be close to being associated with that? >> you don't have to be. tumblr is a big, big network made up of $100 million blogs and posts every second. most of that is incredibly inappropriate contract and a contract with an audience that spends enormous cases. >> tumblr has been doing some advertising and it's nascent. and the top movie studios all advertise with tumblr. eight of the top ten brands in the world are already on tumblr. there's a lot of brand eagerness and we noticed as we were doing due diligence in the process we kept getting these unsolicited comments and people who didn't know we were doing the acquisition. the place we're just dying to be is tumblr, what a great site, what amazing, creative content and how do we become a part of that in a way that feels really natural and i think there's a huge amount of opportunity in there. >> does it bother you when people go say marisa bought herself some cool. >> it's not what it's about. you never do an acquisition that's this large, and there are a lot of things that can happen between the companies. that said, what we did is we bought a growth opportunity and that is our job to help tumblr execute on that and we've been talking about and have been very clear that our goal is to grow, to grow with the market and eventually to grow faster than the market and tumblr's hype growth and the massiveness of the user base is amazing. so growing our audience by 50% to more than 1 billion users a month, that's a big deal and that's what was attractive about this. so it is much more about growth. >> the stock's up almost 70% since you joined. almost 10 billion in market cap. how much credit do you take for that especially given that a lot of the valuation of the stock is based on a valuation of an ali banna offering or holding in yahoo japan? >> well, ali baba-japan have performed brill wrantly and we're proud of our involvement with the companies and the small part that we get to play there. i would say there's a lot of new energy with yahoo and the terabyte, the new user interface, the new android app and you can start to feel that there is energy in the core and some of it is that and i would say it's not me, and one of my favorite mentors once said that great executives confused themselves when they convinced themselves that they actually do things and executives are our defense. teams are offense and so i think we're headed in this direction and get things out of the way and so i think that's also my role with tumblr. is that okay? david's got a vision and they know what they want to do and they know what will serve the creative community best and that can be realized as quickly as possible. >> how do you respond to the notion that the stock run-up is largely one built on the promise of something rather than the result of something, right? >> i think that's fair. i think that we need to deliver growth. we've been talking about it and last year was our first year where we demonstrated growth at four years in yahoo and all growth starts somewhere and that certainly is -- i would like to hold myself it a high standard and i don't think that's enough growth and i think we would like to grow more, and i hope that we will. >> previous reforms in yahoo was about content. you have detail with us at cnbc and sports, and marisa is a product person. where are you in the product versus content debate? >> it's both. i think that technology really matters, design really matters. that's really important, but i also think content plays a huge part and that's one of the things that's so exciting with 108 million blogs and 50 billion pieces of content and when you start to think how can we strength encore yahoo!'s properties or the yahoo homepage news feed. yahoo news, yahoo sports and we're stronger in areas where we haven't had a lot of strength, historically and food and fashion. there's a fun set of opportunities. for me, it's a mix of both content as well as product and technology. >> david, the f-bomb at the end of your memo. is this a new standard for corporate communication? where did that come from? ? certainly in commune dating to our community we wanted to make sure that they knew with that little bit of a reverence that we were still tumblr and hopefully downed for something. >> there are a lot of men and ladies building businesses who are looking at you on the cover of "forbes" now with this deal. did the valuations make your head spin or does it make you think we're in a chapter where it's unsustainable. do you not think about that at all? >> the business side of this is there are people in this industry building really interesting,es that support incredible efforts that move the world forward. it's an incredible place to be and the energy in this industry is awesome. it's an awesome community to be a part of. does davidville continue? >> no, no, no. i was doing client work for years before starting tumblr. it took a few months before i realized this was more than just a side project. this is where my heart and head was and i went all in and haven't looked back. i haven't done anything on the side since then. yeah. this is it. >> this will be your life? >> this keeps me busy. there's a lot to do here and it's been an incredible platform and i'm passionate, passionate about the stuff that i'm excited about. >> you industrial a lot of cash, marisa to play with. >> does the deal mean anything for the future return of capital to shareholders? >> do you still have a lot of big acquisition in you? >> we have really made a commitment to return capital to share holders. last fall, for example, we promised to return an additional $3 billion or so to the shareholders, and we are still executing on that commitment. so as of yesterday we had $700 million remaining in that commitment and we're resuming that now. >> how about other big deals? >> there are still -- it's a parlor game, trying to figure out who you would buy. this was not at the top of the list. >> i think you don't set out to do an acquisition as big as this. you only do it if it absolutely makes sense. so i'm not sure if there's another one on the immediate horizon. i don't ever like to say never, but i do think it takes a moment to breathe and integrate this well and make sure that the independence is set up well and that tumblr is executing well and we're seeing through the partnership and collaboration opportunities and i want to take a moment to do that if at all possible. >> do running engineers at google inform your ability to work with a guy like david? david is incredibly special. he -- i think the technical and engineering proues is there, but i think there's a very special skill in getting creators, and you have to create an environment where people feel safe to put themselves out there and david is a mex of both. you make the people -- >> i don't mean to talk about you -- >> she is uniquely capable of that. >> there is a big school of thought that this deal, if it works is not only good for you two, but good for the broader market in that there needs to be some balance between google, facebook, yourselves and some others. do you think this will have it? how is this going to impact the broader market? >> i think we get focused on the user and it's what do the users want? what does the community and the creators want and that's where the focus is. . we think if we do that well it could be something that ultimately helps shape the market or impacts the market. that's not where the motivation comes from, the motivation dollars building soofl beautiful, meaningful and impactful. >> we had the google io. larry had out this mission of where we are going in the next few years that we're underestimating the potential for the sector and what it means for the economy. do you think he's right? >> i think generally people tend to overestimate the short term and underestimate the long term. so i think where will technology take us in the next decade, it will take us amazing places that's hard to envision. in the short tomorrow, a lot of times people underestimate how much can happen quickly. >> i remember being a child i thought that for sure when i was 30 or 37, but would be flying cars and we're nowhere close and we have cars that drive themselves and the point is there was the internet and it's com low thely changed everything and it's hard to predict them because what you bet on in the short term, but obviously, the internet, mobile, and all of those things are clear signs where we've -- >> have you tried google glass? >> i like wearable computing in general. i like the notion of taking your context and getting information in real time. so the fact that i've always thought that as much as i love search, it's very shallow because it's just the words that you type in. the truth is you really want to put into that box when you're interested in. your whole history, your thought process, where you are, that whole context and i think that glass is one step closer to getting that context and that's exciting. >> how are you able to do this, marisa and being a relatively new mom, how's the baby? >> the baby is great. >> travels a lot. >> frequent flier miles and barely a year old. >> thank you so much for coming in. on it's a pleasure. marissa ashga mayer and david thank you. >> okay, carl nint quintanilla marissa mayer and the guy that sold tumblr. >> the new get-rich quick scheme there was this pause from david karp. it's a great question. how many times have we seen this where it's a great move on behalf of those selling the companies and all of the focus has been on whether yahoo has done acquisitions has anyone with a couple of noticeable exceptions and she mentioned paypal which has been a great acquisition for ebay or remember when ebay bought skype. that was not as good an acquisition and one wonders, you are talking about a $13 million revenue company and it's 85 times revenues and that's something we vvrpt seen since the '90s. she cited the discounted cash flows. so it waun as if she tried to cite something that was less material, less specific. in fact, that seems to be the one area where people are a little more skeptical about what tumblr can generate. >> it's about moving to that utopia that she expressed at the end which is similar to larry page of understanding who people are, plugging into that, plugging into search and taking the whole experience somewhere else and that's obviously where she thinks tumblr is. >> i leak the answer about google glass as well and she finds it interesting and she generally likes wearable tech, but the questions that wearable particular is beginning to raise as people going mainstream are massive. ? a disclosure, we should mention. cnbc and yahoo have an alliance to produce editorial condition tent, marissa and david karp are in a sense, an extended family. if that was the interview of the day, this now becomes the news event of the day. very shortly, the ceo and the cfo of apple are going have to give testimony in front of a senate committee that many members are angry over the way in which they have been able to avoid taxes albeit legally, here in the united states. plus we will head back to oklahoma for the latest on the rescue efforts there. this is a big morning on cnbc. we're back in two. 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[ female announcer ] when people talk, great things can happen. so start a conversation with an advisor who's fully invested in you. wells fargo advisors. together we'll go far. >> apple stans accused of shielding taxes. its ceo and cfo are about to be grilled on capitol hill. we're watching the first part of the session and they're on the second panel. >> they're hearing from a couple of finance professors right now giving them a sense of what the tax law is and what these professors think it should be given the findings here of the senate subcommittee. in essence, the subcommittee here doing months of research found that apple created three corporate entities that were sort of stateless. they didn't exist in the united states for tax purposes. they were ringstered leg stlega ireland, but not for tax purposes. they didn't exist anywhere in the country. the committee says that's a big problem and it was done to avoid taxes. it doesn't use tax gimmicks and the setup of one of these sub entities didn't reduce their u.s. tax burden at all. we'll get to the bottom of that. everyone here waiting, of course, for tim cook, the ceo of apple to take the chair there in the room and begin his testimony. we have not spotted him publicly yet and they're about to wrap up for the second panel and this is the second speaker now so it should be not too long now before tim cook takes the chair and faces tough questions from the senators, simon. >> apple is not the first to be dragged into the subcommittee. a couple of months ago it was high pressure and microsoft. you want to know, does it affect the stock. gene munster, well-known analyst, said it doesn't affect apple stock for now unless they start changing the rules. >> that's right. do you think they will change the rules on taxation? >> senator carl levin who is the guy who chairs this committeeio you see here grilling tim cook later. we talked to his staff yesterday and they were arguing that we need to not wait here for overall tax reform before the senate takes a look at some of these loopholes that they say apple took advantage of here to create these companies without a country so to speak. he says what they did was take offshoring to a whole new level and something like no shoring and what he'd like to do is eliminate the ability of companies to do that. john mccain, the republican on the committee seemed to support his comments and clearly, there are two key senators that need to be two key changes in the law that would prevent apple from doing this. whether that has the steam politically to get all of the way through a tax process is an entirely different question and probably a long way off for now, but what they're doing here is trying to tee up that battle for the future. >> tax reform was something greeted happily by many who run the corporations. eamon, thank you. >> when we talk about apple, we talk about an awful lot of cash that are overseas and some estimates have all corporations and cash holdings and it's somewhere $1.9 trillion. apple, the largest single cash hoard, of course. cnbc's john ford has more on the overhaul of the tax code and on apple's overseas cash. john? >> yeah, you know, it's pretty phenomenal david to watch this hearing take place and the homeland security and governmental affairs committee is the one that's over this subcommittee. carl levin and john mccain. finally, we found something that congress can agree on. rand paul, however, as part of this hearing called out, congress should apologize for hauling apple out and apple hasn't broken any rules here and it's their 102 billion in cash that apple now has overseas. that's growing. the balance of nearly $150 billion total that apple has that is in the u.s. take a look at what's happened to apple's stock today thus far. it looks to be down a bit perhaps on this where the overall market is about flat. apple operations international is the name of this -- this sub group that apple created, incorporated in ireland and said, it's not managed in ireland, therefore it doesn't need to be taxed in ireland. hey, united states because it's not incorporated in the united states you can't tax us either. it will be interested to see what tim cook has to say about that. that seems to be the kind of thing that your average american who pays taxes might have some questions about and apple, of course, very protective of its image, plus there's the fact that apple operations international and some of those subsidiaries that the subcommittee has talked about don't have employees even. here is a key also. apple shifted $36 billion in global sales income away from the u.s. avoiding $9 billion in taxes in one year more than $1 million an hour. that is the kind of figure that your average person can wrap their minds around and there might be some questions about, so we'll see how that plays out as this hearing continues, david. >> all right. >> john ford for us. thank you very much. let's get more on what this means for tim cook and apple and carly fiorina is the former chairman and ceo of hewlett-packard and she joans us with bill george, the former chairman and ceo of medtronic and he sits on the board of exxon mobil and goldman sachs. hewlett-packard is one of the companies that's previously been in the cross fire for this kind of activity. so do you think it's in violation of the law or the spirit of the law for these tech companies to shift profits overseas for more favorable tax rates. >> no, it's clearly not and it's a reflection of the fact that it is uncompetitive and it's unproductive in its complexity and it would be more productive instead of senators feigning outrage and shock that companies would exploit that complexity to minimize their tax rate which is is the high of the in the world now, and i think a more productive use of time is to talk about how are we going reform this tax code so that it is competitive in its rate and it is vastly simpler for the benefit of all businesses, but particularly small businesses and so we can move some of that cash from overseas back to this country. i think that's what you're going to hear every ceo say. you've got to lower the rates. you have to close the loopholes and simplify this tax code and hauling up companies to berate them for trying to maximize profit i think is truly counterproductive. >> it soubnds like what your saying is shortly of what is productive in washington. >> look, it is a ceo's job to try and use legal and ethical means to maximize their profits and to maximize their shareholder return in a way that is sustainable over the long haul. >> is this ethical? it's legal, but i guess there's this question of whether and in who's interest? apple is frequently here in its testimony putting forward this issue of acting in the interest of shareholders. it seems that is effectively the only thing it needs to worry about and perhaps with some merit. >> you know, i'm not in the habit of just boldly defending everything companies do, but in this case, i really think the politicians on capitol hill need to take some responsibility for the fact that over decades they have created a tax code that is clear clearly, uncompetitive, clearly counterproductive in its complexity and again, feigning shock and outrage is easy. what's difficult is getting down to the hard work of reforming this tax code in a way that makes it more productive in terms of raising tax revenues, more competitive in terms of bringing cash back and insenting our american companies. all of this is hard work. a hearing is easy and it's good theeder, but not solving the problem. >> this will be a very bizarre conversation for a let of people watching now. apple stands charged on avoiding taxes on $74 billion. how far below 35% do you have to reduce the corporate tax rate for it to vote to tax that $74 billion? surely, it simply doesn't. it it just keeps it offshore. that's the deal. it's got nothing to do with effective rates of taxation. >> well, i think it has everything to do with it. carly is absolutely right. she says berating the companies, leading companies like microsoft, hewlett-packard, apple, j.p. morgan, same committee. senator levin's committee is not getting us anywhere. it's avoiding the real issue which is an outmoded u.s. tax system. i don't know global corporations that don't have a global tax policy and try to optimize their taxing. companies have to pay taxes where the profits are earned so apple is peaing taxes all over the world, in germany, china or in japan where they're earning money and that's why they're paying 30% in taxes and they're paying a sizeable $6 billion to the u.s., but i think the real issue is we need a different tax policy for repatriation. >> bill, we should be clear that actually that's not strengthly true. i know of many big american companies that create the image that they're running their european operations out of ireland, and those people are actually based in the united states though they are within the hl departments in ireland to make it look as if that's where business is being done. this is a much bigger issue than simply intellectual company within technology. it comes to theeth iks of doing business. it's a much bigger issue, isn't it? >> i think you have a dysfunctional tax code, and i think the answer is to change the repatriation policy. i would advocate one of two thing sfs either we have a 12-month repatriation holiday in which companies submit a plan to the u.s. treasury to ve invest that fund. say apple wanted to reinvest 5 billion or ten billion in the new factories in the u.s. or any company could submit a threat to the treasury. right now to be able to put those factories and they're in acquisitions outside the u.s. because they have the cash there and it's basically tax-effective to do that, and i just think it's wrong. the other thing is we can permanently reduce it to 78%. it's the highest in the world so when you do this you're going to cause legal behaviors that are not the benefit of the u.s. we are not cree ating jobs and we have many other advantages, american companies or i know companies i was on the board of a swiss company. they have a global tax policy, too. i just don't know anyone that doesn't do that. this is not about the cayman islands. this is about having a system in the united states and that incentivizes companies to bring their cash back to the u.s. and invest in the u.s., not just invest in bonds and mortgage instruments, but invest in the u.s. in packries and rnd and perhaps an acquisition. that's what i would advocate. >> first of all, i agree with everything that bill just said, but simon, i want to go back to the point you made which is in essence of accusing companies of 19inging irish operations. you may be aware of companies that have done that. i am not aware of any companies that have done that. it is important to remember why so many companies went to ire lann in the '90s. the reason they went to ireland in the '90s is the irish company made a strategic choice. they lowered their tax rates and invested heavily in their education system and a lot of companies including and not limited to hewlett-packard placed factories there. our senators and congressmen need to get with the program and the reality that we are competing in a global economy. we -- every american company must compete in that global economy and in order to compete successfully we have to have a tax system that is competitive globally. our rates are not competitive. the complexity of our tax code is clearly counterproductive to everyone. it's courter productive in terms of raising tax revenues. it's counterproductive to dumps in terms of the amount of manpower they have to invest in understanding the tax code. it is literally killing small businesses because of its complexity. as i say, it makes good theater to haul up a ceo of a company like apple and berate them, but it doesn't get down to the issue of solving the problem which is massive tax reform, including lowering the rates and simplifying the system and recognizing that this is a global economy. >> and this is the most important point. it is a global economy and frankly, you've got it at the same time the european parliament looking to vote right now on trying to harmonize taxes around the world. it will take years for that to happen and in the in the meantime we know how companies are going to behave. >> can i just say one thing before we leave this, if you are an american citizen or you hold a green card, you are taxed in the united states wherever you are around the world. i do not understand. >> but what i mean is, there's a difference between the worldwide and the territorial system. what they earn overseas, they are supposed to be taxed on. most other jurisdictions you are only taxed on what you earn in that territory. so frankly it would be easier if everyone went to the territorial approach instead of this peace meal situation. the fact that companies are able to defer the tax holdings is how we got into the problem in the first place. it's going to take global cooperation. and the prospects are up hill. >> the prospect for any company with the significance of congress is pretty low. let's move onto the devastating tornado. at least a half a mile wide. the winds up to 200 miles an hour. dozens of people, of course, are dead. and officials say the death toll is expected to rise. jim cantore joins us live from moore, oklahoma, and has more for us. jim. i remember how cloudy or rainy it was. that hinders all the search and rescue efforts going on here. so all the debris that you see on the ground is sent down from a tornado. and in some storms they can carry debris 100 miles. we heard from the lieutenant governor who came by and talked about 101 survivors pulled from the rubble last night. they have search and rescue teams from oklahoma, texas. nebraska and tennessee here. a tremendous amount of support hoar where her staged around the area to continue with the search and rescue, which could last 24 to 48 hours. we hope the weather will hold off. someone is trapped into the rubble. it's cold out here. i have two jackets on. it's 60 degrees in the rain. the issues with the death toll, hopefully they will get this corrected right now. confirmed 24 are dead. 19 are from moore. 5 from oklahoma. all told within the 24, eight of them are children. we continue to hear of victims that are in hospital. some of them, as many as 50% are children as well. five or six in the moore area sustaining the damage. we keep you posted for more. >> in the meantime, just to underline the point that the president made, if you want to help, here is the information for the red cross. >> now another look at capitol hill. when we come back, full live coverage of that event. stick around. we're back in two. [ male announcer ] i've seen incredible things. otherworldly things. but there are some things i've never seen before. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel, spend less time on the ground and more time in the air. suddenly, faraway places don't seem so...far away. ♪ best buy beating on earnings. and same-story sales were also down. courtney reagan just sout down with the ceo moments ago. what did he say? >> he had some interesting comments. it's really the large largest consumer retailer still standing. this is beat on the bottom line by a wider margin than it initially appears. why they don't explicitly call it in the release, that's the most comparable to consensus. that excludes income for operations. but analysts included the impact which is why it's appropriate to add it back. however, the ceo tells me when you include europe the revenue comes in at $10.8 billion. comparable online sales up for the quarter. that's promising because a traditional brick and mortar retailer is fighting to compete with amazon. i spoke with him on the phone. he said every gene in me is focused on positive comps. he also said the kbeart's gross profit margin is a result of increased investment in price investment. that price matching program only marginal impact. because they really made a deliberate investment in price competitiveness. now to net promotor sports to track consumer satisfaction. that's improved 300 basis points over the past five months sochlt this are some interesting signs of this transition moving forward but still some concerns as we look at the quarter entirely. >> thanks very much. i mentioned carnival, which is down heavy today. they last warned in march last night they cut the mid point of the guidance by 25% as they basically lowered the price and we look at the publicity they lowered the prices in order to get people to fill the ship. they were saying actually we have a perception problem with the instead of well, the worst is not behind carnival, particularly in recessionary europe. this is a big stock. this is a $25 billion company. the 6% loss is significant. >> absolutely. and the worst lost since concordia or worse than that. >> we were down 12% in europe earlier. seems that some money is coming in to prevent greater falls. >> i was just looking at earnings estimates for the year. still looks like $2 the a share. so they're not trading all that cheaply relative to the hurdles that they're facing. >> that's for r sure. keep an wry on norwegian, appearing to eat their lurj, as they say. good morning. this is what you've missed if you're just tuning in right now. welcome to "squawk on the street." here's what's happening so far. >> we're still in the rescue and recovery stage right now. i have instructed everyone to make sure first and foremost that we are looking under every single piece of debris that we find. >> when you have the chief executive officer, a very important person in any company, but essentially an employee of the board running the board itself, it leads to ininherent conflict of interest. >> at this point, it does indicate that he will hold onto both. >> i know our tax rate is high. it's 35%. but in the end corporations are not loved in this country. unless you can figure out a way to tie it to jobs. instead it's used for dividends. it's not going to work. >> there is the opening bell. >> is this what you consider yahoo! finding an ace? >> we want to term fast. we achieved a lot more velocity. that is what is being feld right now. >> this is a mission to serve an incredibly creative community. that's the community that tumblr's big audience is built around. for me it's been about the mission. >> good morning. with a special hello to our west coast viewers who are waking up and joining us here. let's get a check on markets. the dow jones testing the level earlier this morning but retreating now. wii just barely higher on the day while the s&p 500 an nasdaq are lower. we have big events tomorrow with the federal reserve. bernanke we'll be hearing from. today oklahoma dee poe is a big gainer after better than expected first quarter profit. responding up 2% today. it's citing strength in the housing market. we'll see demand for home improvement supplies. lest get to the road map for the last hour. ya hoo ceo speaking out about the deal to tumblr. hear what she has planned in the future. plus, jamie dimon facing shareholders in florida. the efforts effectively defeated. they were extremely outspoken. and tim cook is expected to testify on capitol hill any minute now. we'll bring you that as soon as it happens keeping an eye on washington. we start with the tragic news out of oklahoma. the state reeling from what may be one of the deadliest tornadoes in u.s. history. the mile wide twister staid on the ground for 41 minutes as it ribbed across the oklahoma city suburb of moore. jane wells is live in moore. she has the latest for us. there's focus on the toll, the fatalities. some confusing reports coming out. >> reporter: yes. that is right, yelly. right now we have a cold, drizzly rain coming down here in moore. and you can see behind me what was left of the moore medical center. the news coming out now is the number of coffin firmed fatal y fatalities is reduced from 51 to 24. the thought is some of the deaths were double counted. it's amazing when you hear only 24, though it's 24 too many, when you look at the devastation. of course, the total could still rise. we turned a corner and happened upon the neighborhood just east of the freeway. and home after home destroyed. and then we met randy and lisa grace as they were going through what was left of their house. listen to them. >> just like they always say like the train. it just got louder and louder. then it got really loud. then you hear the stuff hitting, and then it was gone. >> it just lasted ten seconds. >> it's gone as fast as it come in. our main concern is we have a 5-month-old grand baby that we had to make sure was safe. >> nefamily is all together. we're all safe. >> it took them several hours, of course, to get together. they have already reached out to their insurance company farmers and already filed a claim which brings now the question of what the economic toll will be, what if cost will be. we asked the governor for an early preliminary estimate. >> lit be billions. billions of dollars because of all the sbripgss of business in the area. it's going to take a long time. the hospital was hit. a huge movie theater was hit. many facilities. a bank was destroyed. >> meantime, home depot has committed a million dollars. the store was not damaged and became a base for the first responders. i have to tell you guys, oklahomans are known for being stoic and good people and they are certainly proving that. when i to randy and lee grace's property. they said wipe your feet first. >> oklahoma will need federal assistance. fema left with a billion dollars left for dealing with recovery efforts from the sequester. text red cross. call 1-800-redcross if you would like to donate. let's bring in carl for a fascinating interview. >> of course, we're keeping our hearts with the people of oklahoma. but earlier today we did sit down with marissa meyer. we asked about the way the stocks behave, brand safety and advertising on tumblr as well. here's what he had to say. >> tumblr has less inappropriate content than almost any of these peers. it has great community tools to stop where that is. we know where it is going to appear. users in the user experience. if they want that content, they can find it. they don't just stumble upon it. i think it will flicker up, as it did last night. giving everyone a bite of the new user interface, the new android app. you can feel there is energy in the core. some of it is that. it's not me. one of my favorite mentors said great executives confuse themselves when they convince themselves they do things. executives are defense. teams are offense. last year we promised to return an additional $3 billion or so to the shareholders. as of yesterday we had about 700 million remaining in that commitment. we're resuming that now. >> a lot of skeptics think they're paying for a company with little earnings. he has a couple hundred million in cash in his pocket and can do anything as a 26-year-old is going to stay there. we'll see his influence on not just tumblr but also yahoo! by its side. >> yeah, and stay there for a couple of years, in fact. i thought that was interesting that he wore ha hoodie. >> i think there's a dress code if you're the start up. this one didn't quite have a hoodie. it could have been mistaken for one. i thought they did seem rooted in the product and probably made a good case for why this may not be a repeat of geo cities which everyone is bringing up today. >> tim cook is ready to testify. we've been watching the story out of washington. we're just wrapping up with the first round of panelists and having arrived he will be stepping up to the mike. you can actually see him tl just over the shoulder of the gentleman testifying on the right. tim koork with a glimpse of him over the shoulder there. we'll bring that to you when we come back. also with the roles secure, what does the future hold for the big bank. you'll find out what the decision means when we come back. but we can still help you see your big picture. with the fidelity guided portfolio summary, you choose which accounts to track and use fidelity's analytics to spot trends, gain insights, and figure out what you want to do next. all in one place. i'm meredith stoddard and i helped create the fidelity guided portfolio summary. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. for 150 years, california educators have stood up for what happens in the classroom. in 1866, pioneering the first free public schools for all kids. and today still standing strong, with efforts to close achievement gaps... reduce class sizes... and give every student a well-rounded education. even as time and technology change the way we teach, our commitment to children never will. because the california teachers association knows quality public schools make a better california for all of us. a preliminary vote shows jamie dimon's role will stay secure. hi, kayla. >> hi, carl. we still haven't heard the final tally be read yet, but the company is talking about the situation as if it is already fact. we are still under way in the question and answer portion. lee rayswmond has come out to address questions about his role and how he plays this role on the board and why he thinks it's the correct one. raymond defended the composition of the board he was cited an anecdote from his days at standard oil companies saying there are two requirements for a peaceful coexistence. the board needs to be able to oust management. but management can't oust the board. like wise management needs to be able to run the company. and the board can't run the company. the board will respond in due time to any concerns raised by shareholders, even if vote does defeat the proposal to split the chairman and ceo roles, that the board would respond to whatever critical mass of shareholders were voting in that regard. the risk policy committee came under oversight of the loss that occurred over the last year. also noting that he's very proud of jpmorgan. he said he's proud of dimon's work. just up is a pension fund that challenged the work onto hold where the vote stood during an 11-day period when they were try to posture in terms of how to plan for what would eventually come out today. hod the to jump on air. kelly, back to you. >> thank you very much. let's hear more on this now. joining us is jeff sonnenfeld with the yale school of management and karen brenner with nyu school of business. hello to you both. jeff, let's start with you. you're vocal about the fact that you didn't think the roles will split. is that because there's no evidence for the roles to be split? or because we felt strongly for jamie to keep both of them? >> both arguments are good one. first that shareholders have done well with jamie dimon holding the position. overall there have been voluminous studies, more than 50 studies does been dozens of universities. it really has to do with being alert and courageous and honest. but this nonsense is crazy. because they wear bowler hats in the city of london doesn't mean we should copy that here. you saw what it was like in england. and the european scandal, you name it, they already had a separation of roles. >> let me just say this. we're going to speak to ann simpson, and she was adamant on the roles being split. she said the role of the board is to oversee the ceo. it's a fundamentally flawed system. so are you saying she is wrong? >> ann will like to quote the famed cadbury report that camed at a time that thomas disappeared make ed off his boat. they came out with a report that says a vice chairman or any other title is great. and the report ritz said that was fine. but still an independent director can be led by somebody else other than this chairman. you may ask ann if there's any law or listing requirement known on the planet where you have to use the title compare man. a lead director, presiding director is just fine. the confusion sets in when you have people at bp or others where you are not sure who is speaking. whether it was bob dimon at barkley's, the ceo became a fall guy. it creates noise and confusion. research shows it hurts to separate the roles. >> certainly that would be the case if you had a system that changed. people argue that we were supposed to takeless from it. is this different than that? >> i think in general the idea of split roles can be a good thing. that doesn't immediate to be every case. the companies performed in a stellar fashion. when it suffered the loss from the london trade the company was forthright in dealing with the problem. so i think that's the best you can expect from any company. i agree that there is abundant research and no indication unifying the role or separating the role is indicative of better governing. >> i couldn't agree more. jamie dimimie dimon has been inf being transparent. where is the problem? we had a ceo who to do out from the pack and engaged in public discourse. don't become a corporate statsperson. you'll become a target. >> this isn't just about the london issue. also regulators in california over energy prices as well. in the company's defense seems to be exec executives couldn't understand what is at stake. karen, i'll let you respond. >> i think there are two issues. the response to the concerned shareholders a specific concern that needs attention or should be thought through is appropriate it was a side issue. not an area where it needs to be focused. some were concerned about the banks being too big to fail. so it's really important to think through the specific elements of each issue and whether the response is meeting the need of the questions being raised. the other point ann says the y idea of a ceo can't oversee him or herself. a ceo, whether chair or not, has the same concern. i don't think that's a mitigating factor either. >> we'll put those questions to ann when we speak with her. thank you so much for your time. c ceo tim cook will give his testimony soon. >> ea did see tim cook walking in a few moments ago. heedness answer any questions but gave a big smile and wave. he is expected to be part of the second panel and expected to face very tough questions here about the way that apple has structured itself around the globe, including what this investigative sub committee says is setting up three separate corporate entities that were not tax residents in any country of the world. not taxed residents of the united states or ireland, where they were legally registered but apple will be in a position where they have do defend themselves from a very hostile senate. we have some tape here of cook walking in. let's take a look at that first, and then we'll show you the others. take a look. >> was what apple did appropriate here? was apple appropriate here? so you can see a lot of camera crews. let's see if we can play the other tame we have with senator rand paul in a dispute if what apple did was wrong. >> frankly i'm offended by the tone and tenor of the hearing. i'm offended by a $4 trillion government bullying one of america's greatest success stories. if anyone should be on trial here. it should be congress. i think the committee should apologize to apple. >> senator, paul, you can apologize if you wish. >> this sub committee is not going to apologize to apple. we did not drag them in front of this sub committee. >> carl levin in no mood to have anybody apologize. now we are going to hear from cook about why apple structured itself this way around the world, whether that gave the company tax vangss and whether he says it's inappropriate in any way. and apple said they don't use gimmicks. we'll see how he handles it in live testimony in just a couple of minutes. >> he's up against challenging optdices, as you just showed us, thank you so much. we'll find out what best buy ceo had to say about the company's first quarter revenue miss. a lot more "squawk on the street" is back after a break. this is for real this time. step seven point two one two. verify and lock. command is locked. five seconds. three, two, one. standing by for capture. the most innovative software on the planet... dragon is captured. is connecting today's leading companies to places beyond it. siemens. answers. the ocean gets warmer. the peruvian anchovy harvest suffers. it raises the price of fishmeal, cattle feed and beef. bny mellon turns insights like these into powerful investment strategies. for a university endowment. it funds a marine biologist... who studies the peruvian anchovy. invested in the world. bny mellon. a talking car. but i'll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is, what it's carrying, while using less fuel. delivering whatever the world needs, when it needs it. ♪ after all, what's the point of talking if you don't have something important to say? ♪ welcome back to "squawk on the street." we are witching phillip morris international. they announced they will buy out billionaire for some $700 million. this was a well telegraphed deal. morning star's tom malarky saying this is a good deal. business is profitable. marlboro is the leading brand. >> i'm trying to think of how you say marlboro man in spanish. we'll get the close and the detail on the impacts this afternoon after this break. ♪ ♪ the new blackberry z10 with time shift and blackberry balance. built to keep you moving. see it in 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centered on what is likely to happen when the fid speaks tomorrow. that's what they're talking about. and evans was a koe factor yes in bringing wall street up. so you can the banks having profits on them. so there at the banks. and of course a big stand onout as well. it was down about 12%. but it's climbed back as wall street as hoped. zbl yeah, all eyes on with the fed. let's bring in bob pisani for a look at what's happening at the big board. >> i'm getting comments for the chicago fete president james boweler here. he says that recovery is lower than expected. thing market moves a little bit up on that news of increasing the possibility that the fed will continue the bond buying program. when you get names like health care, that's an indication the market is not sure where to go today. home depot is up. notice saks is up. best also with good reports. most of the analysts were at 3% or 4%. the 2013 sales estimates, they were talking about 3% themselves. they raised 5% on the the year. and you can see the stock is trading up 2%. most traders feel the department is overpriced. we are dealing with a significant multiple. the stock is up almost 8%. the store sales were much better than expected. up almost 6%. 2% was the estimate. so three times higher than the estimates. that's the main reason thatst up so much. here's something you didn't see. shares climb 13% because of the buy-back program. most traders feel they're so expensive. bottom line is there is a surprise about saks being up. >> thanks so much, bob pisani. best buy falling sharply today after the first quarter results. it was a transition year on the renew blue. online comps of 16.3% for the quarter. the u.s. same-store sales down are 1%. they give new guidance but the ceo is focused on turning the downward trend. he says every gene in me is focused on pov comps. q1 saw the beginning of the samsung experience -- i believe i need to send it back to kelly. >> sorry about that, court. we have tim cook just about to testify. ? >> all witnesses who testify before the sub committee are require to be sworn. at this time please stand and raise your right hand. you swear that the testimony you're about to give will be the truth, the whole truth, nothing but the truth, so help you god. >> i do, so help me god. we'll kuz our traditional timing system today. you'll see the lighting change from green to yellow. giving you an opportunity we can ask that you limb your oral testimony to ten minutes. my thanks to you and your colleagues for being here. you may proceed. i'm sorry. we changed that. it's to a 15-minute opportunity, instead of 10 minutes. >> i appreciate that. >> good morning. i am proud to represent apple before you today. apple has enjoined unprecedented success in the past ten years. international revenues are twice as large as domestic revenues. as a result i'm often asked if apple still considers itself an american company. my answer has always been yes. we are proud to be an american company and equally proud of our contributions to the u.s. economy. apple is a bit larger than the company created by steve jobs in his parent's garage 40 years ago. that entrepreneurial spirit drives everything that we do. you can tell the story of apple's success in one word. innovation. it's what we're known for. products like iphone and ipad, which created entirely new markets. these give customers something so incredibly useful. they can't imagine their lives without them. you may be surprised to learn much of the innovation takes place in a single u.s. zip code. 95014. that's in california where we have built an amazing team. they come to work each day with just one mission, to make the very best products on earth. their job is to dream up things that capture the world ice imagination. one of those inventions is the app store. if you've ever used an iphone or ipad, you know mobile apps are one of the hottest things in technology today. apps that made software development one of the fastest growing job segs in the u.s. today. we estimate that the app store has generated 300,000 new jobs in the u.s. app developers have earned over $9 billion from apps sold on the app store. half in the last year alone. none of that economic activity was there five years ago. apple took a bold step in developing the a prk p store and the app economy was born. today it's a multibillion dollar marketplace that shows no sign of slowing. we chose to keep the design of the products right here in the united states. while job growth stagnated this the last decade, apple's u.s. workforce withdrew by five told. today we have 50,000 employees and employees in all 50 states. apple that has created hundreds of thousands of jobs with small businesses that support us. the components for iphone and ipad, for example, are made in texas. and iphones glass comes from kentucky. in total, apple is responsible for creating or supporting 600,000 new jobs. we used if earnings growth to invest billions to create more american jobs. we're investing $100 million to build a line o in the u.s. later this year. this product will include components from illinois and florida and rely on equipment produced in kentucky and michigan. we constructed one of the world's largest data centers in north carolina, reflecting our commitment to the environment the data center is powered by the largest fuel cell of its kind in the u.s. we are building data centers in oregon and nevada, a new headquarters in cupertino. apple has become the largest corporate incomes taxpayer in america. last year our u.s. federal cash effective tax rate was 30.5%, and we paid nearly $6 billion in cash to the u.s. treasury. that's more than $16 million each day, and we expect to pay even more this year. i would like to explain to the sub committee very clearly how we view our responsibility with respect to tacks. apple has real operations in real places with apple employees selling real products to real customers. we pay all the taxes we owe every single dollar. we not only comply with the laws, but we comply with the spirit of the laws. we don't depend on tax gimmicks. we don't move an electrical property offshore and use it to sell our products back to the united states to avoid taxes. we don't stash money on some caribbean island. we don't move our money from foreign subsidiaries in order to reskirt the tax. our foreign subsidiaries hold 70% of the cash because of the very rapid growth of our international business. we use the earnings to fund our foreign operations, such as spending billions to acquire commitments for apple products and apple retail products around the world. under the current u.s. corporate tax system, it would be very expensive to bring that cash back to the united states. umpl the tax code has not kept up with the digital age. it handicaps american corporations in relationship to the foreign competitors who dount ha don't have constraints on the free movement of apple. we believe it brings increased responsibilities to the communities where we live, work and sell our products. we enthusiastically embrace the belief to whom much is given, much issing quired. in addition to creating hundreds of thousands of american jobs and developing products that deeply enrich the lives of millions apple is a champion of human rights, education and the environment, our belief that innovation should serve the deepest values and highests a places is not going to kpang. we are deeply committed to our country's welfare. we believe great public policy can be a catalyst for a better society and a stronger america. apple has always believed in the simple. not the complex. you can see this in the products and in the way we conduct ourselves. in the spirit that we recommend a dramatic simplification of the tax code. it should eliminate all corporate tax expenditures. lower income tax rates and implement a reasonable tax on foreign earnings that allows the free flow of capital back to the united states. we make this recommendation with our eyes wide open fully recognizing that this would likely result in an increase in apple's u.s. taxes. but we strongly believe that such comprehensive reform would be fair to all taxpayers, would keep america globally competitive and would promote u.s. economic growth. my colleague will now make a few opening remarks and then we'll be happy to answer your questions. thank you very much. >> good morning, members of the sub committee. my name is peter oppenheimer. >> we want to bring you breaking news. the preliminary vote indications are that 32.2% of the shareholder vote went for splitting the role. kayla is reporting that from the shareholder meeting in tampa. that would be significantly down from the 40%. we would also like to pivot and sticking with this theme, speak with the nation's largest public pension fund that voted in of splitting that role. and also held support for three members of o the board's risk committee. it has cited failures in risk oversight during last year's record trading loss as a reason for withholding the votes. joining us now fn an exclusive cnbc interview is ann whitman. can you just react to the result as you've just heard them? zbr well, i think the winds of change are blowing through the boardroom at jpmorgan. there's been a human amount of conversation and discussioning the votes. the board has been in active listening mode. the message here really is jpmorgan needs to raise the game. thigh don't have people with up to date backgrounds. they don't have people with deep experience in the financial institutions. it sort of got turned into a popularity contest for jamie dimon. it's not about him. it's about the board. >> just a second. before we move onto the board, if anything this seems to be a vote back. the percentage is actually down from a year ago. >> yeah. we'll see where the final vote lands. but for the company to recognize that they work very, very hard to get their votes in. i don't think this is an insignificant vote. once you get to double figures at a company this size and you've had all these conversations about strengthening the board, strengthening the board's oversight, i would say just watch this space, there will be change. and i'm sure this is part of what the shareholder community is accepting. they get it. they know they're going to have to pull up their socks on the risk management piece. this isn't about trading titles or woiing about the sensitivity of egos. first of all, a backbone, secondly the what's going on in this competitive market. >> you've said in the past that it is simply inappropriate for the chairman and ceo role to be combined, that this is an issue of systemic importance. i guess i'm surprised that you are not more upset with the results here. >> no, because i think that this change will proceed, you know, one step at a time. it is a fundamental conflict of interest. think about this. the primary and most important job of the board is to think about what the chief executive is doing. if that board is chaired by the same person, that oversight is flawed. there's a conflict of interest right at the heart of the arrangement. so if the leading direct or is the alternative and some people think that's okay and in certain situations we do, too, the most important thing is that person has the reins and are in charge of what's going on on the board. we're not particularly bothered about titles. we know there's an element of ego attached to titles. but the critical thing is the function has to be independent, and that remains. jpmorgan is a systematically important institution. so getting this board strong. getting this board staffed with people who understand the business thoroughly and making sure there are people on the board that can go toe to toe with jamie dimon, that still needs to be, you know, that still needs to be tackled. >> anne, i know you say it's not about titles and it's not about getting into a contest with jamie, but do you believe he would have left if he had lost this vote? >> no. >> and would you have been upset about that? >> no. first of all, i think you have to accept that -- you know, we talked to the company about this issue. their view is that really that comment by him was taken out of context. it would be remarkably childish for somebody to say because i can't have two jobs, i don't want either of the jobs. and i don't think jamie dimon has finished. i think he said he's enjoying his time at jpmorgan and, as we've said, this is really not about him. it's about the board which is a collection of -- a weak collection of strong individuals if we can put it that way so, no, we don't think that's at risk. the other thing 0 to remember is no one is eternal or immortal. it's extremely important to have secession planned. the idea that a chief executive could can hold a board hostage by threatening to leave in a fit of pique, we really don't think that's -- looks to us like good planning for the long term. so that wasn't something that was uppermost in our mind to know. >> anne, thank you for that. we do want to remind our viewers we are still keeping tabs on capitol hill where tim cook continues to now take q&a. we'll bring you that live when it happens. for now, though, kayla tausche as well live at the jpmorgan shareholder meeting. kayla, some of the headlines on twitter at least, are that dimon retains the crown. the whale has been harpooned. what's it like there? >> reporter: yeah, well, it is certainly an interesting day, an interesting read of results that just came moments ago. and i want to read you 32.2%. that is the figure representing the shareholders that approved the proposal or voted for, rather, the proposal to split the chairman and ceo roles. those are preliminary results. they don't include any votes cast at this meeting. it does appear the threat of jamie dimon potentially leaving did have an effect be on the way some of those large funds voted. we won't get a specific breakdown for or against but it does seem there was a shift at least in the past couple weeks. i also want to tell you exactly how the board lead ership turne out. everyone was approved but there were some pretty glaring approval figures for some of the board members on the risk committee, specifically the president of the american museum of natural history. she is actually not here today. the only board member not here today, she had the lowest approval rate in about 53%. david cody, the ceo and chairman of honeywell, got about 59%. and then 57% for james crown. they'll have to do something about the risk committee. >> thanks, kayla. we're hearing question and answer now with tim cook. here is carl levin. >> recently more and more enterprises argued abroad by american firms have arranged their corporate structures aided by artificial arrangements between parent and subsidiary regarding intercompany pricing, the transfer of patent licensing rights, managing fees and similar practices which maximized the accumulation of profits and the tax haven. do you agree with that? >> the president and his brother had been long-term heroes of mine, so i'm sure if he said it at the time, it was true. today, from at least our point of view, i don't consider deferral to be a sham or abusive in any kind of way. >> does apple own directly or indirectly aoi, aoe and asi? >> yes, apple incorporated owns directly or indirectly aoi, aoi and asi. >> all those companies in ireland are owned by apple effectively, is that correct? >> they are all legally owned by apple incorporated, yes. >> and where is aoi functionally managed and controlled? >> in our view it is functionally managed and controlled, which is an irish legal concept, in the united states. >> a february 11 letter to the subcommittee apple wrote, quote, has not made a determination regarding the location of aoi central manage lt control. why did you tell us that? >> mr. chairman, the reason we responded in that manner is that under irish law, the requirement for evaluating our concluding on the tax residency of ireland looks to whether or not central management and control takes place in ireland or not. it does not formally require that you make a determination that it takes place somewhere else. >> but you've told us here this morning that you believe that the location of aoi's central management control is in the united states -- or apple has concluded that, is that correct? >> yes. and i believe that? a previous meeting with your staff, they asked the same question and i believe i provided the same response. >> mr. cook, do you agree that the location of aoi's central control is in the united states? >> sir, i don't know what the legal definition of that is, but from a practical point of view, yes. >> now relative to asi, mr. bullock, is asi managed and controlled in the united states? >> as a practical matter, applying the irish legal standard of central management and control, i believe that it is centrally managed and controlled from the united states. >> and does apple agree that it is functionally managed and controlled in the united states? >> under irish law -- >> no, under our law, do you believe that? >> i don't believe that central management and control is a legal term under u.s. tax law. >> do you believe it is functionally manage the and controlled in the united states? >> yes. >> mr. cook, do you agree? >> there's a significant amount of decisions and leadership and negotiations that go on in irela ireland. but some of the most strategic ones do take place in the united states. >> would you agree that on balance asi is functionally managed and controlled in the united states? >> from a practical matter. i don't know the legal definition. >> practical matter you would agree that it is functionally managed and controlled in the united states? >> yes, senator. >> thank you. now, mr. bullock, aoi is incorporated in ireland, is that correct? >> yes, mr. chairman, it is incorporated in ireland. >> and where is aoi a tax resident? >> it does not have a tax residency. that does not mean that it does not pay taxes. the interest that it earns is paid -- u.s. taxes are paid in full on its interest by apple, inc. >> and the interest you are talking about is on the tens of billions of dollars that it has in cash, is that correct? >> correct. the cash that was distributed from the operating subsidiaries underneath. >> so those tens of billions of dollars of cash earn interest and that interest is paid by apple inc? is that correct? >> it pays at the statutory rate of 35%, yes. >> but there's no income -- there's no tax paid on the money itself that has been sent to apple -- excuse me, to aoi by the distributors, is that correct? there's been no tax paid on that either in ireland or the united states on those tens of billions of dollars which has been sent to aoi from the subsidiaries below that? >> the income of the subsidiaries have been subject to tax in the countries in which they operate. >> right. but there's been no tax paid in ireland on those distributions nor in the united states or those profits, is that correct? >> there's been -- there is no u.s. tax on the transfer of those balances to

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