Transcripts For CNBC Squawk On The Street 20140328

Narrowerthanexpected loss and well talk to Ceo John Chen about it first on cnbc. Cbs outdoor americas ipo capping off what has been a big week for offerings. Cbs Ceo Les Moonves and jeremy male will join us on a first on cnbc. And walmart suing visa for 5 billion over what the retailer deems excessively high credit card swipe fees talk about that. But blackberry did report much narrowerthanexpected quarterly operating loss of eight cents a share and revenue below consensus as smartphone sales fell across all regions. And john chen said they are on sounder footing with a path to returning to growth and profitability. Hell be a guest later on on squawk on the street. I dont know, eight cents, i think the estimate was for a 55 cent loss. Look, there are a lot of people who turned on this company no matter what they say. Now, there is revenue decline and theyre not talking about really great numbers for until fiscal year 16. But do you know what, lets just hand it to the kceo. There were people who felt this thing would be out of business. Did you see the cash position . No, i did not. Inform me. They have a ton of money, what i was most worried about and our viewers were worried about, that this thing was going to tank. It aint tanking. Negative cash flow, right . 553 trying to get to breakeven by fiscal i think 15 as you said. Total problem there, not denying it. I got to tell you, carl, when i look at the thing, do i want to buy it. No. Do i think its going under, absolutely not. Maybe thats what a perception that it was going to go back to four five. I find that hard to believe. I dont think it does. And there are some notable investors in the stock at this point but one wonders what constitutes a true turnaround for this company. Well, they have 3. 4 million blackberry smartphones were sold. Look, im looking at the release. But to me the key line was, cash investments, balance of 2. 7 billion, you can lose a lot of money and still have a lot of money. Sticking to their guns in terms of the bold in some cases yes. Saying they will work on higherend smartphones that might roll out in 18 months thats down the road, of course. I want to hear from there ceo. I think this ceo has game and thats what people didnt count on. Some companies you get the right ceo they can make a mountain out of a molehill. This guy is making id say a hill out of a molehill. Well, he did something similar at sybase and there were those when he was appointed who pointed to his previous track record and said keep an eye on him. Dont be completely morose or dour or doleful about the future. Is it dore. I think dour is pronounced dore. I always get something wrong. People are getting into college right now and it makes me think s. A. T. Words. Gloomy. Lugbrious . It brings out the nikkei report, that apple will unveil the iphone 6 in september a 4. 7 and 5. 5inch screen and citing the component suppliers that make the news common ahead of the launch. Its funny that heres a new rollout from a new product at microsoft that makes it so you can use your apple even though you can use your tablet even if you leave. No one says a good thing about apple. They just think how great it is that microsoft is now addressing apple. How about the fact that apple is so rooted to the people when they go home that they have to have it. I think this is icing on the cake. Apples a value stock. I know thats not what people want to hear. It doesnt have growth. Peaked in 2012. But i do think that we should recognize that this installed base is one that people cater to. Two years too late at the very least here there are plenty of other packages that are available to me on the ipad whether its evernote or the other companies out there that are similar to and ive now become accustomed to. Nadella, the reviews on his presentation yesterday, out of the mom and pop paper, nadella makes good first impression. You could ask for worse press. I liked it. Notice the deepsixing of the term windows. Windows is out the window. Its about office. Now whats next . How about getting rid of the Windows Phone . Going a gnostic. Android, thats next. Going to create a higher value for microsoft. All right, lets move on. Of course, its been a big week already for ipos not necessarily a good week certainly given the debut of king, but as we wrap up that week at the nysecbs outdoor america is going public. It will trade under the Ticker Symbol cbso, the Outdoor Advertising unit of cbs offering 20 million shares at 28 apiece, that was at the high end of the expected range that valued the company at 3. 36 billion, and cbs Ceo Les Moonves and jeremy male will join us on the set later in the broadcast. Of course, theyve owned outdoor for a while. This has been in the works for quite some time. You got to remember its selling about 18, 19 now. To the public. But it will be an Exchange Offer that comes down the road in a number of months, maybe six months or so, in which cbs will buy back an enormous amount of stock by offering you cbs outdoor shares at some sort of a discount to entice you to part with your cbs shares and that will bring about a very large buyback and then youve obviously got debt thats offloaded here as well. Separating these two companies. The small buyback now. This is one of the great buybacks of alltime. It has been a big theme at the company. They bought back an enormous amount of their float, cap shrink as we say. Cap shrink . Cap shrink. Is that shrink to grow . How do you know all these in this case it was shrinking to grow, right . Exactly. Its another one of those. They will claim well talk to both gentlemen and see in a sense ones a seller and ones a buyer here. Its not a sale per se but it is in effect they are divesting this unit. Jeremy male will be running it as an independent entity and they want to make it become a reit. They dont have approval yet for it to become a reit. So 90 of proceeds would have to go back to shareholders and change your Shareholder Base conceivably. The yield, is it role, teal, yield they are talking about at 7 . I dont know. What a steal if you could get 7 . Its a slowgrowth business but one they say that is not affected by the digital receive institution except, of course, they continue to take billboards and change them to digital at a relatively slow pails but that increases the revenues fourfold. 300,000 displays and over 400 of them are digital. Theres runway there. There is. I always wonder the safety authorities. Im mesmerized by the ones that change. I dont have the google driving where i dont have to drive, so im looking, wow, look at that, thats really a great billboard. There are big ones. Lincoln tunnel entrance is one of the bigger ones out there as you might imagine. But they dont control that one. Samsung and toyota, right . But they are in Grand Central and a number of other places. It does make you wonder, david mentioned the ipo week so far and king did overshadow a lot. Yeah. But strap strip that out, it hasnt been that its not been a disaster. No. I had trinet on last night. Look at this one, its going to go up again. This is a company, a profitable company, that does all that is your answer to all the regulations that have been put on business. Whether it be hr, whether it be taxes, whether it be payroll process. I dont think people understand how hard it is to not run afoul of the governments rules. Trinet is your Insurance Plan to not run against government rules. I had that company on last night. I think thats a super situation. I like earnings. I like Revenue Growth. I think you got to have both. At one point i asked the ceo burton, i said, burton, so many ceos come on and say the opportunitys too great to show profit. He laughed. He said, really Good Companies show profit. That is funny. Such a novel approach. You do hear that often. Was that a novel approach . Were spending right now and spending and not worried about profitability. He said it actually matters. Wait a second, you think profit matters. Wait a second, lets stop trading. We do have to interrupt briefly. I think we have some breaking news on tesla. Lets go to sheila, sheila . Breaking news on tesla, the National Transportation safety board saying that they are closing the investigation in to fire accidents of tesla motors. Heres what interesting, though, they do add that closing the investigation does not constitute a finding that a safetyrelated defect does not exist so keep in mind this means tessma is not necessarily off the hook but for now the investigation is closed and they do have the right to take further action. Tesla shares are moving up slightly on this news and i do want to cite reuters on this breaking news, guys. Sheila, thank you for that. What a month tesla has had. Not just from the shares depreciation stand point but the news flow dealing with the Dealers Network in new jersey, dealing with them in texas, now ohio and, of course, all of this in the backdrop of that nhtsa investigation. And a 60 minutes piece. What is it . I think it is on the genius that is musk. I think theyve already done one of those. It could be a rerun. Hes said to our own Andrew Ross Sorkin a number of months ago that, you know, look at the fires on this particular issue, they were far fewer when you actually consider how many cars there were. Right. Versus the fleets of other automakers. As a side note solarcity does get some love today. Yes. Right . I tell you, i tried to look at the numbers, tried to read the income statement for solarcity. You know, look, i took a year of accounting. You need you need a serious accounting degree to understand how solarcity makes its money. I mean, maybe the price of the nodules are coming down. But, i mean, honestly, if you look at this one, you want to call your professor and say, is this true . Can you do that . And how much of it is related to government subsidies . That is an issue that overhangs some of musks businesses including tesla. Well, i think a lot. But it is an interesting its an interesting idea. Your kids instead of wanting to go to kiddie city want to go to solarcity because they want you to put a panel on your house and this is the best way. Musk has a great product. And prices keep coming down. Yes, they do and thats important. First solar had a remarkable analyst meeting. The price is coming down. Use going up. On that note, when we come back for Facebook Ceo Mark Zuckerberg its not just about deals of late, its also about drones. Were going to fill you in on that. And as david said cbs outdoor america is the ipo of the day well talk to les moonves and jeremy male about that issue later on this morning. Nufutures dont look so bads we start to look at the end of q1. A lot more squawk on the street live from post nine from the nyse in a moment. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Larry, i miss you. Youre great. You were the place for civil discourse because youre a civil man. We ended every show the same way and we do it now. We do it now. Youre the best. Youre the best all right, jim cramer, my expartner and i miss him. Kudlow last night with jim and larry. The last show for larry tonight. Right. This morning he had kind words for you, called you a class act a true patriot. I saw that. Larry created a place where republicans and democrats could talk and not shout at each other. We were talking during the commercial how if the world if our country were to revert to the way that larry refereed things, better place. Hes a great man. I cant think of a commentator on the air who is better ripping you apart during an interview and then smiling having everyone smile after the fact, its an amazing thing to watch. With all due respect, that was always it. When he said with all due respect, that meant get under the desk. Because here it comes. Yes. Our hats off to larry. Yes. Hes not going anywhere, still remain as senior commentator for the network, thats important to keep in mind. Facebook wants to deliver the internet to underdeveloped parts of the world via networking and satellite and drones. Its hired experts from nasa and Ames Research center, the Connectivity Lab is working on building drones and satellites and lasers to deliver Internet Access to everyone. Literally beaming the web to you from the sky. I wonder whether this is a gogo via sat killer. They are not that fond of each other. But you want netflix in your plane. Right. You want right. But this is also to get it to remote areas. Right. Listen, by the way, this is pie in the sky right now would be a series of lasers that would create this. It sounds like terminator kind of stuff. Is it pi in the sky or pie . Both. Beyond my pay grade. But keeping up with the googles. They got their driving car, the robots and the balloon project to create wifi and bring it to remote areas and so weve got whatsapp and Virtual Reality and now well have drones. One of the things that i think hurt the whole Group Everybody is suddenly in everybodys face. Amazon, deny that they were going to stream video which would have hurt netflix but i think the idea is everybody wants to be in the other guys market which has really kind of shrunk the multiple for a lot of these companies. But none of these seem to be part of core business. No. You could argue that google bringing Internet Access to everybody in the world can help. The same with facebook. But its not necessarily a core activity. Thats why they are spending time and money. Thats why the stock went down. I think people are saying, hey, no free pass at this point. Come on. Have some sort of a schematic of where the helmet fits in. Right. Of course, googles case were also trying to bring fiber to certain parts of the country. Right. In significant ways. But, again, put pressure on the providers to make sure its available, fast, and as cheap as possible. Right. Right. As far as the stocks go, reuters has a piece out this morning looking at sort of the momentum stock breakdown this month. Arguing, a, that its not done yet, but thats in their words contained and contained meaning the Broader Markets not necessarily at risk because of it. Okay. And finally its a healthy sign that correlations may be breaking down between sectors. I agree with every aspect of that. You do . I think the containment tends to be related to where all the ipos are coming. I think the rest of the market has acted terrifically. We tend to forget how many different segments of the market have been doing well, so im totally on board on that. Thats a nice view. Interesting. When we come back, well get cramers mad dash as we count down to the opening bell. One more look at futures. The last premarket of the week. Well get more squawk on the street from the nyse straight ahead. Its a stationery and gifts store. Anything we purchase for the paper cottage goes on our ink card. So you can manage your business expenses and access them online instantly with the Game Changing app from ink. We didnt get into business to spend time managing receipts, thats why we have ink. We like being in business because we like being creative, we like interacting with people. So you have time to focus on the things you love. Ink from chase. So you can. Got a hold on you new sensation a new sensation right now its going to take we got eight minutes before the opening bell. Its friday, baby yes we got a mad dash, restoration hardware, why . Amazing, blowout quarter. A lot of people felt they couldnt deliver. This company is so exciting. Couldnt deliver, it is up 100 for the year. There were concerns a lot of retailers had missed. Its a catalog business, its a showroom now. But its all about the book, the book that you get. I dont know if youve looked at their stuff. I shop here aggressively. Amazing quarter. What does aggressive shopping look like when youre jim cramer . It means that you need help to take it all to the register, okay . And i do love their product. Now, remember, if you have a beach house i have a beach house, i dont know if you have a beach house. I feel fortunate to have a beach house, its the rh beach house, a lot of people are like me. Its a remarkable quarter and the stock goes higher. How about sprouts . This is a deal to watch, sprouts farmers market. Priced 15 million shares, 33. 75. Theyre good. Theyve hung in there and doing secondary. You want to keep an eye on them. They were on mad money. Its a very respectable company. 200plus stores, they could go to 1,000. I was going to ask you that. This could lift the group. Whole foods has been its own personal bear marked, undeserved, 5. 5 comp store sales. If this stock goes up, take some whole foods, 52. There. You mav your marching orders. Weve got a lot more going on here, of course, including a big day for ipos on wall street. Ceos of cbs and cbs outdoor america will join us. Theres Leslie Moonves on the podium along with jeremy male and theyll join us after the opening bell about six minutes from now. From now. [ bell ringing, applause ] five tech stocks with more than a 10 . Change in aftermarket trading. All the tech stocks with a market cap. Of at least 50 billion. Are up on the day. 12 lowvolume stocks. Breaking into 52week highs. Six upcoming earnings plays. That recently gapped up. [ male announcer ] now the world is your trading floor. Get realtime market scanning wherever you are with the mobile trader app. From td ameritrade. Youre watching cnbc squawk on the street. Live from the Financial Capital of the world. The opening bell in a little more than three minutes time. Im counting the number of ipos this morning, guys, at least six. Right . Enough already. Cbs outdoor which well talk to the ceos in a moment. Everyday health. We just got a bunch of people coming onto the floor dressed as doctors. It looks like General Hospital broke into the building. Yes, it does. Blue rock residential cant wait to get some of that. I did want to get to another theme weve been seeing which is involved in, of course, a lot of stocks going down in particular in an old area that i focus on still which is merge er and acquisition activity especially those that focus on special situations and the like, meaning risk arbitrage. We talk so much about the synergy deals, mens warehouse, for example. Yes. Have you seen what happened to mens warehouse since it moved to acquire joseph a. Bank, its a cash deal. Oh, my. Youre looking at it. Oh, my. Thats not really helpful, is it guys . I was hoping for a one month, thats what were looking for. Down sharply. It looks good there. The point was show the last month. We produce these things ahead of time but what can you do . Also odp hey, look, there it is. Wow, thats horrible. Thats horrible. Comcast our Parent Company the deal was worth 158 a share not that long ago and its worth 141 the stock has been coming down. Look at that. What youve got is people taking in risk and when a Hedge Fund Takes in risk across disciplines typically theyll pull back on risk arbitrage, and thats one area. They are not setting this up because its an allstock deal, so they are. Comcast charter and liberty this morning continue to pressure this deal by soliciting votes against it. They had their slate out there but charter and liberty come out this morning in a filing and say we are soliciting actively against the current deal. They cite what they say is a higher risk of delay saying it could go to the Third Quarter 2015. That seems a little ridiculous. Flawed process by which they say they didnt really get an opportunity here to kind of compete, reduce an uncertain value given the fall in the stock price. None of which means theyre coming back to actually offer you more money. Right. But what a change. Charter stock may be up this morning. Interesting most companies would be gone. Its optionality. Why not hang around. Doesnt cost you anything and theyre doing that. Well, this is a big change because we saw the guinetts going higher. Us airways keep going higher. The whole theme was when you merge, the stock doesnt quit. It has another leg up. Thats the enormous synergies. Odp is another one. Office depot and office max. That thing is tradeable four odps. Two drunk sailors. Its something to watch as people take risk off, these things are getting hurt and hurt badly. Yeah. Great point. On that note, lets await the opening bell here. And look at the s p at the top of your screen. Down here at the big board, cbs outdoor america celebrating its spinoff from cbs well talk to cnbc Ceo Les Moonves and jeremy male in a moment. And the nasdaq celebrating its ipo to you, a provider of cloudbased Education Software for colleges and universities. Well talk to them in the next hour. Pricing 8 million shares basically helping colleges extend their curriculum to the online community, jim. Cloudy with a chance of selloff. If i hear the word cloud once again and its not from al roker, honestcloud, cloud, cloud. Are you cloud . I am cloud. Ill take my price target off of you if you are cloud. I have the cloud offering. Enough of software as a service. What do you think will happen to these stocks . Do you think theyll go higher over time . How important is the cloud in terms of optimizing the projection for the industry are in the hundreds of percents. I think theres something wrong when i see cloud after cloud deal. It says the window is going to close, so get the deal done. Yeah. Speaking of all of the names weve been watching all week long, well keep our eye on the likes of a gilead today, down another percent here even with the dow up 38. The rotation. Just hideous. The reuters article. Yeah. Now, these stocks are all up huge. You look at gilead remember how we looked at the cbs, i mean, at the what was the mens warehouse . Yes. Remember how that chart looked great when you back it out. Of course, one year looks great. One year for celgene and gilead, it looks like theyre down a little bit. But its pain. There was one point at which gilead and mercks market caps were converging as gilead moved up sharply which was just shoging. Now theyre far apart again. Gilead 108 billion and merck which is selling its consumer business 165. Celgene on 2016 earnings is cheaper than merck. Cheaper than merck. Honestly. Is that what is that . Is that the theme weve been talking about across the board ever since yellen . Yes. Yes. And i got to tell you when you look at the multiples, you start wondering how a company that could have such growth like celgene could trade below pfizer. Its a little irrational except for when you look at how much these stocks are up, how many biotech offerings have come, youve got to sell one to get in on the other deals. Its not over. Reuters is right. Yeah. The list of losers today is almost a repeat of yesterday. Tripadviser, gilead, biogen. Literally the third or fourth day in a row. They have to come back to earth and people have to lock in their gains. Theyre very Good Companies. Doesnt matter, theyre going lower. Veisa is feeling pain. The story of walmart suing based on what they call unreasonable swipe fees have run afoul in their words of antitrust regulations. Im not sure what to make of it frankly. In the sense of where it goes or why they decided to take it to that level. But it is absolutely worth noting. And well see. Now, they did not participate i believe in what was, what, a class action or something along those lines i think . It was very odd. Very odd thing to do but they did. Lululemon up almost, well, twothirds of a percent. They do go from an underweight to an overweight. 60 target. I think people want to catch bottoms nm so of these depressed retailers which i think have gotten too cheap. Should note shares of Charter Communications are up 2 on this news that we told you, charter and liberty will solicit votes against the Time Warner Cable deal. Very much unclear whether its going to make any difference at all unless they are to actually come with a new offer of some kind with a larger cash component. Dont forget libertys largest shareholder after malone is a guy named Warren Buffett. Yeah, famous guy. Also vodafone shares are up. Theyve been down sharply. Yet another name that ive been watching not collapse but pretty calamitous move downward. Theres a Research Report out of cs showing your age. Yes. This morning i tweeted lbtya when i meant liberty. I once called caterpillar caterpillar tractor. It was a heatseeking missile, dont you know we dropped tractor be careful. They put out a long report about a prospect of a Liberty Global vodafone linkup which has got some people chattering but thats Just Research to get people doing exactly that, but worth noting. And yet go back to the fact that these are all interesting to people. Theres buyers. And then i look at Palo Alto Networks which is the finest Security Firm in terms of software, down three bucks. I mean, did you see fireeye . Fireeye priced the secondary, oh, my 17 points ago. They are all heavy. Tesla is up 2. 5 back above the 50day on the us in out of nhtsa. And microsoft up more than a percent after nadellas coming out. Free of windows, free at last, thank heaven free at last. Nice. Trust me on this. I do. Dont dont smirk. I wasnt smirking. I dont think hes smirking. Smirking about what . Like he knew that i had baylor last night. Is that what you knew . Its my smolder. Lets get to bob pisani to see what is moving on the floor. Hey, guys, im checking on indications and we are still waiting for them to come up on the six ipos, three here at the nyse and three at the nasdaq. The important thing is the pricing was sensible on all of them and nothing has gotten out of hand. A couple at the high end and a couple in the middle. Yesterday triple digit gains double digit gains for three ipos that came thats kind of blown away the concerns that the ipo market is teetering on the downside after the disappointment from king. King is now being viewed as a oneoff problem. Aerohive, Cloud Platform for businesses, 10 the middle of the range and cbs outdoor america were waiting for them to price right now to open, and were talking 28 the high end of the price talk. Everyday health and still waiting for the indications to come up, 14 in the middle of the range of 13 to 15 and 2u the cloudbased Online Educational content provider they were at 13 towards the high end. Energus wire free charging technology. We didnt thif it would come today. 4 million at 6 and we have a reit bluerock residential priced at 14. 50 a little bit below the price talk. Overall nothing thats completely out of hand right now. Now, i want to move on and talk about the earnings situation because i know nobodys talking about it but earnings are going to start in two weeks. First quarter earnings up 0. 5 , thats what happened last year. I think youll see the earnings starting to come up. Good news on revenues. 3. 5 expectation gains and that will be a big pickup for the year. The firstquarter themes pretty simple, short the end and long japan stocks. Remember that trade . Thats kind of fallen apart. Japan is the worst per informer in asia this quarter down nearly 10 . One sector started weak and ended strong was emerging markets. One sector that started strong and ended weak, the social media and the cloud. I know you dont like the cloud overall but Software Enterprise Companies Like net suite and concur on the weak side. China lost and Everything Else was on the up side in the emerging market area. Lets go over to Rick Santelli standing by in chicago. Rick, we started the quarter with, what, the ten year at nearly 3 , now around 2. 7 . Absolutely, bob, good point. Theres only two maturities that are actually showing higher yields than they did at the end of last year and thats the two year and the three year. Even the five year which settled at 174 is down on the year in yield up on the year in price. Okay, lets take a look at a couple of issues. Lets start with that five year. That is really the linchpin of the yield curve, the fulcrum the main area of focus and the main area of where the flattening occurred. If you look at a twoweek chart you can clearly see it moved up in yield and its just stuck. Its basically been virtually sideways since a week ago wednesdays fed statement. Look at a chart of ten year. Were virtually unchanged. Were a bit down on the week. If you open the chart up, though, and this is interesting, to a twoday of the 30 year. The 30 year yesterday dipped briefly below the 3. 5 level. Open the chart up. We are now in the zone on the longest maturity that we havent seen on a closing basis since july. You know, another instrument shorter duration thats doing the same thing . The bund. The tenyear bund. Look at the tenyear bund also now coming back to july and it underscores the difference between our ten and the bund, their ten is about a six year. The widest that spread has been. We need to Pay Attention to that. If we look at one more area thats key, what we want to look at is the dollar yen. This continues to give you clues on Interest Rates and like Interest Rates for the moment not a lot of action although a lot of trade. David faber, back to you. All right, thank you very much, Rick Santelli. Well, cbs outdoor america is set to begin trading this morning on the big board. The company priced at 28 a share at the high end of its planned range. The deal 15 times oversubscribed, we are still waiting, though, for the first break, but before we get to that joining us is jeremy male the ceo of cbs outdoor and les moonves ceo of cbs. Good to have you both here. You will own 80 of cbs outdoor and that will be exchanged. Six to eight months well not own outdoor anymore. Why is cbs better off with outdoor and to you, mr. Male, will you operate the company differently once you are fully independent . As we analyzed the strategy and at our core were a content company, you know, and cbs outdoor is a Wonderful Company, but really didnt fit into the future growth, so when you look at it, the idea of splitting off the outdoor division, it was a positive for the Outdoor Group plus a positive for cbs because it gives us more cash and gives us more ability to continue to expand in the content business. Will the company be any different once its fully independent from cbs . You know, cbs has been a great parent for cbs outdoor over the years. Its been a tremendous company within that business. I think it can be an Even Stronger business outside. I think having management that is solely focused on out of home is a good thing. I think it will be sort of rejuvenating some of our staff to be part of this exciting new venture. I think just in terms of, you know, Capital Allocation, i think, you know, when youre in a business thats sort of, you know, a content strategy, primarily, i think to the extent that we can be making our own Capital Allocation decisions will be a positive thing. Was it starving you of capital in the past . Not true. Not true at all. Its a Wonderful Group and theyll have a lot more autonomy. You are still waiting for approval to become a reit. Right. Im curious, a, do you expect approval will be forthcoming, and does that change your Shareholder Base . Something jim had brought up earlier, of course, is the significant yield. You have to have a very good yield if youre going to be in the reit group. How do you see that evolving . Were as certain as we can be that well be getting the plr pretty soon. Well convert to a reit at that point when cbs dont own any of our stock, so thats going to be in the 6 to 8month time frame that les pointed out earlier on. Yes, i think we will over time have a different Shareholder Base. Its fair to say that the reason investors need to get to know us and understand us. But weve been talking to a number of them over the last couple of weeks and, you know, genuinely theres been a lot of interest. This is a slowgrowth business, so whats the pitch to investors, then, in terms of why youd want to own this . I think really what were saying is its kind of growth with a great sustainable dividend, you know, in the middle of the range, you know, that the yield was sort of 5. 5 thats a great yield and we believe we can offer some good growth. We think the market has great opportunities for us and we think that, you know we think the outdoor pie can keep growing and we think we can get a, you know, bigger share of that. Its significant to know that obviously with a reit a great percentage of the income that will go back to the shareholders. And we are very confident the reit is imminent, so thats going to be although my understanding when its an ad on a bulls it cant be considered a reit, right . When its actually in transit it gets some of do you know what, we wont even go there. Most of the assets will be part of the reit. In terms of your assets and in terms of the money, of course, thats come in the Exchange Offer. You already bought back a lot of stock. Yes. Its a key part of your story but youll continue to buy back more. Earlier this week, leslie, larry fink, criticized this focus on buybacks that we see at so many corporations saying you should be investing more instead of just worrying about that. How do you respond . The good news is from the outdoor transaction well get a lot of capital. In addition our Balance Sheet is in great shape, so we have great capacity to do anything we want. Yes, buying back shares is a big part of our company but well have a lot of money to try to expand our content creation, you know . And thats a part of what our strategy will be. What does that mean, though . Whats s tdoes that mean to well not do something thats stupid or not accretive. If theres the right content asset thats out there we can manage them very well, weve proven that. Well look for those opportunities. Wow. All right, les yes, jim. We might have an open over at everyday. Okay, another open. The consolidation. Yes. Of the cable companies, maybe of the dish companies. Yes. Does it worry you . Not really. As long as were producing the kind of content we are, as long as we have the nfl and we have ncis and the big bang theory, they cant not live without us. So the comcasts of the world, they appreciate content companies, so we think were going to be fine. No, it doesnt worry me. Do you think you need to get bigger . And i ask that because many investors look at the cash that you are generating and taking and will do an acquisition . And you said youll only do it if its accretive. We dont need to get bigger, we wouldnt mind getting bigger. Our assets are working really well right now. Our network, our tv stations, the local business, showtime, everythings really working. Our content is being sold all over the world, so the outlook for us is very promising. How is business right now . Because ive been hearing that its slower in the Second Quarter or i should say pacings for what will be the Second Quarter may be a bit slower. Some people citing the weather. Im curious as to whether either one of you can share some current reflections on bis. I think all id say as we look forward generally, you know, were confident, you know, of our outlook. And, you know, were confident in our ability to, you know, keep going and growing slowing a little bit . No, actually, on the contrary. During the olympics obviously a little bit slow. Theres not a lot of scatter activity going into the olympics. The olympics are over and the last two weeks in scatter have been terrific. So, its building up perfectly as we head into the upfront which is exactly what we want. Last two weeks in scatter and you got march madness. And we got march madness which is doing really well. Im fascinated by the digital displays, jeremy, what is the payback and how long does it take to convert . Those are impossible not to notice as you drive by them. Thank you for saying that, we tend to agree obviously. We get around four times the revenue from a digital display as we do from a sort of static display. We maybe end up paying a couple of times of rents. Its right up in the 20s. You got almost 400 now that are digital. Whats the path on that . How many can you do . We think well probably be in the area of another 100 a year, Something Like that. So, yeah. Right now digital revenues are 10 of, you know, 10 of our base and that will keep growing and be 15 in two or three years time. On my calendar i have written down april 22nd because thats when i believe its on the calendar because thats when the Supreme Court will hear the aerial case. Will you be in the courtroom . I wont be in the courtroom. I doubt theyll want me there. How important will that be . Aerio is important. We think well win. The solicitor general came out in favor of us and theyre siding with us and the percentage of cases that usually go with the solicitor general is very high, somewhere in the 75 to 80 range, so were confident. If it if we dont win, we have other ways of making up for it. So, its nothing i lose sleep over it. Well win either way. Other ways of making up for it. What does that mean . Putting your shows directly on cable and forming our own aeroe, going over the top and lots of solutions and no fear on my part. Leslie, as always, leave it there. Always appreciate you coming by. Good luck to you, mr. Male. Well watch the open. Were watching with interest. You indicated 29 to 31. Are you happy with that price range . Look, its just great to be here, to be honest. Once weve gone out and marketed the business, after that its kind of out of our hands. Open at 28, 29 to 31 it will be great. When we come back, blackberry Ceo John Chen shares the lift from the quarterly results. Squawk on the street is coming right back. Beautiful day in baltimore where most people probably know that geico could save them money on car insurance, right . You see the thing is geico, well, could help them save on boat insurance too. Hey okay. Im ready to come in now. Hello . Im trying my best. Seriously, im. Im serious. Request to come ashore. Geico. Saving people money on more than just car insurance. So our business can be on at ts network for 175 a month . Yup. All 5 of you for 175. Our clients need a lot of attention. Theres unlimited talk and text. Were working deals all day. You get 10 gigabytes of data to share. What about expansion potential . Add a line, anytime, for 15 a month. Low dues, great terms. Lets close new at t mobile share value plans our best value plans ever for business. [ male announcer ] this man has an Accomplished Research and Analytical Group at his disposal. But even more impressive is how he puts it to work for his clients. Morning. Morning. Thanks for meeting so early. Oh, its not a big deal at all. Come on in. [ male announcer ] its how edward jones makes sense of investing. Waiting for the 20 million shares of cbs outdoor to indicate indicated 29. 50 to 30. 50. Well check on that. And well get that and stop trading with jim and well get Consumer Sentiment when we return. Rn. A name and not a num . Scottrade. Ron im never alone with scottrade. I can always call or stop by my local office. Theyre nearby and ready to help. So when i have questions, i can talk to someone who knows exactly how i trade. Because i dont trade like everybody. I trade like me. Thats why im with scottrade. Announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. A 401 k is the most sound way to go. Lets talk asset allocation. Sure. You seem knowledgeable, professional. Im actually a dj. [ dance music plays ] woman [laughs] no way that really is you . If theyre not a cfp pro, you just dont know. Cfp work with the highest standard. But with so much health care noise, i didnt always watch out for myself. With unitedhealthcare, i get personalized information and rewards for addressing my health risks. But shes still gonna give me a heart attack. Thats health in numbers. Unitedhealthcare. Dows up triple digits and lets get stop trading with jim. Alcoa amazing, 6 yesterday, amazing run. Rumors of a chinese stimulus that could come this weekend. Some of it because they are closing smelters. This came out 147,000 metric tons out of brazil. They are really tightening and the lme decisions, prices for aluminum will go up. Dont sell this stock. It has run, but its not a sell. And that has been the problem is the raw product, not the finished product. Yes, because the finished product has been doing very well. The idea has been if the raw product could go up, maybe they could cleave it off and maybe create two companies, that would be the value. Chinese stimulus seems to be playing through other stocks. You are seeing it in the caterpillars, and the iron makers. Watch cliff. I mean, cliff, remember that one . Sure. Cliffs natural. If there is a stimulus plan announced sunday, we will go higher again on monday. Yeah. With that, lets get to Consumer Sentiment. Rick santellis got it in chicago, rick . The university of Michigan Sentiment survey 80. 0. 80 right on the nose. This is close to expectations. You could say a little light. Our last read which was the preliminary for march at 79. 9 was very close to this number obviously and this will be the weakest number since november last year when we were at 75. 1. And just to put a final face on this, last july 85. 1 was the highest read going all the way back to july of 2007. So, we have lost a bit but Still Holding an 80 handle. Interest rates on the week are down a bit. Carl, back to you. Rick, thanks so much, Rick Santelli in chicago. Jim, whats coming up tonight . Weve got finish line. The group has been under pressure, the footwear group, lets find out what is selling. The company had a good quarter plus six, but theres always a story here that perhaps retail is slowing down. That has been the theme. Remember, retail is the one that looks like its breaking down, you know, after biogens broke down theyre trying to make a stand. Its retail thats at the precipice. The nasdaq trying to make a stand only six of the nas 100 are negative. Well, you know, you mentioned, this is where the weakness is, this is where people panicked. Maybe it stabilizes. Jim, well see you tonight. Thank you, guys. Jim cramer mad money 6 00 p. M. Tonight. And john chen will talk his turnaround strategy in wake of the results and gainstop paul raines. Dont go away. Just take a closer look. It works how you want to work. With a Fidelity Investment professional. Or managing your investments on your own. Helping you find new ways to plan for retirement. And save on taxes where you can. So you can invest in the life that you want today. Tap into the full power of your fidelity greenline. Call or come in today for a free oneonone review. [ chainsaw whirring ] humans sometimes life trips us up. Sometimes we trip ourselves up. And although the mistakes may seem to just keep coming at you, so do the solutions. Like multipolicy discounts from Liberty Mutual insurance. Save up to 10 just for combining your auto and home insurance. Call Liberty Mutual insurance at. [ thump ] to speak with an Insurance Expert and ask about all the personalized savings available for when you get married, move into a new house, or add a car to your policy. Personalized coverage and savings. All the things humans need to make our world a little less imperfect. Call. And ask about all the ways you could save. Liberty mutual insurance. Responsibility. Whats your policy . Welcome back to squawk on the street. The roadmap begins with the markets. The dow seeing triple digit gains thanks to some consumer data, but some investors still worried about froth. Loud in here. Japanese retail giant uniqlo is looking to become one of the worlds most powerful brands. The ceo will be joining us for an exclusive interview. And the ceo parade continues gamestops been struggling but now its competing with walmart. Well talk to that ceo as we turn our attention, david, to post eight where cbs outdoors just opened for trade. It has. It looked like it opened and it is up a bit. 30. 33 as i look over my shoulder here. A nice open there after being priced at 28, 20 plus million shares, of course. Cbs selling 81 into the market. Excuse me. 19 into the market, will own 81 . But this will be followed by an Exchange Offer of cbs with the shares that it owns for its own stock about six months down the road so it will have completely divested in cbs outdoor. A nice open here. It expects to become a reit although that approval has not yet been received by the company and, therefore, will pay out at least 90 of its earnings in the form of proceeds to shareholders with, of course, expectedly a large dividend. Who would have thought on a week we get all the crazy gaming ipos and people are talking about the cloud nonstop that the biggest deal of the week is your Old Fashioned billboard. Exactly. Old fashioned may Say Something that cannot be overtaken perhaps by the new age. We will see. But certainly people will continue to drive and see billboards as they do so or on the sides of buses or at bus shelters, transit an important component of the business as well. The ipo parade continues this is one out of six four here at the Stock Exchange and two down at the nasdaq i know we have more ceos coming up. Jeremy male and les moonves exiting the floor here a little bit more applause as it does open for trade. Talking about the markets this morning seeing green, of course, on betterthanexpected consumer data. Just got good confidence number as we near the end of the First Quarter. Weve seen the deluge of ipos but the momentum stocks have had trouble pretty much all week long, whats an investor to do . Here to weigh in is jim store columnist with the New York Times. Thanks, carl, good to be here. The debate is can it continue in some sort of contained fashion without infecting the rest of the market . Where do you think we are in terms of this correction . Well, i think this is a Pretty Healthy development. We had a huge runup last year. I think its very impressive so far that the broad market has held its own, gained a little bit with fed worries overhanging it, geopolitical worries in russia overhanging it, some froth in the ipo area and some of the momentum stocks but ive seen them break down a little bit and at this junk ture thats actually Pretty Healthy. One dynamic weve been trying to prove at this desk they are selling these names to get in on these ipos. Does that ring true to you . I really dont i dont know. I mean, i look, momentum stocks, ipos especially new companies, by the way, the cbs, one thing i love about it is its so Old Fashioned. You dont have to guess. Its not a story stock. Its got a long track record. You know where to price that thing. These other ones, i dont know. But the momentum in the ipos are similar and theyve got a story and maybe theyve got some Revenue Growth, but the rest of it is all conjecture. Which do you want to pick . I mean, pull it out of the hat. Its a guess on the future. Now, personally when i look at these momentum stocks and i have looked at a few of these with my class at columbia, i like to see the brokendown momentum stock that has real Revenue Growth not from acquisitions, not some other phony thing and less of the story. Example . Well, there are a couple chinese stocks i just saw on your screen, wbai, 500. Com, vips, its an internet retailer, those are two i looked at recently. They were both down 25 from their peaks. One thing i like about it, nobody likes china right now, china can manage that economy a little bit. I would never count china out, number one. And secondly, theyve got real incredible Revenue Growth. Theyve had great numbers. If they can do that again, theyre going to be a good buy. Revenue growth is one thing ipo is another, Renaissance Capital put out a new report over 50 ipos this year and twothirds of them were unprofitable. That makes me nervous, im old enough to know the 90s and the bust in early 2000, all the Companies Going public with no earnings. Some of them actually had very little revenue, too, but no earnings. That to me makes me a little nervous. Id like to see a little less froth in this ipo area, although you are seeing some selloff which i think is healthy. The correlations people want to make with the dotcom bubble, are they fair to make . What do you think . No, no. The market valuations are nowhere near where they were then and history never repeats itself exactly. So, i think these analogies are interesting but i dont take those too seriously right now. Im thinking of the big event king going public. It was the worst ipo performance in 2014, indicative of something broader and more worrisome, some of these things, you on do you think its Company Specific . I think its Company Specific. Whoever sold that deal did i guess an amazing job. Who buy these things . A onehit wonder called candy crush, i dont want to go near that. There is the broader question of what companies are paying even for privately owned companies or what private equity is paying. Facebook, again, this week with oculus, whatsapp a few weeks ago. You think in the valley or when we talk about Tech Companies buying to preserve their own space, that those valuations are out of control . Well, look, if i was an invested banker, i would be knocking on Mark Zuckerbergs door. I mean, money seems to be no object there and, again, this is all about this is a bet. Its a guess about the future. And do they know more than the rest of us . Maybe they do. Im not in a position to say. But certainly by any conventional valuations these things are theyre crazy, i mean, even the twitter ipo, if you look at the numbers is pretty out there. So, yeah, there is some of this froth going on. And, you know, we just dont know. It is a complete guess about a new area, new technology, theres no way to know the future, theyre very, very hard to price. But i would have to say by historical standards, yeah, these deals are beginning to raise my eyebrows. Jim, its always good to get your take. Thanks for coming in. Sure. Jim stewart from the New York Times this morning. Speaking of technology, lets go to jon fortt now who is on the floor with more on blackberry, story of the day here, came out with results that were actually better than analysts were expecting. Perhaps some good news for blackberry. Yeah, you could say better. You could say not as bad. I think overall revenue did come in light. 976 million versus over a billion that folks were hoping for. But the eight cents nongap loss is certainly better than the 25 cents that consensus street was expecting. 37 of revenue was hardware. 56 services. So, whats impressive here is the shift thats happening towards services. Also theyre bringing down the number of blackberry handsets in the channel which should be Pretty Healthy Going Forward. The main question, though, is can they sell blackberry enterprise server to all the companies that dont just want to manage blackberries, they also want to manage ios, they want to manage android, the new version of blackberry enterprise server or bez as they are calling it can do that but the easy path program which is supposed to migrate people over to that, it starts on april 1. John chen was sounding bullish about interest on the call this morning. Interest from enterprise customers eluding to that, but until we see them actually moving we dont know whether that Revenue Growth is really going to materialize and happen. I know, jon, that they are focused on the other areas of growth, but i said to carl i was surprised over the quarter that the company sold 3. 1 million blackberry hand sets and whats interesting about that is most of them were actually the older models. I would caution you there, they didnt actually sell 3. 4 million handsets. A lot of those sold through. Most of those they had accounted for in previous quarters they sold 1. 3 million and, lets see, 2. 3 million of those that sold through altogether were as you say blackberry 7 devices. Thats the vast majority of those. And thats where a lot of the Service Revenue that were going to continue to see from them for a while is going to come from until they get this new version of blackberry enterprise server up and running and we really see that corporations are buying it. Thanks for putting it in context. Makes sense. Jon fortt thanks for running through the blackberry numbers with us and were looking forward to your conversation with blackberry Ceo John Chen. Hell be joining us a little bit later on first on cnbc interview right here on squawk on the street. When we come back, its the one of the names making fast fashion the next thing for retailers, japanese retailing giant uniqlo usa will join us to talk about it as well as the rumored courting of j. Crew. Well be right back. Back. Are you still sleeping . Just wanted to check and make sure that we were on schedule. The First Technology of its kind. Mom and dad, i have great news. Is now providing answers families need. Siemens. Answers. And his new boss told him two things cook what you love, and save your money. Joe doesnt know it yet, but hell work his way up from busser to waiter to chef before opening a restaurant specializing in fish and game from the great northwest. Hell start investing early, hell find some good people to help guide him, and hell set money aside from his first day of work to his last, which isnt rocket science. Its just common sense. From td ameritrade. Welcome back to squawk on the street. Check out shares of solarcity up about 5 after Raymond James upgraded the stock to outperform from market perform based on valuation. The firm says buying the dips in these shares have proven to be a good buying opportunity over the past year. In fact, over the past month solarcity lost about some 30 so it does look like a classic buy on the dip call, david . All right, thanks very much, sheila. Retailer uniqlo opened in new yorks soho neighborhood in 2006 and has since expanded by setting up 17 largescale stores in key markets across the United States. This year it will open in boston, los angeles, and philadelphia as it looks to be the fast fashion antidote to stores such as h m, forever 21, and the gap. Larry meyer is the ceo of uniqlo usa. As he welcomes us for a cnbc exclusive. Are you in danger of becoming the next bentiton . No, i dont think so. As much as we love to have the colors and similar in benetton, we are about innovation, new technology in clothing and constantly evolving our assortment. And, you know, are there dangers, i mean, in terms of your approach to expansion, which youre moving at a fairly steady and significant pace, what are the dangers that you see and what are the post you know, that you keep in mind to sort of say, okay, we cant go beyond this amount of openings in a particular year, for example . To me the real new thing about expansion is making sure your bricks and mortar strategy complements your ecommerce and Digital Strategy so that you are looking at total revenue as opposed to just store growth. I find it interesting that at a time when many retailers in the space are actually closing stores. I mean, Just Announced gamestop well be talking to the ceo later closing 2 of stores, you are expanding so aggressively in the u. S. Market. Isnt that a risky strategy with traffic patterns changing and people shopping in different ways . At only 17 stores i dont think it is it is a problem. We have to be very focused and make sure were going to the right locations within the great cities. My other question is in terms of style. I know its a japanese brand, and its sort of conquered that country, coming into the United States early. Do you have to change the styles and switch up the manufacturing process to cater to an american audience versus, say, a japanese consumer . Well, wed like to evolve and make sure were both a global brand with influences from both the u. S. As well as japan and europe. So, our goal is to ensure we have influences from around the world and have global appeal. I want to apologize for all that sound. It sounds like were at a stadium. Cowbells. Cowbells and all, we have a number of initial Public Offerings that have priced and thats yet another one you are hearing, mr. Meyer. A lot of talk about j. Crew as a possibility, a merger partner for uniqlo. I know Mickey Drexler pretty well and hes impressed i should say with what your retailer has done. Are you interested in acquiring j. Crew . Im here to run the u. S. Business, and i really cant comment on anything, but, you know, all companies are always looking at all possible opportunities for growth. Well, given all of the competitors such as a j. Crew, how do you position the company from both a value and fashion perspective and to your Customer Base . Well, our brand stands for stylish stylish classics, great innovation, be that in our heat tech or safety with our uv functionality, with dry pants and dry polo shirts. So, its about making yourself making your life easier to live with uniqlo clothing. Ive been at the 53rd street and fifth avenue location, my colleagues know i dont normally go in many of these stores, but my kids dragged me in. Its quite an interesting experience. Are you replicating that in the other stores in terms of the opening . We are trying to bring elements as that stores is large and our stores elsewhere are not as large. Right now if you go into the store, we just opened sprz which is bringing arc to clothing with our association with moma. Im curious about who your customer is in terms of price point. We hear so much about the retail environment and the customer and how its different across the income levels. I mean, its not ive been to the h ms and your previous employer and thats much cheaper price point, so who is your target customer . We like to think its everyone because we have kids, women and men, and were about having great quality, consistent, stylish basics, at a consistent value price. But in terms of income level and the price point exactly, i mean, it is higher, right, than forever 21, but lower than some of the more designer brands. Well, you know, you have to look at each item like our graphic ts and art ts are 19. Ny 19. 90 and the polo shirts at 19. 90 and the dress shirts are 29. 90 overall i think our prices are competitive and plus you get a quality benefit. And mr. Meyer, finally, how would you characterize the consumer in this country to the extent you can do so given your limited store base . Well, were very fortunate at this particular point. We find a pretty strong Customer Base in both more than california and the metro new york area and thats really where our stores are at this particular point. And we also see growth in our ecommerce platform which is nationwide. Mr. Meyer, thanks for joining us. Very much appreciate it. My pleasure. Larry meyer, ceo of uniqlo usa. Breaking news this morning on General Motors. Phil lebeau is in seattle for us this morning, phil . Reporter good morning, carl. General motors has sent out a memo to its chevy dealers telling them to halt sales of 2013 and 14 chevy cruze, not all chevy cruze, only 1. 4 liter models. Gm has not given a reason why it issued the halt in delivery of these chevy cruze models but it worth noting the cruze was the best selling car for General Motors last year, almost a quarter million was sold. It only impacts 1. 4 liter chevy cruze models, dealers have been told to stop selling those and well give you more information over the next couple of day. Thats the latest from General Motors, guys, back to you. Thanks so much, phil. We want to show you that aerohive has opened for trade. Of the three big ones weve had on the floor two are trading in the read and aerohive is one of them. Wireless networking concern. Plan to raise 75 million. Says its never had a quarter or a year of profitability. Although 11,000 customers and backed by kliner perkens. A lot of cowbells. Yes. Its getting hard to work in here. Its exciting. You need more cowbell. Ive got a disease and the only cure is cowbell. Youll miss those applause every time you talk when the ipos stop. Watching the ipos and well talk to the ceo a little bit later on squawk on the street, but up next cocacola fighting back. The company is responding to more attacks from an activist investor over its executive pay plan. Weve got the latest details. And later the ceo of gamestop joining us for an exclusive interview. How does he plan to stay relevant and compete with the likes of walmart and some of the Digital Games . Were back after a quick break. ] when fixed income experts. Work with equity experts. Who work with regional experts. Who work with Portfolio Management experts, thats when expertise happens. Mfs. Because there is no expertise without collaboration. Mattel started in a garage. Disney started in a garage. Amazon started in a garage. The ramones started in a garage. My point . Some of the most innovative things in the world come out of american garages. Introducing the lighter, faster cadillac cts. 2014 motor trend car of the year. Aint garages great . The drama surrounding cocacolas pay plan is heating up. Coke out this morning with another very Strong Defense of its 2014 equity plan after Value Investor David Winters actually sent a second let they are week protesting it. Sent a letter to Warren Buffett the biggest shareholder to the board and to his fellow shareholders. At issue here is the stock Compensation Plan which coke needs its shareholders to vote on april 23rd at the annual meeting. Winter says it dilutes shares by 6. 6 . And that coke is calculating it wrong and understating the dilutive effect. Coke is firing back in a big way saying now mr. Winters claims shareholders will be diluted by 16. 6 . This figures taken out of context. It ignores the impact of our robust Share Repurchase program and our pay for performance policy. The dilution is minimal. Coke claiming that its not just Senior Management its 6,400 employees that are eligible. Its performance based. Basically winters and coke coming back and just digging in their heels with their same arguments. David winters wants the plan scrapped. Coke says that its board stands behind it ahead of the annual meeting. And that this is completely wrong. So, both of them really being stubborn here. Its difficult math. Ive been talking to a lot of the analysts and basically coke is not changing its longterm Compensation Program here. Its an industry norm but it does raise a question, again, about executive comp, how much management is paid, and whether they should be tied directly, indirectly to the performance of shares. I mean, its not the industry are highlighting some of these issues. Other beverage news, weve been talking about breakfast, it turns out mcdonalds is offering free coffee amid the breakfast world. The worlds biggest hamburger chain announcing today that participating u. S. Locations will actually be offering small cups of mccafe coffee. Getting serious. Taco bell yesterday announcing its new waffle sandwiches. And got a lot of pr play out of that as well. We know coffee as we said earlier, breakfast, high margin business, thats why they are all chasing this traffic. If you go to one, its kind of like watching your favorite news show, youre going to probably go to that one more than you try others, so the repeat business in the high margin business means its a real dogfight right now in the mornings. Yeah, mcdonalds, dunkin donuts. People are fan of their coffee. Starbucks. Starbucks. Chipotle makes news about it. When we come back 2u makes its debut on the nasdaq today, currently trading down almost 2 . Well talk to the ceo who is also the former head of hooked on phonics, when we come back. The dows up 116. Announcer where can an investor be a name and not a number . Scottrade. Ron im never alone with scottrade. I can always call or stop by my local office. Theyre nearby and ready to help. So when i have questions, i can talk to someone who knows exactly how i trade. Because i dont trade like everybody. I trade like me. Thats why im with scottrade. Announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. Love love will keep us together sure. How can you play the captain tenille and keep it together . All right. Shares of cbs outdoor you can see them there up sharply this morning after 23 million shares were priced at 28 a share. You can see the stock having a very strong debut. Cbs will continue to own 81 until it pursues an Exchange Offer under which it will essentially buy back a lot of cbs shares later this year. Earlier in the show jeremy male who is the ceo of cbs outdoor as well as Leslie Moonves, ceo of cbs, and moonves had this to say about the decision to part with cbs outdoor. After we analyzed about where our company was going were a content company and cbs outdoor is a Wonderful Company but really didnt fit into the future growth, so when you look at it, the idea of splitting off the outdoor division, it was a positive for the Outdoor Group plus a positive for cbs because it gives us more cash and gives us more ability to continue to expand in the content business. Other fronts, of course, there are no shortage of them on april 22nd the Supreme Court is scheduled to hear the aereo an important case for cbs and other broadcasters. I asked moonves what he will do, what his expectations are in terms of whether the company will win at the Supreme Court and what happens if it doesnt. Aereo is important. We think well win. The solicitor general came out in favor of us and theyre siding with us and the percentages of cases that usually go with the solicitor general is very high, somewhere in the 75 to 80 range, so were confident. If we dont win, we have other ways of making up for it, so its nothing i lose sleep over it. Other way of making up for it, what does it mean . Putting our shows directly on cable forming our own aereo with the other networks, going over the top. Lots of solutions, no fear on my part. Interesting answer there. And so glad you followed up on what does that mean, right . That was such an interesting answer. Hes got a whole panoply of ideas and well see if they follow through with the threats, if theyre real. But if they were to lose at the Supreme Court that would be a very they hear the case the 22nd and we wont get the decision until most likely june but it will be very important. Also saying the scatter market looked in his words terrific postolympics. Ive been hearing the opposite, theres been some concern about whether, you know, retail, advertising, for example, has that come down, moonves saying very strong over the last couple of weenks. All right. Thanks for bringing that, david, great stuff. Lets get over to the cme group in chicago and Rick Santelli with a friday edition of the santelli exchange. Good morning, rick. Good morning, carl, and a very good morning to mark grant, our guest, thank you for taking the time this morning, mark. Always a pleasure, rick. When we were coming out of commercial break they happened to be playing a song love will keep us together captain tenille, change a couple of words energy will keep us together. That should be the theme song of the postanalysis of crimea and europe and russia. Would you disagree with that . Listen, we can talk about acting tough, talking tough, but in the end, the dynamics of how energys integral on the sell side and the buy side is pretty much going to take care of most of the issues in that region for the near future, would you agree . Yeah, rick. I think that the one of the big issues in the crimea region is the natural gas pipeline and the energy that goes out of russia through the ukraine and then into europe. And, of course, ukraine has said maybe were going to keep the pipeline open, maybe not. Thats one of their big threats and, of course, over in europe, germany and austria and the other developed nations need the energy, so i think thats all part of this political process. Yeah, theyre not going to cut that baby in half. All right, lets switch gears. Thursday of the week coming upon us will be an ecb and even though traders always say thisb big one for obvious reasons. Weigh in on thursdays ecb meeting, mark. Certainly. One of the big issues, rick, is that spain just went into a deflationary mode. And the ecb ive been told by several people is paying very close attention to that. They may cut rates further finally which is something that has been discussed prominently and they may even go to negative rates to deal with this inflationary problem. Which, of course, then is going to have a terrific impact upon the euro and the euros relationship with the dollar, so its going to be a very significant meeting. Everybodys weighing in that the slowing in china is going to disproportionately be felt in germany, meaning its going to hurt their economy more. They just closed down a Nuclear Power plant early right in the backyard of bmw so maybe Energy Prices are going to go up. My guess is theyll go up no matter what. But i look at bmw stock which i show on the veen, its a moon shot, how do we reconcile the nervousness of the German Economy versus the fact of what bmw stock price may represent . Your point is well taken, rick. The slowdown in china is real. Theres no question about it. Plus in their shadow banking area, they have allowed for the first time several bankruptcies in the coal business and solar. And that is going to have an impact upon all of the western world including the United States. As the chinese economy slows. And then, of course, over in europe, the auto stocks, bmw as you point out, are coming off significant low numbers so im not surprised to see the bounce at this point. Thanks, mark. Have a terrific weekend. Look forward to talking to you again. Carl and the gang, back to you you. All right, ill pick it up. Rick santelli, thank you very much. Shares of 2u are open for trading. The cloudbased Education Company debuting on the nasdaq today. It priced at the top of its expected range of 13 a share. Joining us on this first day of trade is chip paucek, hes the ceo of 2u. He was also featured in our squawk breakthrough a couple months back. Its great to see you again, chip. Good morning, happy to be here. The question is timing for me. Obviously were in the middle of an ipopalooza here at the new york Stock Exchange and nasdaq, but when you think of Education Companies were all reminded of cheg last fall which had a tough ipo day last year, but education, why now . We partner with top colleges and universities to build what we believe are the worlds best online degree programs. Were here for the long haul. Were working with great schools, capitol hill, usc, berkeley, to build some of the best programs in the world. So were thinking over the next couple of decades. It looks like investors are happy. The shares opened higher there on the nasdaq. The question, though, is how fast are you going to move to sign up new graduate programs, new undergraduate programs . This isnt about speed. Its really about quality. We are really working with some of the greatest universities in the world and for the first time these schools have made a very difficult decision. Make the Online Students equal to the campus students in the way that typically doesnt happen. These are the same degrees, theres no e or i on the degree of any kind. Its the same quality, same outcome and faculty and the schools have made a difficult decision and lean in and doing it in our opinion the right way using our sas solution. Its good to see you back. Yes, carl. What do you make broadly of the convergence, the coincident ipos that are all resvolving around cloud, its getting knocked as a froth and boom . Is it that or is it more of the technology migrating over time . Its clearly the technology is Getting Better and better. And our chief Technology Officer built a system that allows universities to power their full degree programs with an intimacy that really rivals the campus solution. We think not only is the sas solution here to stay but we think 2u powers some of the best programs in the world based on that sas solution. What are you seeing in terms of growth for the industry . I know one of your competitors recently received yales former president rick levin as the ceo. Thats got to be a vote of confidence in the industry in general. What will it look like for Online Education . Prekconceived of Online Educations are a challenge, historically it hasnt been there, but now you have georgetown or berkeley or usc doing it in a way that we think is representative of the quality of those incredible brands. We think over time that will be really wind at the company. All right. Well, thanks very much. Congrats on the ipo. Shares trading higher. 2u, chip paucek, thanks for joining us today. All right, when we come back, closing stores, profits decline. Gamestop shares fall after reporting earnings yesterday, but sales are up. Why is that . Well find out when we talk to the ceo paul raines in just a few moments. We took a walk down to the bank nk h ones to follow . The equity summary score consolidates the ratings of up to 10 independent Research Providers into a single score thats weighted based on how accurate theyve been in the past. Im Howard Spielberg of Fidelity Investments. The equity summary score is one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. Video Game Retailer gamestops stock dropping on a missed Fourth Quarter earnings but rebounding today. Some pressure from online video sales and retailer walmart accepting video game tradeins. What lies ahead for the company, paul raines joins us today, its good to have you back on the program. Hi, carl, its great to be with you. Hello, sara and david, nice to see everyone. Since youre there and since we mentioned it, walk me through what is important about simply mac. Its a great story. Simply mac is the largest and fastestgrowing apple dealer in the United States and what weve done is in partnership with our friends at apple weve identified secondary and tertiary markets where they dont have good distribution and they need better distribution and were building 3,000squarefoot specialty stores. Here at simply mac and all over the western part of the United States and soon to be nationally you can come in and buy great im imacs, laptops, you can buy an iphone and ipad and get all the accessories you need from apple specialists and the simply Mac Associates that are terrific. An underserved market. Thats right. Lets talk about the quarter and some of the metrics, paul. The guidance on some of the comps was a bit disappointing and some are arguing why would we be disappointed in the wake of new consoles from sony and microsoft . How do you explain it . You know, carl, its been an interesting cycle for us. Youve followed us for a while. Were often a poorly understood company but we just closed a quarter where we comped 8 and we had earnings pressure due to the mix of our sales going heavily to consoles. If you think about the guidance we gave for the year, we gave strong, double digit earnings per share growth for the First Quarter and for the full year. We expect to comp between 6 and 12 . I dont think thats disappointing. Ive been in retailing for a long time, but i think there are investors who dont understand that the console cycle is not a sudden event. Its a multiyear event, sew the video Game Industry is going to have growth for quite a while Going Forward, carl, and will continue to be the dominant player in that industry. And in the meantime as we await for those new consoles to take hold, is it all about selling older games . No. Were seeing great growth of new software. But, of course, it is probable and likely that our preowned business will also begin to grow very rapidly. You know, historically we see very strong growth of new software with new consoles but the value consumer comes back into the category from other categories and begins to also buy the preowned business. I know you played this down in the Earnings Call but how are you not feeling a little bit threatened by wall mart getting into the used video game business . You know, were not playing it down. Weve been at this a long time. Gamestops a 9 billion company and were the dominant player in video gaming and i spent a lot of years in the big box world so i understand what is done well and what is not done well. But we think its good for the category that a new competitor would return to it. You know, it creates awareness. Consumers dont have great top of line of awareness of buy, sell, trade so that helps bring traffic. By the way, we are a formidable player in the space for a lot of reasons, so we think its going to be an interesting time and i think consumers will go to other competitors as they have gone to other big boxes and online players and theyll see what the experience is like and theyll compare that to gamestop and we generally have been successful in those challenges. Mr. Raines, david faber, are you satisfied with the amount of capital you are spending to keep up your stores and improve and i have a couple in my neighborhood and i have to say on the whole its not the nicest experience in terms of what im seeing in there. Yeah, david, i think capex is also important to drive innovation. If you are discussing stores in manhattan, weve remodeled quite a few of those but we have plenty of work to do, its one of those situations where weve always got to keep innovating and were also consolidating the footprint through our power rewards program which helps us focus on the improvements in the conditions of the stores. But we think our stores have had quite a bit of freshening in the past few years and well continue that. Finally, paul, you threatened at all by candy crush or king or any of the new casual games that get so much attention . Listen, candy crush is great. I play it a lot myself. We think casual games a good category. We operate congregate. Com in San Francisco which had a killer year last year and is one of the top publisher on the app platform and one of the casual game portals and we love gaming and we love customers coming into gaming. We think its an abundance technology and a pie that gets bigger for all of us. How candy crush does, well see, but we love the space and we think its important. But to be onhost theres so much growth coming in console gaming thats where there will be tremendous consumer activity. Well see you next time. Thanks so much. Great, good to see you guys, thank you. Coming up, Johnson Controls, the global giant making everything from lithium ion batteries to your car seat. The ceo joins us next. Well i wont back down nt ba. You seem knowledgeable, professional. Would you trust me as your Financial Advisor . I would. I would indeed. Well, lets be clear here. Im actually a dj. [ dance music plays ] [laughs] no way i have no Financial Experience at all. That really is you . If theyre not a cfp pro, you just dont know. Find a certified Financial Planner professional whos thoroughly vetted at letsmakeaplan. Org. Cfp work with the highest standard. Save you fifteen percent or more on car insurance. D Everybody Knows that. Well, did you know pinocchio was a bad motivational speaker . I look around this room and i see nothing but untapped potential. You have potential. You have. Oh boy. Geico. Fifteen minutes could save you fifteen percent or more on car insurance. General motors hoping sales of chevy cruise models today. Will Johnson Controls manufacture car interior, seating, and batteries but recently indicated a desire to reduce the exposure to the auto parts sector. Joining us now, chairman, president , and ceo of Johnson Controls. This is a cnbc exclusive interview. Thank you for joining us. Gm, i know you dont want to specifically comment nor are you necessarily involved, but you do supply parts for General Motors and this is what everybody in the industry is talking about, the recall crisis. Do you have any comment on how General Motors handled it . No, i really dont because i really dont know anything a it except what ive read. I know all the automakers have a process at which they go through in order to decide how to handle these situations. But im not on the inside of that situation at all. Another hot topic has been electric vehicles. How much growth to you see in electric Vehicle Production . Well, you know, Johnson Controls we look at it a little bit different. I think the elect fication of the vehicle were not as bullish on. Were not as bullish as many or a few on electric vehicles as a mass market for at least a decade. So i think tesla has a place. I recently spoke with one of the automakers and their concerned about folks like tesla in the higher end market. If you think about the mass market where we play we see Battery Technology evolving but were not sure electric vehicles will be the mass Market Product in the near future. Are you ramping up production in anticipation . Were rafri iramping up prod for higher voltage batteries. Micro hybrid batteries, were not as focused on electric vehicles. What about the cost factor . How are you going to bring down the cost of the battery packs . I think thats exactly why we think that over a period of time cost will come down but the technology is really not there yet. Manufacturer scale there, supply chain is in place. We still have technological hurdles in order to get the cost down and the train structure. And cost relates not only to the foreign factors but the weight and distance and all these things are related. Thats why its still a decade away. We can can do it t in the laboratory but not in real life yet. I want to ask you about auto demand because you have a great handle for it and you are the largest battery maker. What were seeing around the globe right now specifically in europe, auto production got absolutely slammed, demand falling, the recession hitting. We started to see a comeback. Is that for real . Are we starting to see real growth in terms of auto demand and production in europe . Were not counting on growth. Were happy to see things have bumped along. Theres a little bit of growth and thats pleasing us. But our plans dont project growth. But we would be happy to see it. I think that for europe to bounce around at this level for at least the next year or so is probably our predictions. U. S. Continues to be strong. We see china stronger than what the market has been predicting. Our sales in china have been stronger than the market forecast. Here in the u. S. , alex, the boom that sarah is referring to, will it have any impact on production going into q2 . Yes. Yes, i think that on the upside . On the upside. I think what we see is production continues to be strong. What we dont know is sales because of the weather and the harsh winter weve had is that going to have an impact on inventory levels for the oes. We wont see that for another week. Very interesting to get your thoughts, especially on europe no, growth. Thank you for joining us. Alex molinaroli,president and ceo of Johnson Controls. The ceo of blackberry, john chen, will be joining us life for a first on cnbc interview following the companys results dont you wont want to miss. This company trying to pull off a turn around. D. A turn around. Opportunities arent always obvious. Sometimes they just drop in. A turn around. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Easytouse platform. No, thank you. We know youre always looking for the best fill price. And walk limit automatically tries to find it for you. Just set your start and end price. And let it do its thing. Wow, more fan mail. My uncle wanted to say thanks for idea hub. He loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. [ male announcer ] open an account and get a 150 amazon. Com gift card. Call 18883303136 now. Optionsxpress by charles schwab. [ male announcer ] how could switchgrass in argentina, change engineering in dubai, aluminum production in south africa, and the Aerospace Industry in the u. S. . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 75 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Welcome back to squawk on the street. We are watching big name tech momentum stocks. Theyve been taking a hit this week. Today they are all up to the upside. Price line, amazon, tesla, netflix, and facebook are moving higher on the day. Were on the floor of the new york Stock Exchange looking at a nice rally. Looks like were closing out the week with optimism with the dow, the nasdaq, and s p all in positive territory. The nasdaq of course the out performer as we have been seeing in the past few sessions. Carl, watch out because the pattern weve been seeing as you open higher and sort of lose momentum into the close. We are still headed for a down week. It will be interesting to see if becan hold these gains throughout the trading day, as momentum movers specifically watching the teslas and facebooks are gaining background after getting beaten up this week. As you know, sarah, march has just not been kind to the nas. Nas has not had a losing march since 2005. At this point theyre on track for the worst month since 2012. Its not been a kind 30 day or so. And monday, last day of the quarter, just want to we remind. On monday, yeah. Have a great weekend, sarah. See you later on. If youre just joining us, heres what you missed. Welcome to squawk on the street. Heres whats happened so far. There were people who felt that this thing would be out of business. Did you see the cash position . I did not. They have a ton of money. What i was most worried about and i think a lot of our viewers is worried about that this thing was going tank. It didnt tank it. We realize at our core were a content company. You know . And cbs outdoor is a Wonderful Company but really didnt fit into the future growth. We find a pretty strong Customer Base in both Northern California and metro new york area. And thats really where our stores are at this particular point. Consumers will go to other competitors as they have gone to other big boxes and online players and they will see what the experience is like and they will compare that to gamestop and we generally have been succe successful. Welcome back to squawk on the street. Lets check the markets. Holding on to pretty much the highs of the day. Dow is up 146. S p interestingly is up almost 18, to 18. 66. And the nas is having the best day of all, better than a percent despite the weak month of march. It is 11 00 a. M. On the east coast. Watching for you shares of black werery rallying after earnings came in much t better than expected. Interim Ceo John Chen will be here in a moment to talk to jon for fortt. Facebooks Ceo Mark Zuckerberg is jumpingarena, dro. Find out why. Either way, the company is holding a big event in new york next week. Were going to try to figure out what the tech giant has up its sleeve. Should be interesting. The breakfast wars are heating up after taco bells waffle taco went live yesterday as we saw here on squawk on the street. So what can other fast food chains do to keep up . The ceo of sonic will weigh in later this hour. But lets start with blackberry. The stock rallying after posting a smaller than expected loss in the fout quarter. For more on this lets send it over to jon fortt, a first on cnbc interview with ceo interim john chen. John chen, ceo of blackberry, joins us. John, good to see you. It seems like the downgrade yesterday might have been a little premature. At least given todays Market Action based on your cost controls in the quarter. Lets start on hand sets. Sell through was better than sell in. You brought down inventory. Whats happening out there . People are still buying blackberry 7, blackberry 10 not taking off as much. Where are you seeing relative strength in actually moveing the headsets . Well, people are buying both. They are buying hi, jon. First of all. Thank you. Glad to be here. Anyway, people are buying both the 7 and the 10. We have were working out inventory in the channel on the 10. As you see now earnings released, we reduce the channel inventory by onethird. So its our headset is still moving. Moving quite nicely, too. Also, lets talk about blackberry enterprise server or bes as youre referring to it now. That is really key to the strategy Going Forward. Youre talking more about bes 12 now as opposed to 10 saying november time frame is when we should expect to see that. What are the early indications that the enterprise is actually going to buy this and that you will see some Revenue Growth out of that Going Forward . Thank you. We announced the bes 12 at mobile world congress. It was really a respond to a lot of enterprise customers saying that they do not want they want to stay with blackberry but they do not want to have twoic fra structure. Both the bbos infrastructure as well as best ten infrastructure. This is a respond to combine two as one. And, also, to really highlight our real Good Technology in the cross platform, in managing android and irk phone aiphone a devices. This is one infrastructure that could manage everything for a company. So when we when i start go and speak to customers, they love it. They all are very positive about it. Most of them asking for beta status. As you pointed out, its going to come out in november. The hit rates on our lending page, on our website, has been really great. Over 100,000 hit rate so far. And a lot of people register, a lot of Company Register for more details. Its a very encouraging sign at this point. John, one of your execs said on the call want to make it clear that investments will be required Going Forward to support the execution of the strategy and ultimately the companys future growth. I think you tried to signal that there would be some ups and downs in the next two or three quarters as far as maybe your spending goals. What kinds of investments are you talking about here . Investment in the channel. Were building our self. We have marketing investment. We need to launch some of the foelk phones. We have a phone launch in indonesia in a very short time. And then we need to invest in areas of bes 12, the enterprise bbm and build more bbm tractions. There are a number of things. When the product is going to come out in the latter half of the year like november time fra frame, we need to build up the capability both in engineering, marketing, as well as in the sales force. But we are going to be very moderate. Everything we talk about being able to be cash flow positive by end of the year, fiscal year, and being profitable, the next fiscal year, in some quarters, is still right on. And what this release has shown that were definitely right on our track and maybe slightly ahead of it. The more you start looking like an Enterprise Company the more you start getting to break even on cash flow, the more people are likely to talk about whether a Bigger Company might be interested in making a bid. We see now that he he lenovo was interested. How does that position you Going Forward, should an attractive bid show up, you were just telling us several weeks ago that you would be willing to talk a deal for the right price as a steward of the company. Well, of course. I mean, a Public Company officer, you know, i work for the shareholders. Anything that a shareholder get a really good deal, i need to entertain it. But thats not what i do every day. What i do every day is to really build up a strong company. I cant worry about whether somebody would be interested or not. Somebody is interested, they will have to give our shareholders a very, very strong incentive. But im the what i do is operate. So we can only focus on that. And when should we expect to see notable revenues coming out of some of these new phones, particularly in launching in indo neisha, the ones coming out of fox town . Yeah. In indonesian phone is really build an emerging base out there. Gradually well see that. Thats not going to be i dont expect that to be a i imagine its going to be a success. Were going to make some money off it but its not going to be a humongous run. I think youre going to have to wait until the classic. Microsoft also moving into the mobile Device Management business where you want to be with bes 12. How much of a threat of a competitor are they in this space . Great question. First of all, we are the Market Leader in mobile Device Management. We have about 60 of large enterprise around the world. All i need to do is shore up that and then start growing from there. The mobile Device Management world is just a very basic fundamental layer of what one could add value to. Enterprise mobile management, application, development, application deployment, identity management, security is endless. You know, its just the beginning. And then, of course, the all things internet, the m2m world. Its just going multiple years and decade opportunities. So everybody will move in some day but we have a strong lead right now. Im not overly worried about that. All right. Satya nadella is not going to make it easy for you, john chen. Thanks for joining us. Hope the see you next quarter. Thank you, jon. Take care. Fantastic interview, jon. Interesting to see the stock move as you were talking to him as well. Up next, what is a social network doing with a fleet of drones . Weve got the details on the latest project from ceo of facebook, mark zuckerberg. Plus, amazon is set to make a big announcement in new york next week so what exactly does the tech giant have up its sleeve . Weve got that answer coming up next. P next. In todays market, a lot can happen in a second. With fidelitys guaranteed onesecond trade execution, we route your order to up to 75 Market Centers to look for the best possible price, maybe even better than you expected. Its all part of our goal to execute your trade in one second. Im derrick chan of Fidelity Investments. Our onesecond trade execution is one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. [ male announcer ] when fixed income experts. Work with equity experts. Who work with regional experts. Who work with Portfolio Management experts, thats when expertise happens. Mfs. Because there is no expertise without collaboration. Mfs. Female announcer what will you man with your new im getting a camera . Im getting an espresso maker im getting a new smart phone female announcer through sunday at sleep trains big gift event get a 200 best buy gift card with purchase of selected beautyrest, posturepedic or tempurpedic mattresses. Or, get 24months interestfree financing. A new tv. A laptop. A game console female announcer sleep trains big gift event ends sunday. Sleep train your ticket to a better nights sleep welcome back. Its time for todays squawk feed. Guys, good morning to both of you. Good morning. First up, from Virtual Reality to drones. Facebook plans to bring internet to third world countries via drones, satellite, lasers and more all part of a con project called Connectivity Lab and acquired by staff from nasa and different drone makers. Its been said this morning on twitter zuckerberg suddenly think hes elon musk . This only cost him 80 million to get into this stuff so far. For them, its like nothing. They brought a Drone Company for 20 million. Titan for 60 million. Basically they are unwilling to run out of growth. They want to make sure they can connect everyone not connected. They want to make sure they are in Virtual Reality. So this is basically a bet to come up with every possible way of connecting people in all different kinds of population densities. I was talking to javier, facebooks head of growth, about this in barcelona. Facebook sees the bigger opportunity in people who are already covered by a wireless signal but cant afford of actually use it or dont no why they would want to. Literacy issues or just age and culture issues, theyre working on that most. This is sort of an answer lcill effort theyre going to invest less in to cover people who arent already covered by a carrier. Facebook is a business. Politico notes in its piece there are some factions in south ameri america, the more people who get broadband the more people who can join facebook. When do you start to worry about the money theyre spending . I think if you look at android, for example, android was a google bet that we can make more people use mobile devices and lightly embed gookle with it we will net benefit from it. I think that is this argument as well. I dont know if this resolves the whatsapp for 19 billion but net net this is a smart investment. Relatively low cost at this point. Experimental and we do need to get connectivity to the other parts of the world. I think what will solve it is a depreciation of your shares. Right. Discipline will be forced on them at some point. The more you spend all that cash until this happens. I dont think this sun disciplined at all. You look at driverless cars, how long is it going to take you to connect the dotsz between that and anything that google is making money off of right now versus this, this is emerging markets. Whatsapp, we can see at least the logic bed hind that move as defensive move and potential transaction. Bring internet to people and they may not jump on facebook the first thing they do but they night use whatsapp. Theyre already trying to use whatsapp in pockets around this. If they have more access they can use richer services b, maybe get involved in commerce. Carl icahn is the man most responsible for bringing us the future. Carl icahn and dan loeb. If it wasnt for the pressure for these companies to do this we wouldnt be getting this much future. We want to fly in cars we got 140 character, were going to get flying cars as a result of activist investors. Nobody can really beat on the door of zuckerberg or larry page because theyre controlled by them. Thats true. Meantime, a new free Video Streaming Service or Something Else . The journal this morning says that amazon is planning a we free ad supported streaming service to offer content to all users, not just amazon prime custer . Today amazon denied it but theyre getting ready to announce something at a media event in new york next week. Jon, youve got the invite. What do you think it is . I think this is the not probably a box with a streaming that weve been looking for. You plug it into the hdmi port on the tv, much like chrome cast and easily access amazons content. Not free. They are experimenting with groceries, drones. That doesnt necessarily mean theyre specifically planning to bring this free service to life any time soon. And the fact theyre denying it probably means its not this year. You and faber is saying the ario ends up being not knocked down hes going to go over the top. And the next level of major players, amazons, googles, microsofts, who need to for the tie a position in the world. I think it would be smart and amazing if amazon did it. My gut is its just the dongle. Thats all thats getting announced next week. What would underwomen investors at an amazon event . It seems like a company that can do no wrong. No matter what they announce, people like it. People usually tend to agree with amazon. What would be an underwomening announcement. Most of it tends to be underwomening. The kindle fire gets an, well, its okay, its a little wonky to use. I think theres a big chance for a surprise if there are more services on it than people expected, if they cut content deals people didnt anticipate. I think the bar is relatively low. Whats going to spook investors is if amazons growth slows down from here or somebody else starts growing faster and they want to put their money there instead. In a low margin business, yes, thats going to get peoples attention. Microsofts ceo sat yeah nadella taking the stage for the first time as a ceo introducing Microsoft Office for apples ipad. Heres nadella explaining exactly why he made this move. When it comes to office 365 the vision is pretty straightforward. It is to make sure that the one billion office users and growing can have access to the high fidelity Office Experience on every device they love to use. An office on the ipad and todays announcement marks one more step in that direction. A lot of contrasting pictures today features ballmer and nadella together. Developers. The way microsoft is releasing office is interesting. Office is free to download on the app store but to use it you have to sign in with valid user credentials because the app itself is free. Microsoft is not obligated to pay that third of revenue to apple which of course is a condition for all paid apps on the app store. The reviews of his performance have been generallies positive today. For the First Time Ever im doing my notes today using office for ipad. Im impressed with it. Jon and i were both playing around with it. There are a few things a little buggy. No blue screen . No. This pricing thing is no different than kindle is faced with. This is why you cant buy a book through the kindle app on ipad. They make you go out to the web to buy the book and it downloads because they dont want to pay that 30 cut. On office for ipad if you want to have the editing functionality you sign up for the 100 a year subscription, apple gets the 30 . You want monthly you have to go out to the web to sign out. Traditional stuff. I was convinced a little bit more by this strategy when i realized that on the iphone or on android phones right now you can actually get office for free. Editing included. If you want to type something on the small screen which most people dont you can at least get a taste of that editing there. Its a way to up sale you to the tablet version. 85 of the user base of office is corporate though. So i think what this really does its a bring your own device strategy that might get people to go to i. T. And say, hey, i really want office 365 because you gave me this iphone, i got an iphone, i want to use this on my mobile devices. Sign me up. If this accelerates microsoft 365 signup rate, thats awfully good. What do you think the opportunity for corporate spend on Something Like this is . If you think the market for enterprise and for employees to use it more or do you think companies would be willing to jump on the bandwagon to spend on this. Absolutely. Microsoft has momentum in this area. Apples builtin productivity asp dont play that fisly in the enterprise partly because if youre on a p. C. Youre stranded out. You kaunt use them that whale. Its only on the devices themselves and on max. This works across multiple different platforms. There arent many other productivity apps that can say that. Plus theres a legacy of office being in the enterprise. People want to access those documents. If they move quickly and fix the issues with the apps they will be in good shape. What app are you using . Quip right now for my notes. Its actually working nicely, too. And its free. Im using a thing called paper and pen. Theres an app called paper. I think its microsoft is doing best practices. A free version with the premium upgra upgrade. Its like drop, its like box. Its a new microsoft already. We want to talk a little bit about the Storage Companies because when i was doing reporting on box which filed for its ipo this week, we saw the public s one, i started calling people about, what is this company doing in such a fierce rivalry with dropbox, does it have the first mover advantage. People were telling me dropbox isnt far behind it. I learned this week dropbox inked a new credit facility. In weeks they were in talks with people in the range of 500 million. Upwards of that when the ink is dry. But this is a new trend. The companies are wanting to get a mature capital structure before they start selling stock to the public. You look at facebook in 2012 got an 8 billion credit facility. Twitter in october, 1 billion. Spotify a couple weeks ago got a 200 million facility even though it wont go public until late there year. Dropbox needs to finance a lot of operations. It is trying to get into the Enterprise Business as well. So maybe it could tap that credit before it actually goes to the public market. Maybe it will let it sit there. None the less, its an interesting move. Precursor to an ipo. Obviously even if its a couple months abe hind. The philosophy is you need to spend as if you are going to have the ipo proceeds. Why would you go public if youre not going to need ipo proceeds. If you dont make it out of the gate you are stuck spending at a rate you cant cover. You go public. Maybe you never need to draw upon it. I hope its not for marketing expenses like box has because those numbers were terrifying. Sometimes in the deals there are stipulations where you cant actually touch it until you go public or until you hit certain revenue benchmarks. I havent seen the term sheet so i dont know what it says. Its interesting to put this in place. Its interesting as jon mentioned the rate of marketsing spend that drop had you wonder if this says anything about dropbox. Probably not because facebook raised credit facility, too. Like having it in your pocket, you want to go in with another knife behind your back. Home equity line. Issue is in the case of box is given theyre selling to the enterprise you dont have as much of a premium upgrade to pay. So i dont know why theyre spending that much money to maintain a user base that night not convert. Its not their Sales Strategy anymore. The other tea leaf people will be reading into this is valuation. Normally you have leverage you can tack on. Facebook went public at 100 million. Got an 8 billion facility. What can you deduce from that about how big dropbox valuation is on wall street right now . Is there anything that can be said for that . 8 for facebook and 1 for twitter. Twitter came in a fifth of the size, right . Right. I think the big question is are dropbox finances going to be like box or better and more closer to profitability to turn profitable a few quarters out or exactly the same story . If dropbox has better financials it bodes badly for box trying to do the ipo. We wont know for some time if theyre bolo. They can file confidentially. We wont see it until three weeks before they decide to start trading. None the less, interesting i will be subpriced if dropboxes are better because they havent been spending as heavily on an Enterprise Sales force and signups were a bit more viral. So well see. To be continued. Thanks, guys. Have a great weekend. Jon fortt, see you later. Up next on squawk on the street, could this be the largest baggage theft operation in history . Well bring you the details in a few minutes. First, Rick Santelli in chicago, what are you watching today . Were going to be watching what spains information on potential deflation may mean for the ecb meeting next week. What it may mean for the United States. All these are important issues when our fed seems to be going the other way. See all of these handsome young people here . Theyre from marquette university, milwaukee, heartland. They are the answer to our future problems. Trust me. Make sure you, and watch us after the break. Break. Im beth. And im michelle. And we own the paper cottage. Its a stationery and gifts store. Anything we purchase for the paper cottage goes on our ink card. So you can manage your business expenses and access them online instantly with the Game Changing app from ink. We didnt get into business to spend time managing receipts, thats why we have ink. We like being in business because we like being creative, we like interacting with people. So you have time to focus on the things you love. Ink from chase. So you can. announcer scottrade knows our and invest their own way. With scottrades smart text, i can quickly understand my charts, and spend more time trading. Their quick trade bar lets my account follow me online so i can react in realtime. Plus, my local scottrade office is there to help. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. Everything looking good. Velocity 1,200 feet per second. [ man 2 ] youre looking great to us, eagle. 2,000 feet. Still looking very good. 1,400 feet. [ male announcer ] a funny thing happens when you shoot for the moon. Ahh, thats affirmative. [ male announcer ] you get there. Youre a go for landing, over. [ male announcer ] the all new cadillac cts, the 2014 motor trend car of the year. Looking okay here. Dow is up 120 but red hat is a different story. Sheila . Carl, yeah. Check out shares of red hat, the maker of the operating system. Stock getting hit hard after disappointing guidance for the year. Several Brokerage Firms are raising their price target on the stock. Ubs saying its robust Revenue Growth, expanding Profit Margins outweighed the weak cash flows. Investors are not buying it though. Kayla . Thanks, sheila. A stock were watching today. Also the cme group, lets get over to Rick Santelli and the santelli exchange. Rick . Thank you so much. As we look at this central banking issue globally, you know, we see maybe different dynamics and the ecb, bank of japan, our own fed, but it really is akin to some of the issues weve already seen. One of my big complaints with the credit crisis and how it was handled is the fact that were putting people in charge of picking winners and losers. And we all understand that free markets may have their flaws and hiccups. Allocating resources, allocating capital, or making the tough decisions, the aggregate behavior of the marketplace is better than individuals. Okay . I think many out there, if youre older, if youre a saver, you understand, you werent picked as a winner. So at this time where march madness and everybody has their brackets, ricks picks are that who is going to end up and what institutions are going to end up better off is going to look a lot in the future like it has in the past. The too big to fail banks seem have done well. Leverage is bigger. Balance sheets are mostly bigger. Yet when you look at where the buck stops, well, the buck stops kind of at the middle class. They just seem to be shut out. So back to deflation. So we learned what some of spains data that came out today that they are seeing a bit of a whiff of deflationary pressures. Now, what does that mean . In central banking terms, that means holy cow, we all now see the enemy and the enemy is deflation. But is it really . Why are Central Banks at this point in time going to ramp it up to fight deplace . I think this is going to mark a Significant Development for this year. Its because of, my opinion, one of the big reasons is debt. Okay . If you owe a lot of people a lot of money there is Nothing Better than to pay them back with cheaper money. Now, we all understand that in the u. S. We are also having less inflation than we would like. I would agree with that. If you wanted to oversimplify theres boon and bust. How would i identify a boon if i had a limited set of input variables . If inflation is up, youre in a booming session. If stsnt youre most likely in a bust psyching. Imagine all the markets and signals and giant jar like when you play one of those games and shake it up a and the dice come out we dont know where were at. One thing i can tell you the people and institutions in debt are going to do better than the workers and the savers. I dont think its right and i think that we ought to rethink deflation because its probably more of an extension of failed policy than what people really think it is, fep you dont believe how they calculate the numbers to begin with. Thats my kind of cynical happy friday. Hope all your picks for sweet 16 work out. Back to you. Yeah, they havent done too well so far, rick. Thanks a lot. Rick santelli in chicago. Still have Michigan State and wisconsin, carl. Sounds good. Louisville, kentucky, is going to be a good one. Look at the market here. S p is close to the highs of the say, 1864. Kayla, there have been some people sending us messages from various desks saying a lot of its covering and you watch out for some late day weakness if its going to come the last hour might be interesting. Especially if it was a lot of momentum tech names and social media reversing what we saw in yesterdays market. Absolutely. Meantime, shares of Alaska Airlines have been doing well. The stock is up over 40 in the past year. So does that and continued expansion make them a takeover target . Were going to talk to the companys ceo in a cnbc exclusive when squawk on the street comes back. Reet comes. Lets say you pay your guy around 2 percent to manage your money. Reet comes. Thats not much, you think except its 2 percent every year. Go to e trade and find out how much our advice and guidance costs. Spoiler alert. Its low. Its guidance on your terms not ours. E trade. Less for us, more for you. Welcome back. Airline stocks getting a bit today. Alaska air out performing the broader Airline Index in the past year. Stock is up more than 40 . Its expanding the service out of seattle. Phil lebeau is live in seattle with the ceo of Alaska Airlines. Take it away. Im joined by brad tilden, the chairman and ceo of Alaska Airlines on a day youre announcing expansion to baltimore and albuquerque. More than 100 city being served. This is part of the growth plan. Weve done it several times over the years. Pull airplanes out of some cities and into others. This latest move today is about strengthening our hub in seattle and playing to our strengths here. At the same time, you guys are in the midst of defending seattle. Youve got delta who rou have a cochair agreement with who is aggressively expanding here, other airlines looking and saying seattle is the place to go to the asia pacific routes from. How do you defend that turf . For us, its all about customers. I meerngs thats what i think alaska has done well over the years. We take care of our customers. For us that means we need to be safe, we need to be on time, we need to offer them Great Customer service which is something the company have done, the people have done a great job over the years. More importantly we need to offer them low fares. For low fares to work youve got to have low cost. Big competition means your going to have to add more routes. Is there a concern of overcapacity . I think the industry does well when supply and demand are in check. Thats something we should all be keeping an eye on. You mentioned safety. You guys are known as having an incredible safety record. You have talked about and you have gps on your planes, which is a huge tool for you when youre flying into some treacherous conditions in alaska. Is it time in light of whats happened with malaysia 370 for all airlines worldwide, not just here in the u. S. , but worldwide to have that constant connectivity gps on the planes . I think it row probabprobabl. I think where we are in airspace in general on the way we surveil airplanes inflight, the technology is ready for us to move to next Generation Air traffic control. The technology is there. Many airlines including alaska are equipped and ready. It is time for us to move forward together. I think there will be a lot of improvements to capacity in the system but also to safety when we make that step forward. Talking about technology. Youre announcing today that starting in april youre going to allow some customers, depending on where theyre flying, to check their bags at home essentially. Present out the bag tags. Makes it easier, quicker to drop off at the airport and perhaps see in advance how long the wait time is at different security checkpoints. Explain to me the rational behind t it. The whole thing for us is we want to make the travel experience for our customers just as easy as can possibly be. Theres a lot of stress to flying. We want to take that anxiety and stress out of fliering. Weve been leaders for a long time, first let you check in over the web or kiosk. Today its a phone application to let you see tsa wait times. And then print your bag tag from home. We saw that yesterday and will be showing that throughout the afternoon. Youve seen incredible growth over the last year or two in terms of the airlines overall. Does this run continue here for the airlines because the trek record is when good times come they dont last for long in this industry. Thats the question. Theres been a lot of real change in the industry. Theres been a lot of consolidation recently. With the consolidation that has occurred, theres a better chance that the supply is going to be right given the amount of demand we have. I hope that this is sort of the beginning of a new era of better prosperity for the industry overall and alaska. Well have to wait and see. Chairman and ceo of Alaska Airlines joining us on a day they are now announcing service to baltimore, albuquerque, more than 100 cities, guys. These guys, theyre big out here but quickly growing around the country. Back to you. Phil, thanks so much. Phil lebeau in seattle today. A string of stolen electronics, jewelry, and other items led to a major bust at l. A. X. Jane wells is live with the story. Jane . Carl, its unclear how long this has been going on. A few years ago i had a laptop stolen at a bag through l. A. X. Theyre calling this the biggest property heist in history there. While six contract baggage handlers, either former or current, have been arrested and another eight questioned, more arrests are expected. L. A. X. Police noticed a 37 jump in thefts last year. Now, some of those were just in terminals by regular old thieves but they apparently noticed a pattern in two adjoining terminals and again investigating bag kangage handl. They accuse them of stealing maybe hundreds of thousands of jewelry and electronics and maybe growth clothing in a couple of locations. The theft of passengers property both from the baggage areas and from the actually from on the aircraft. I was assuming that people going through my luggage anyway so theyve taken pro cautions and keep my jewelry on me, on my carryon. I do, too. Its been a rough six months for the airport. Tsa offenser was killed there in november. In october, another baggage handler was arrested for setting off dry ice bombs. As you lock at a live picture of l. A. X. This morning im told on average one to two thefts a day are reported there. 450 a year. Many not reported still relatively small number compared to the more than 60 Million People who fly through there annu annually. Its not clear if the onboard thefts occurred as bags were loaded on to the cargo hold or if thieves may have gone through the main cabin after passengers on connecting flights, on the same flight deplain planed to stretch their legs. Police say some stolen items ended up on craiagslist and all of those arrested had to Pass Security background checks to get hired. Carl . Jane, thank you so much. Jane wells in l. A. Taco bell has made a lot of headlines this week with this, the brand mu waffle taco, which jane, by the way, tried earlier in the week. How are other Fast Food Companies handling the Early Morning competition . Well talk to the ceo of sonic when squawk on the street comes right back. S right back. P, how much money do you think youll need when you retire . Then we gave each person a ribbon to show how many years that amount might last. I was trying to, like, pull it a little further. [ woman ] got me to 70 years old. Im going to have to rethink this thing. Its hard to imagine how much well need for a retirement that could last 30 years or more. So maybe we need to approach things differently, if we want to be ready for a longer retirement. In todays market, a lot can happen in a second. With fidelitys guaranteed onesecond trade execution, we route your order to up to 75 Market Centers to look for the best possible price, maybe even better than you expected. Its all part of our goal to execute your trade in one second. Im derrick chan of Fidelity Investments. Our onesecond trade execution is one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. In a we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Coming up at the top of the hour, does the end of the quarter mean the end of the rally . Well look at where this market is heading next with pimcos new stock guru. Housing stocks are a wreck but are things about to turp around . March madness is coming up a haft time. Well talk t to the commissioner of acc whose home to two sweet 16 teams, louisville and uconn. See you in a fit. The breakfast wars keep heating up. Players like mcdonalds and burger king already in the fray but now taco bell joining in. Sonic is beefing up its business, too. Joining us from hq in Oklahoma City is sonic ceo cliff hudson. Cliff, thanks for joining us this morning. Happy to be with you. You guys have had breakfast burritos, french toast sticks for quite some time. What does the entrance of taco bell in this space do to competition . It. Obviously heats it up quite a bit. We finished rolling out this system side ten years ago. Convenience stores have been engaged in this in a big way for the last six or seven, eight years in terms of growing their breakfast business. Theyre the biggest growers in that area that day part in the last ten years, lets say. So taco bells entry makes sense they would get into it. Theyre smart guys from a marketing standpoint. So it will only heat up the competition for that morning business. Just this morning mcdonalds announced that it is going to be offering free coffee to people coming for breakfast. What are you prepared to do to try and keep your share to guard it against some of these competitors . Well, right focus and the last 90 days what weve been doing is offering morning drink stop. Our large drink for 99 cents. We do offer coffee as well. But our soda pop, our cold drinks are very popular in the morning. This has driven our traffic nicely in the morning. Its also driven sales. So this is our morning drink stop is a big part of our differentiation of Product Offering in the morning. Its talked about in general, breakfast as a higher margin business. Is that true . And to what degree does it differ from the other big day parts . It has been historically, carl, but i think as the focus on discounting, particularly with Convenience Stores, theyve grown that day part quite a bit in the last several years. And with the Convenience Store focus its much more about discounting from their standpoint. While it is a high profit margin business its getting squeezed because of the nature of the pro meigs and industry. When we went through a high level of unemployment in this country i remember people talking about breakfast as a potential victim because if youre not getting up and having job to which to go youre probably not going to stop in somewhere. Has that we got jobless claims down to 311. Has that shown itself in breakfast . Well, i think the biggest shift in breck tast in the last several years in addition to more people entering it like taco bell, this may be repetitious, but the biggest shift in the last several years has been the way Convenience Stores have approached this. Five to ten years ago Convenience Stores might have offered a discounted drink. Many of them have really started stepping up the quality of you might say the lower end breakfast food. But if you go into a mini Convenience Stores today the quality of the food theyre offering at breakfast has stepped up quite a bit. So this is i think this is probably the biggest challenge in the industry. Cliff, you had earnings this week. One of the big focuses was a digital rollout. Youre putting tablets and new technology in some of your driveins. Could you comment on the rollout and what you expect it to do to headcount in the chain of command at each of these stores . Well, we have a program that we call pops. Its point of personalized service. Its integrated into the menu housing at the sonic drivein. We only have it in about 70 stores right now, which is about 2 of our system. But we will be rolling it out later this year as the year progresses. And then the next two and three years as well, across the system. But it is intended to engage the customer in a different way and integrate with the Customer Engagement even off premises. We think it will be a nice value added, give order confirmation, very good product promotion while theyre online and theres other ways were going to use it foreign gaugement. To come down as a result . No, we do not expect headcount to come down as a result. One final question, cliff. Theres an interesting debate about minimum wage in this country. A lot of companies have stepped up and made announcements about what they plan to do. Majority of sonic worker railroads part time. Im wondering if youre looking at your strategy on wages and thinking about anything in particular. Well, youre correct. Many of our employees are entry level, partime workers, across the system. We are in 90 franchise system, so the largest impact of that is from our business standpoint is on our franchisees. The cost of labor is something we continue to focus on both because of the afterfordable care act and focusing now on minimum wage. If as minimum wage increases this is something were going to have to deal with from a pricing standpoint. We have quite a varied menu, a wide menu across multiple day parts and we think ways to affect this with pricing much better than many of our competitors have. So invariably this is going to be inflationary but we will work to help our operators protect their profits as those costs increase. Cliff, its an interesting debate. Youve given us a lot to chew on this morning. Just promise me you wont discontinue the cherry limeade. Absolutely not. Our favorite. Your favorite. Appreciate it. Cliff hudson, ceo of sonic. Thank you. Aerohive is slipping this morning. The ceo of aerohive will tell us where the company goes from here. [ sniffles, coughs ] shhhh i have a cold with this annoying runny nose. [ sniffles ] i better take something. [ male announcer ] dayquil cold and flu doesnt treat all that. It doesnt . [ male announcer ] alkaseltzer plus fights your worst cold symptoms plus has a fastacting antihistamine. Oh, what a relief it is firstcnn we look at another ipo today. Aerohive networks. Shares of hive trading down 6 1 2 after pricing at 10 a share. Lets welcome david flynn, president and ceo of aerohive networks, complete with lets just point it out and get it over with, the the stress ball. That is a bee. This is a bee. Our company mascot, favorite trade show give away our customers love p. Now that youre trading publicly you can use that. Exactly. Part of the new life. We have been awash in networking cloud ipos all week. Can you help us differentiate between the cloud and yourself. Aerohive is a next generation mobility company. Focused at the intersection of cloud and mobility. We have a cloud managed platform that allows us to provide Wifi Networks easier than anyone else in the market. So a lot of comparisons to ruckus wireless, between them and you guys. It seems like youre looking at maybe trying to get half the market value of ruckus with a little less than half the revenue. Whats your pitch that youre going to grow faster than a player like that . Yeah, the growth weve been delivering over the last couple of years has been dramatically faster than anyone in the marketplace. 90 over the last four years. 50 last year. Dramatically faster growth. Key thing is ruckus focus on different segments. They focus on carrier space. We focus on next generation enterprise mobility. We provide a lot of unique with the Cloud Platform, the ability to put Cloud Platform on top of mobility infrastructure. Could you talking about all about the ipo process . Weve been talking about the ipo market and seen investors with differing levels of receptivity to companies, especially smaller cap companies. Investors leading up to today and seeing the stock down some 6 . What sort of questions did investors have and how did you look to sort of pacify them . The investment the investors at the start of the ipo process is there, it deteriorating on the road show. A lot were interested in company and where were going. And we saw strong interest from many of the inevestors although there was increasing nervousness over the last five or six days. Were confident they will come back . What do you think attributes that nervousness to . Obviously there are Broader Market dynamics that have been behind it. We dont see it as aerohive specific issue at all but theyre generally a lot of high growth, emerging Companies Like us, had more pressure to sell off the last week and a half. On i havely a lot of the knocks on the issues is lack of profitability. You havent lad quarter yet i think of profitability. When do we start maximizing margins . Weve had some nice cash flow positive quarters. We get that sometimes, yes. Indicative of some very heal i have ones. Were in that phase of investing for longterm growth. We see a great market in front of us. Were disrupting roughly 4 billion market growing at 6 1 2. There are strong incumbents in that market, people like Cisco Systems and we are taking deals from the very consistently. We want to go out and have the sales force coverage and do that and satake advantage of this xu. We have a leverage business model. Thats what i was going to say what i like is you seem to have expense discipline looking at your numbers and if your revenue continues to grow, the profits appear to be there. Were still within the ipo pricing range, 9 to 11 is where we were and its been a rough week. Good luck. David flynn will be ringing the closing bell later on today. Aerohive. We also had a big name interview at the top of the hour. Blackberry Ceo John Chen spoke with jon fortt. [ male announcer ] when fixed income experts. Work with equity experts. Who work with regional experts. Who work with Portfolio Management experts, thats when expertise happens. Mfs. Because there is no expertise without collaboration. Shares of blackberry are one to keep a watch on today. You had a decent start at day. Up a third of a percent at 908. Jon fortt interviewed john chen at the top of this hour. The turn around plan was on track, he said. Everything that we talk about being able to be cash flow positive by the end of the year, fiscal year, and being profitable the next fiscal year in some quarters, its still right on. And what this release have shown that were definitely right on our track and maybe slightly ahead of it. Point out Short Interest in the name continues to be quite high. Previous management made a couple of critical mistakes to prif vot from. One was bes ten which wasnt back word compatible with a lot of the blackberries out there. John chen saying that now weve got bes 12, more competitive and enter operable but it doesnt show up until november. Trying to shift from selling handsets and getting out there to software to trying to Sell Software now and at least break even on handsets. You look at the stop just trading negative at this point. Certainly a big move and investors will have to wait several quarters until that profitable benchmark chen is pointing to. 9 is the key level. Its a relative victory considering the downgrade that they just got yesterday and the pessimism thats been in the market. And i think cramers point this morning was cash continues to be not as much of a concern as you would have thought, say, 6 or 12 months ago. Great stuff today, jon. Thanks again. Lets turn to wapner and see what hes got for the half. Were watching the momo bounce today. Getting a boost today. I know you guys have probably been watching this closely, too. Yeah, the general take, i think, among some is a lot of shorts are covering early. What does that mean for the afternoon . Well just have to wait and see. Can you trust it is the big question. Well dive into that. You have a great weekend. Well catch you on the other side. Heres todays game plan. Momo, oh, no, is the steep selloff in momentum names about to spread to the Broader Markets . Pimcos stock guru tells you why it wont. Home wreckers . Diana olick has a reality check on the realty trade. Trade school. The next ger