Transcripts For CNBC Squawk On The Street 20140919

This day . Normally, things we will not get to are things we will lead with. Absolutely. History being made on wall street as alibaba makes its wall street debut with a 21. 8 billion ipo, the biggest ever in the United States. The chinas ecommerce pricing at 68 a share. Gives alibaba a market value about 168 billion surpassing disney, boeing and amazon. It will trade under ticker baba. Earlier alibabas executive chairman jack ma held court outside the big board amid hundreds of members of the press corps on hand for todays big event. Later we will bring you our cnbc interview with ma here at post 9 00. We are literally feet away from the post at which it will trade, post 8 over here. Where twit other went public almost a year ago. The crowd of press, guys, i heard at least 100 media from china alone. Well, this is historic. I say its a rejuvenation in the sense this is the deal its been a long time since people talked about a particular stock which was facebook. This is bigger than twitter, obviously. What is incredible about this deal, we are looking at just the american side. I am shocked at the amount of buying overseas. There is going to be 30 million shares to buy. Its going to be obviously way, it was way oversubscribed. The demand of mutual funds worldwide for this thing is atypical of what we see for a visa, which was our last big one. Not to mention back in its home market. The largest ipo of all time but the Third Largest in the world, u. S. Number one. The other two are also from china. They were from the financial sector. Right. The Agricultural Bank of china and icbc eclipsed in the total raise. Alibaba is the first opportunity to play the Chinese Consumer. To than leveraged to the greatest Growth Market in the world. 81 of the ecommerce market in china is alibaba. What they are going to do beyond that are key questions. There is no doubt this morning we are going to see that reflected in the price of 68 that will go higher. The question is, and ive been talking to a lot of Hedge Fund Managers who got small allocations. Whats it going to be . 81, 82. Then trades to 88. Interesting. To get a 200 billion market cap, 81. 14 is the price. Right. Thats facebook. It certainly has better characteristics than facebook, to quote off our cheat sheets. I will tell you they want to have it be in the 70s to open. It cant do that. Theres not enough stock to go to the big institutions. Say they get half their position and get half a position at 68. You are willing to pay 82 for the rest. Get a nice blended average, be up at the end of the day and feel good. Thomas farley, Group President of the nyse spoke to pisani and said all systems are running normally as of now. As he said, the nyse is a hardearned reputation for doing these things well without a mistake. The logistics of all this will be into focus. That could mean we dont see an opening price until 11 30. He said three hours. Could be two hours or three hours. Its very hard, when you have a deal where there is very little retail order taking because everyone has been shut out, so you have orders coming in right now that are very difficult to batch versus what the institution has. Given how much stocks, how much liquidity is going to be created. Remember, i told you how much people really had to sell . They had to sell more than 21 billion. Fidelity gets a billion or a billion and a half. Its going to be a big number. I think its a good estimate. How much do they put back into the market . None. None . Really . None. That is not all right. In any way, shape or form believable. I think there will be very little stock put back from these institutions because they own amazon. They own facebook. They own google. Those characteristics are not as good as this company until it gets to 95. At 95 they flip. We are going to get to apple, scotland and a lot more. We do want to get to kayla who is by post 8. As we await that opening trade which will be a couple of hours off, we have bob pisani inside the bull pen here. There was a painstaking process that took place last night and that was to build the book, build that Shareholder Base alibaba will make its debut, having as a foundation for its very first public shareholders ever. Im told that process took about four hours after the pricing took place last night. Pricing came out officially at about 6 00 p. M. Four ours after that, the company was up very late into the night finishing this process. In all, im told there are 1,700 accounts in the book. 1700 different investors that have bought into alibaba of varying size. 50 of all of the shares, 50 of those 320 million shares will be coming to market are going to just 2 dozen firms. Im told virtually all of those are mutual funds. That was at the behest of jack ma who personally chose many of the shareholders taking place. David, hedge funds did get allocations, but they were very small. I talked to a couple of Hedge Fund Managers this morning. Only got about 1,000 shares a piece, roughly 70,000. Thats tiny compared to what they probably asked for and what some of these big longonly Money Managers got, as well. Some very happy, some not so happy. They are going to have to buy in the open market. Sudden date desks at the banks calling bankers trying to figure out how to manage the message to some of their biggest clients that didnt get any shares at all. So we will see how this opens in a couple of hours. Thats what we are learning about what this Shareholder Base looks like going into that debut. Back to you. Interesting, kayla mentions the Hedge Fund Allocations which appear to have been quite small. I heard if you had a previous relationship we talk about this often. There have been opportunities to get ahold of alibaba stock the same way facebook was already owned and others. If you had a previous relationship with the company, you got a much better allocation. Even if you were a hedge fund. If you had a significant stake already. So they were, from what i heard, to add to great reporting from kayla, it did come down to jack ma saying, hey, you were onboard already. We know you. We like you. We feel that youve been supportive in the past. Highly unusual to have the bonds actually matter, ties to the company. I am told by my friends in the industry that there have been this is the one where they would punish you more than any other if you flipped. There is a huge penalty. You get an allocation, its up long, ill sell it. No. They want to know. The way you know is to see followon bidding. I buy a million, ill buy another million at the open. This story is above the fold on the front page of usa today. The headline is a wakeup call for u. S. Tech companies. A lot of discussion about the biggest u. S. Ipo being a chinese company. Ellison paving his exit on the day ma is making is debut. I dont like to invest in irony, obviously. There is a confluence of events that does make it seem like we are being eclipsed. I think that ellison was eclipsed a long time ago. I know that is not a fashionable view, but it is an imperical view. This is an amazing company. The more i tried to poke holes in it, which a lot of people tried to poke holes. The times was negative. When i say wow, this is the company i always wanted as a wholesale operations, retail operation, china is understored, we are dramatically overstored. When you build up the web in our country as we saw from pier one its not necessarily reflective of china overtaking us in any way, shape or form. No. Its reflective of the number of web users going from 6 million to 600 million. They had no stores. Its about brickandmortar stores. The reason weve been behind in the web, we are copper wire. Their whole country skipped the copper wire phase. China in tier three and tier four places. They do buy a lot of iphones. Judge, they do buy a lot of iphones. We are expecting ma to come to the floor soon. Lets talk about the iphone. New iphone 6 and 6 plus going on sale around the world today. The Flagship Store in new york opened its doors an hour ago. Some people have been waiting in line since september 3rd. Its a 20block line up fifth avenue today. A week ago they said they received more than a million preorders. People are looking for ten by the time the weekend is over. Okay. I said you must own apple, not trade apple. Last night i had a guy from diebold. You are going to be swiping your iphone to take money out. This is the kind of thing that people are building for apple. This is an amazing overtaking device. Its overtaking everybody else. Its leapfrogging and a testament to the fact everyone recognizes this is the i havent seen the hoopla since the original, is what im saying. There have been a lot of iterations. This one anticipates, has a better mail function. People holding off through the 5, i think People Holding off through the 5. This is big. They are coming for the 6 plus. I think the 6 is not incremental. Why has there been so much supply to sell at 102 . I think theres a lot of people who are cynical about the whole market, frankly. I think that there is a moment in time when theres a lot of churning in tech. People dont understand where tech is. Is it old tech, new tech . The cloud stocks have been hideous. New tech has been hideous for months now. Thats why the concur deal was so important. That is in you tech. Thats cloud. No one seems to know where to go with tech. All the action has been in the transports, for heavens sake. And its been in health care. What tech is is celgene. Regeneron. It is. The advances in biotechnology are linked to the advances in technology. It personalized care. That is all genome. Its all equipment. 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Tap into the full power of your fidelity green line. Call today and well make it easy to move that old 401 k to a fidelity rollover ira. Live picture of post 8 there where alibaba is going to go public. Well take you inside alibabas post. Bob pisani is there on more of what to expect. A lot of people are starting to assemble outside the post. Mostly traders, but a crush of reporters who want to cover this. Theres only one group inside. Thats cnbc inside the post to watch all the action. If you want to turn around here, scott, youll see this is the post and this is the designated Market Makers here. Pat murphy from barclays who will be steering this. Well be watching them build the book. We are here with scott cutler, one of the guys who closed this deal. He runs the ipo operation here at the new york stock exchange. Congratulations. A big deal for you. First the question on everybodys mind, when is this going to open . We dont know. We dont care. We are making sure the systems are operating well. We opened the customer gateways at 7 30 to start collecting orders. We do expect tens of millions of shares to come in for that opening print. At whatever time, well be ready. Is it fair to say it could potentially take a couple of hours . You remember when we were here for twitter, we opened around 10 45. So again, same team that is going to be doing that process here. Again, they are just trying to get the price right. Thats going to take time. We are taking deli orders for the afternoon. We could be here for a long time. Is there any early price indications . Its not ready yet. Well expect that after the open. Last night, the underwriters spent until the wee hours of the evening allocating the stock to institutions last night this. Morning you are going to start to see those orders come in from institutions that sold that were allocated last night, as well as buyers and sellers coming in the first time in a public offering. Can you give us some indication . This is a great opportunity as we did with twitter to educate everyone on how an ipo work. Specifically how a book is built. What happened last night . How was the allocation made and how will that affect what happens this morning . A few weeks ago the Management Team started that road show. That is as expansive as weve ever seen. Hong kong, london, all throughout the United States. They are talking to investors. Theyve been doing that the last couple of weeks. Yesterday, they start to now allocate the stock to institutions that want to buy. Thats the most important process is allocating that book to the right set of holders. Now what we are seeing here, we are premarket time. Everybody else in the world has the opportunity. The art of allocation last night is to make sure that not everybody gets what they fully want. So everybody that was underallocated comes in and wants to buy more. Thats why its going to be important to have as much liquidity at the open. This is where the public has the opportunity to buy the shares of the most important, the biggest ipo in history. There are a half a dozen major underwriters here. Can you explain Goldman Sachs role . We have designated Market Makers here. These are the guys who will declare this stock open. Nothing happens until these guys are satisfied that the book is done. That the prices set and a certain allocation level. The important thing is Goldman Sachs, as well as the other underwriters are going to be here in constant communication on that book. What is goldmans role here . Its a very well arc straighted process where goldman is working as the stabilization agent. Also working with the other lead underwriters on this transaction. They are going to be coordinating directly with barclays who is going to work as the designated market maker. Barclays role is to understand where that book is coming at, be able to communicate that back to Goldman Sachs. Goldman sachs stands on the trigger to determine the price and time the stock is opened. That is a well coordinated process everybody will be involved in. Scott will be here with us all morning until this stock opens explaining the whole ipo process. When we come back, well talk about limit up, limit down and what Circuit Breakers are in place. Hopefully after 9 35. Thank you. Great stuff as always, bob pisani on the floor. Speaking of coordinated efforts. This will be interesting in the next ten minutes. Ma is not going to ring the opening bell. Eight customers of alibabas will do that. These are customers that used the platform, sold cherries to chinese customers, local businessmen in china who created an Online Business using taobao. Youve been working the floor, the number of executives. That was one of the leaders of the company. And one of the richest men in china, as well, after jack ma. You can see him right now. We were talking about that in terms of the customers that are going to ring the bell. You are going to hear this when we speak to jack ma. Very similar in a way to a company we all know very well, amazon. You will hear similarly that same kind of loyalty and focus from the Management Team here led by jack ma and joe tsai. You brought up in the beginning, trying to capture the feeling as if this were a ballpark. There is a world series feeling. Its not u. S. China. Its much more cooperative. Its a very american style company. Thats a very good point. Jane penner my old friend at the street, im not saying they have americanized it. That is patronizing. Im saying they understand who needs to work at the highest level of this company to dominate the world, if they can dominate. Theres also the not insignificant factor of the number of millionaires being minted today. The times say 8,000 people in china alone are going to become wealthy about whats going to happen in a matter of minutes. They are all infused with this notion that the impossible is possible because theyve seen ma do it. Its so interesting. Unlike in america where they are going to buy a 29 million mansion in the east hampton, they are not allowed to own nice houses. They live in apartments. They buy beautiful watches. Remember, you are not allowed to demonstrate hahmud. You cant demonstrate wealth. Youre not supposed to have Johnny Walker blue over there. Right. Until the recent regime, there were plenty people demonstrating incredible wealth. All the Luxury Brands have their Biggest Stores in shanghai. A lot of them are buying apple phones here today. I dont know about that. I think outward display of wealth has become discouraged. Discouraged a bit, yeah. Johnny walker. My old friend. Also the amazing story of ma himself. An english teacher who has a very young man fell in love with the english language. Created a translation business to help chinese clients collect money from other countries overseas. Thats why he was in the United States when he came up with the name alibaba in a San Francisco coffee shop. Thats where he was first introduced to the internet in the first place. He is a Great American story, but hes from china. That is exactly right. Of course, is about to become extremely wealthy. 20 billion plus. Going to give a lot of that to philanthropy, environmental protection. He wants to be in film, invest in education in china. We are going to get a chance to talk to him, not just about the business, but what else is he up to over the next years. How exciting. I love the confluence of cultures. It is a great spirit here. How about the differences of your view between today, facebook, twitter . Its been said this company has been profitable for years, making it much easier to value. It is so difficult to make the comparisons to year 2000. They rolled off peoples tongue when we did the facebook deal. The twitter deal was worse. Its like, be its not even a company. Maybe it is just a messenger service. This company is the way you used to think of sears. Sears roebuck. I like the analogy because we have the downfall of one company and the rise of another. This is a very wealthy, very profitable, truly oldstyle American Company that has reinvented. Like ford motor. Their business model. They dont own their inventory. They own 48 of the Logistic Company it employs. Its 1. 1 million employees. Probably going up. A billion packages. Their margins are to kill for. Your take rate on overall gross merchandise value is one of the key things they are being measured on. That gross merchandise value for the year that ended june 14, lets call it 300 billion. The numbers are staggering. Profit numbers are staggering in comparison to ecommerce. Our Biggest Ecommerce Company by far being amazon. Facebook does have good ebitda margins. No doubt. Facebook is the rival here in terms of possible longterm growth and possible profit yield. Im sure ma is envious of facebook as much as facebook because its the same league of domination. Domination that is not limited to china. Not at all. Times this morning asks, why did alibaba spend more than a quarter of cash flow on a grab bag of investments . We know about their investments. What are their aspirations in the states and beyond . Those are good questions. Its a great question. Some people get people spin it a different way. Wayward investments. I think they make forwardlooking investments. Google has been known for its wayward investments, like when they bought youtube. That wasnt so wayward, was it . No. That was an incredible deal. Some of the others. Time will tell. Again, google has the luxury, again, of doing those kinds of things begin the characteristics of its core business and how incredibly profitable it is. Live shot of masasan. 20 million, now worth 60 billion. Ma said its probably the single biggest investment he made. The richest man in china jack ma and the wealthest man in japan. 32. 4 will be ownership. As jim just said, a Great American story, but hes from china. Rejected by kfc when i was a kid. He could have reinvented yum. Revenge is sweet, especially today. They have the eight customers of the company ring the bell in about 2 1 2 minutes here. We talked yesterday about the name alibaba and where he got that, the notion that this smart young businessman helps a village. Started early on in b2b. People should recognize this is a Worldwide Company you can make things. You dont need a labor force. You can find your labor force to make something on the alibaba site. Everyone is going to be a manufacturer and everyone can be a distributor. You can go into retail putting your specs in and finding somebody in the world to make in your product. This is democratization of the world of manufacturing. It is so crowded on the floor this morning, that our crews, our camera crews, our wireless camera operators learned the phrase please move in mandarin. I dont know if youve been to china and dealt with the media there, they dont mind pushing and shoving to get the shot. No, they do not. I went to the opening of a walmart in china. A fight broke out. Come on. Oh, yeah. They are very aggressive. 1. 3 billion people. Which goes back to alibaba and the opportunity that Company Continues to have. Walmart. No one is fighting to get into one here. No. Buzz on the pricing from cashin. A report that morningstar sees the shares fairly valued at 9. Surprised they didnt go higher. Echos what you judge just said. 80, 82 to 88. 88 people are free to sell. Not be punished. A perfect offering. They priced the high end of the range. Many say they could have gone higher. 68 opening at maybe 80. Then working its way up during the course of the day. Thats pretty much. Its possible. It becomes common parlance. 88. Thats jimmy lee there. That was him standing right behind him. One of the underwriters at jpmorgan. Talking a high price. Thats going to be the mission for the next few hours. There is the opening bell. And alibaba, the muchanticipated ipo today on the podium. Eight alibaba customers, including an american cherry farmer and a chinese Gold Medalist olympian who has business in china. We are going to talk to jack ma in just a few minutes as we await the opening trade on this name. By the way, guys, the anticipated market value here, say around 170 billion, is almost the market cap of all 154 u. S. Ipos this year. 180 billion. Money managers struggle over the pricetoearnings multiple. Thats whats going on here. Look whos here. That was fast. Jack, welcome. Thank you very much. Excuse me reach. Thank you, sir. Thank you. Good to see you. We are going to mike you up and start talking, if you dont mind. It is, of course, a historic day here on wall street. Man, that was fast. He wasnt actually ringing, you were watching your customers on the platform ring the opening bell, jack. Many times over the last few years when youve been interviewed, you talked about the different constituencies you have at alibaba. You always say, number one customer. Customer. Number two, employees. Number three, shareholders. You got a lot more shareholders today. Is that going to change at all in any way the way you view your business or run your business . Well, i think as always i believe that customer number one, employee number two and shareholder number three. Today what weve got is not money. What weve got is the trust from the people. Millions of Small Business, so many shareholders. Im very honored, and so excited. When you see the shareholders, its a responsibility. Ive been thinking about next five and ten years, how i can make sure these shareholders be happy. Very important thing, make these guys, people standing there. If they are successful, we all be happy. Thats what i believe. Something else you will have a lot of today is money. 15 million or more raised by the company. Not to mention a currency, which we are going to watch open here in a couple of hours that you conceivably can use. How do you view that strategically for alibaba . Are you going to be buying a lot of things potentially outside of china . Give us some sense here in terms of your thoughts, now that youll have an awful lot of money at your disposal, and of course a stock price that is going to be highly valued. Well, i think to me as entrepreneur and all the instinct of entrepreneur is to try to build the things yourself. I think there are so many things you have to do with our ecosystem. Not only we are helping Small Business in china. I think Small Business in africa, in southeast asia, in europe, in the states. A lot of farmers need help. I think the money will be spent there technology, if we want to acquire it, we want to acquire and buy these companies can help the ecosystem. That can help the Small Businesses. Can you walk us through where your head is on the pricing . Is this where you wanted it . Why didnt you go higher . A lot of people said its worth more and will be worth more today. I think thats my teams decision. I dont want to disappoint shareholders. I want to make sure theyre making money. And im sure, and i really tell the team that shareholder number three, thats not a name, its a discrimination. We respect. To do better is when you really care about the customers, you really make those innovative young people successful. To me the price up and down. My people worry about. I worry about whether the customer happy. Let me ask you. This is a Great American story thats actually a chinese story. Who are your heros . Who are my heroes . Yes. Well, i got my story, my dream from america. A full 50 years ago when i came to america, i visit silicon valley. I saw in the evening the road was full of cars, all the buildings with lights. Thats the passion. The hero i had is forrest gump. 14 years ago. A box of chocolates . You know he is a fictional character . I like that guy. Ive been watching that movie for about ten times. Every time i get frustrated, i watch the movie. I watch the movie before i came here again for coming to new york. I watched the movie again telling me that no matter whatever changed, you are you. Im still the guy 15 years ago, you know, i only earn like 20 a month. Today i can do that much. What does it mean for the peoples republic of china . I think we are giving a lot of people inspiration. We want to encourage a lot of people saying, yes. One of the things i want to do, 15 years ago i told my people in my apartment that if jack ma and People Like Us can be successful, 80 of the people in china can be successful. And 80 of the young people in the world can be successful. We do not have the rich daddy, powerful uncle. We do from nothing. What would you say to an american investor who is really interested in your company and the Growth Opportunity, but worries about interference from the government, transparency, books, regulators we dont understand . How do we get around all of that . Trust. Trust us, trust the market, and trust the young people. Trust the new technology. The world is getting more transparent. Everything you worry about, ive been worrying about in the past 15 years. Everything you worry about, ive been going through this tough 15 years. Thats not easy. And we are ready to work for another 87 years. I want to tell the investors, we take care of them. Trust has to be earned, of course. When you trust, everything is simple. If you dont trust, things get complicated. And so when we talk about transparency, and people look at the alipay transaction which got a great deal of publicity at that time. Certainly was not something yahoo was happy about. How should we view that . Well sox day. Some people will find out. Today is not time. I would say, ive 25,000 smart people. If i do anything wrong, im transparent. Ill put that company into my pocket. Why i keep on telling vision about it for 15 years. People believe us. Somebody has to make tough decisions. As a ceo, you balance. Im doing that. When people realized, when people know the real story, they will feel proud. Feel free to tell it to us when you are ready. I feel proud. I want to say one thing. The decision for alipay was one of the most painful decisions i have ever made in my past 15 years. Business career. But this is the decision i feel most proud of in the past 15 years. That is courage. Its courage, responsibility and leadership. Somebody has to make the tough decisions and i did it. Right. Jack, when i spoke to investors who met with your team as they investigated the company, all of them came out saying, of course, we want to own a lot of shares, but they still had other questions that didnt get answered. For example, your Logistics Business. You own 48 of a Logistics Business that is enormous. Yet its not consolidated at all on your income statement. Some people worry, will the day come when that has to come onboard and what will that mean for what we are looking at in terms of the numbers a the alibaba . The good thing is a logistic system is not good in china. That gives us opportunity. It is very sophisticated, why would they need us . One of the reasons why ecommerce in china go faster than the usa, because the infrastructure of commerce in china was too bad. The usa ecommerce cannot do better because its a supplementary. Its a dessert. In china become a main course. Logistic. We are talking with 27minute packages in china every day. What we are seeing ten years will be 200 million packages every day. We have to solve that problem, not todays problem. 200 million packages a day. Ten years. I think there is a misperception. People say amazon, but if i have an idea for a company and i have a product. I know i can go to your site and find someone in the world who can manufacture my product for far less. Talk about the idea this is maybe the greatest entrepreneurship of all times. This is what we are doing. Our mission is to help doing business easier. We are giving not only traffic, but technology. We give logistics. We also give the Financial Service of small, medium size. When i was doing my business 15 years ago, nobody supported us. So today, we want to build up this infrastructure. If you have ideas, come to our site. Working hard. Everybody is a fair play game. But you also care about making sure there is no slave labor involved. No. Talk about that. That is important. I dont want to communicate with someone where i end up in a factory that blocks us. We have strict properties, copycats and fake products, these are headaches of the world. You see 49 of the Power Centers are women. A lot of the customers today were female. We were not purposefully selecting five of them women. We feel so proud. Here is an obvious question. Are there American Companies on your shopping list, and which ones are they . I think there are a lot of American Companies i would like to learn from. Whether they would sell, we can buy or Work Together. If we can Work Together helping small guys, i would do anything. If they think about making money, well, you know, we can allow them. Helping Small Business, making sure the ecosystem healthy for the Small Business. We will do anything. Where is china right now . The prc has been cutting the repo rate last night. We have the impression china is slowing. Is that just the export market . Is the consumer doing better in china than we realize . Absolutely. We are helping that. This is the power of taobao. The power of alibaba. We want to go the countryside and making sure they are growing. 300 billion in gross merchandise value. How big can alibaba become . Well, we have a dream which probably i think, we value the china chance in the past 15 years. We hope in the next 15 years the world change because of us. We want to be bigger than walmart. We want to be bigger. Its not the size. We want to learn from walmart. They changed the business the last century. They stressed the b2b. We want them to say this is a company like microsoft, ibm, like walmart. They changed, shaped the world. We have to let you go. Your worth now will be more than the gdp of estonia. What are you going to do with that money . Still focusing on our mission. Your own personal wealth. For me . Well, this is a heady thing. I guess im going to when i was, i think, 14 years ago i asked my wife, do you want your husband to be a rich man or a respected business guy . She said, of course, a respected business person because she never thought i would be a rich person. We were having fun even. Later i said before im 50 years old my job is making money, helping people make money. After im 50 years old which is today 50 years old, i am spending money, trying to make sure more people get rich. You cannot spend a lot of money, right . My job is spending money. Helping others. This is heady. Jack ma, thank you. We will be following the opening of alibaba. Whats in the box . Oh, yeah. Okay. This is our tshirt. The souvenir for alibaba listing. We say everybody should have a dream. The bag is what if its realized . People dont believe in dreams any more. A lot of young people. We want to tell them, its the dreams you have to keep. We want everybody to have this dream. I want to give this as a gift to you. Thank you so much. Thank you. People are making jokes on twitter about forrest gump. They say Lieutenant Dan on line one. Thank you. Jack ma, chairman of the alibaba group. We look forward to seeing you again. Thank you very much. Have a great day. Thank you. Jack ma, executive chairman of alibaba. Ticker baba, going public here at the new york stock exchange. I dont think we ever had an interview on the set quite like that one. No. You are always supposed to be so critical. You asked Great Questions about alipay and the structure. There are times in your life when you are in the presence of someone who is a thoughtful man who just got a lot of money, who is obviously, i think, thinking about 15, 20 this is a 15, 25year view of what can happen in the world because of his company. I find it breathtakingly uncynical. There are questions we could have asked in terms of the business. There will be more time in the future to do that. Right. Interesting to note, he is 50 years old. He did seem to demarcate that as a key age. Perhaps thinking about things somewhat differently. The Management Team at alibaba becomes a very great focus and who they have in their top ranks in terms of competing on the global stage. They certainly are doing both as a company and as a public company. American capitalists do not have those aspirations that he is trying to reignite. Not having grown up in that same environment. You are a product of your youth, to a large degree. Its interesting the peoples republic has not been the place we thought of as where the entrepreneurs will come from. I imagine if we go back 50 years. Jack ma would have been the enemy of that country. Im not talking about make peace with jack, im talking about a man who would have been sent to a camp 50 years ago and now he is celebrated. Its also a country that has changed this is a collectors item. How many in there . We could sell it on ebay. Thats just a joke. One. 1. 3 billion people heard that joke and didnt like it. Thank you. Ive got a lot more where that came from. Having talked to ma about the long term fortunes business, well find more about the stock. We are here getting close to getting indications where the stock opened. Im here with scott cutler who runs the ipo business. Pat murphy is one of the designated Market Makers. They run the show. They are going to determine exactly when this stock opens. Tell us about where we are at right now in the process. We just heard that the orders are filling up with supply and demand. We have a few minutes away before we get our price indication out. We are all excited. Happy to be part of this process. Its a long process. The crowds heating up. Weve got about a few minutes before the first indication. First indication is not going to be the one that will ultimately settle on likely. Can you give us some idea how it might move and how are there bands youll be moving in and around that . Right. There will be many indications based on supply and demand. This is one of the oldest systems in the allocation on the nyse. Its all about supply and demand, putting the buyers and sellers together. Once that feels right to us, well smooth that trading and put out the last indication and be ready to go. We said this many times. This is not a nameless, faceless environment. This is one of the guys who decides how to open this. Youve got to get back there. Give as quick hand wave. Scott, tell us a little about the order book and how its filling up. Can you tell us how many orders there are out there . Right now in this the system we have hundreds of thousands of orders. 20 times more than the last these are not stocks for sale. Orders. Which could be hundreds of thousands of shares themselves. Those are coming in from the wholesalers, retailers and institutions representing retailers and institutional buyers and selling. All that is reflected in the books that goldman and barclays can determine that price. That order flow is significant. You are really trying to attract as much liquidity as possible at that open. That first pricing indication and that range is going to be an important sentiment where ultimately we open the stock. Lets assume they get an early indication. There will be price bands. Will it move in certain balance . Give us an idea how they will move these indications . We are close to having that first indication. Likely theyll put a couple dollar range. That allows them as they are hiking up or hiking down to stay within that range and slowly build that book. If its a 2 price rang, that will allow them to hike it up in 2 increments. Slowly as we get closer to the opening, well narrow that range down into dollars and ultimately cents. If it opens at x price, will likely move in 2 bands. Throughout the entire morning. Can you give us an idea who you cant talk about specific companies, but who in general are the people putting in the biggest orders right now . What type of people . What types of institutions . The first thing, once that indication goes up, you have a lot of people allocated last night that have the opportunity to sell into that. Thats going to be a big piece of liquidity. There is probably not a lot of sellers in the stock immediately until you start to see the price higher. Then ultimately, that allows buyers to come into the market. Also, you remember here, you do have a big section of the transaction that was not subject to the lockup. That is essentially a couple billion dollars that could also be subject as the price is increased to provide additional sell side dollars. You mentioned large interest amongst wholesalers. They are representative of retail orders. The implication is there is a huge of number of retail orders sitting on the book. And these are the large firms, citadel, ubs that are big providers of order flow to the nyse. This is a Good Opportunity to indicate the difference between the price set and where we are going to open. It essentially, we are going to walk it up over time. Well narrow and open it up. Weve got to go back to you. Well be back shortly. Thank you, bob. You never know who you are going to find on the floor of the new york stock exchange. I was able to find the chairman and ceo of soft bank. So nice of you to join us. You did not sell a share at soft bank. Why not sell a share . Because this is not the end. This is the beginning. That is a significant stake what do you do with it . Do you use it in other ways to help fortify your own business in soft bank . We have lots of ideas, lots of dreams. Alibaba is alibaba. We are going to keep on, you know, having alibaba as our core company in our family. Would you like to own more, if could you . Of course. Is that possible or not likely. We asked jack ma earlier because they said shareholders are number three. How does the Company Change now that it is a globally public and perhaps as much as a 200 billion company perhaps if we hit 80 a share today . It has lots of new shareholders, which will be nice. Those shareholders will be partner for alibaba Going Forward as a new partner. Its jack and our philosophy to treat the customers the first. Because they are the most important people that we have to take care. Then the employees. Of course, the shareholders should be the third, but having customers take care mostly importantly, actually shareholders get the benefit. I think it does not contradict. It is actually a good thing. Sir, there are people telling me, you are saluting this company but this is all going to be a flash in the pan. This is the top. This is about as good as its going to get. This is a skeptical view, some would say a cynical view. How do you respond to the idea that this is what feels like too good to be true and is probably the end rather than the beginning . People can have a different point of view. My point of view is this is true beginning of alibaba. I think the information revolution is not the beginning. Its going to last next hundred years, 200 years. China is still going to grow. Penetration is low. The ecommerce is going to grow. Im very, very optimistic. Do you believe, people talk about the Chinese Consumer being, obviously, growing and migrating to the web, but still having much Lower Per Capita income, right . The consumption economy is just not there yet. When is that going to change . Every day. Its growing and changing. Im very optimistic about that. Also to the extent that people, again, do equate the offering here with the growing speculation in the market and a bubble mentality, fair or not, youve seen them all. You and i spoke. When you were briefly the richest man in the world at one point. The year 2000 i was the richest for three days. I know what happens now. Right. Given the portfolio of companies you have at softbank and the insight you have having seen the ups and downs, where are we right now . Put alibaba in that perspective for me. Back in the year 2000, most of the Internet Companies were not making any money. Alibaba is already making a lot of money. Sprint could use, half the wealth would get them on even footing with a verizon and at t. Many of the people who watch our program own shares in sprint. It seems like so much money needs to be invested that the common stock itself may not represent a call on all the things that have to be done. For those kind of questions, i have to be careful how to say. Sprint who is a new ceo, the company is changing quite a bit. I am very optimistic about that. I interviewed mr. Claure last week. We talked about his initiatives and the Value Proposition he is trying to bring consumers. You told me in the past its not easy without tmobile or a partner of some kind. Its a long battle. I am still very optimistic and hopeful that we are going to go for that. And marcello is a great ceo. He is a fighter, he is a challenger. He loves to be in the situation of fighting from underdog. His whole life is like that. My whole life is like that. Its an interesting moment to watch. Is there tmobile, some partnership with the dish that would gain it a lot of speck bei spectrum. Are these things you think about as possibilities . I need to be careful with that question. Alibaba, as they deploy cash and invest will be that more china or exchina, in your view . In my view, alibaba has still lots of Growth Opportunity inside china. So that is a basic. Its going to grow. But the overseas is another, yet another big horizon of opportunities. I am very excited. This ipo will give lots of new opportunities for expansion. As a director of this company and having spoken to jack ma, who at least indicated that being 50 years old and becoming as wealthy as he has has begin him a different perspective. What is your view of the management . Do you need to replenish your top ranks . Are you happy with the management of the company you currently have . I am very happy with the management. They have lots of passion and energy. Its not slowing down at all. I am very confident that they are going to keep on fighting for the future. When the richest man in japan talks to the richest man in china, what do you guys talk about . Money is just one measurement. Its not the goal. It is nice to have, but not the most important thing. It is the passion to make customer happy, to see the big smile of the people. Thats the nicest thing. Where are we internationally . Our president has been saying we will defend japan against china, russia, ukraine, europe slowing down. China, we can talk about how great the consumer is about we see slowdown. Japan. Just not growing at all. Where do you see the world . Nap has been struggling the last 20 years, but im hopeful that there is a new changes thats happening. I dont know any company has any future of changes. Im hopeful new changes will come. Do you worry about china u. S. Relations in particular to alibaba and how that could conceivably impact the success of the company . Any country has all kinds of political situations. We as Business People see the customer all over the world. We love technology. Technology takes the border away. In our business, politics is not the most important parameter. Do we make a larger lesson here. I see people telling me to ask you, is this china eclipsing the United States . Is this a statement about we are a great merchant country, but another country has come in and leapfrogged us in terms of the way we treat the customer and in the actual wholesale retail model. Is the United States, in your view, peaking versus china . United states is still growing. I think the population of the United States is growing. It still has lots of passion and energy. It is the center of technology. I love, i respect silicon valley, new york, all the other city cities coming up with crazy and great ideas. Im very hopeful. Im very confident. Youve been critical of our infrastructure, given the size of our country and resources. That is still true. That has not changed . Need to change. We are part of the player. We take the responsibility. I take all the criticism. Yahoo japan important aspect for softbank. Famously very successful. What are you seeing in yahoo japan and overall in terms of japan where there is a great concern about huge budget deficits and the state of the consumer. Internet japan is growing. The average japan has a lot of opportunity. It is one example. Many young Internet Companies having great success. Thank you so much for coming up and having a conversation. Very much appreciate it. Masayoshi son, ceo and chairman of softbank and the largest owner of alibaba shares. Thank you, sir. Thank you very much. Jim, we kept you past 10 00 a. M. This is such an exciting day. This is a well run deal. Its not going to be the year 2000. We heard two gentlemen who are well grounded. My take is i still believe at 80 this represents great value. Do not pay 90. I think you might end up not being happy at the end of the day. See you on monday. And tonight mad money at 6 00 p. M. Eastern time. Today is the day alibaba, the ecommerce and web giant is going public here at the new york stock exchange. Executive chairman jack ma watched the bell being rung a few moments ago. Talked about a lot of things. We hope in the next 15 years the world change because of us. We want to be bigger than walmart. They changed the business last century. They stressed b2b. We hope 15 years later they say this is a company like microsoft, ibm, like walmart. They changed the world. Bob pisani is open at post 8. Opening trade, sooner or later . It might come later. What can you tell us now . There are hundreds of brokers shouting indications. We are seeing a very controlled and deliberate process to find a seller. What we are hearing in the crowd is weve got tens of millions of shares that are interested, high above the price which we placed a deal last night. So it is a chase to find a seller. Tens of millions is vague. Why is the process so slow even to get an indication . Typically, the indications are out now. This is not a problem. I think again, since this is such a controlled process and there is so much liquidity coming in right now, like i said, hundreds of thousands of orders. They are trying to find that price at which you can find and tease out sellers. That first price indication is going to be a good indicator in terms of the sentiment and the volume in which we see this stock open. We are hopeful, again paddy, anything at all . We have an indication of 80 to 83. That is not the final price. How are you going to control this process . Will it move in bands . Supply and demand. We take our time methodically to go through the order flow and make sure every buy side and sell side has time to make decision on price. This will be one of many of indications. Is there any indication when we might ultimately open . Weve got the first price indication. When will it actually open . Its too early to tell. Could be another hour then. Yes. Its all about supply and demand. You know this is a long process. We try to do everything methodically slow, make sure we get everything right and transparent. When weve got everybody comfortable, well facilitate the open. Go back there and get us more indications. Thank you, bob. This man will make the decision. This team doesnt open until they do 30 million shares, 80 to 83. Does that surprise you . No. That is a great opportunity. Teasings out buyers and sellers in a transparent fashion is what we are trying to accomplish. Well be here until it opens. 80 to 83, 30 million shares. Give it a market cap of just about 200 billion. Well watch that. Obviously, a big day here at the nyse. Alibaba making its debut. Set to go public with that indication of 80 to 83 its an exciting morning. We talked with jack ma. And masayoshi son. I dont think cramer was ever happier . He was excited. Masayoshi was an extra bonus. On this very important day, largest shareholders in alibaba and the man who founded it, jack ma. Who would have thought his hero is forrest gump . I like how you pulled that out as a fictional character. What was notable, trust. He mentioned that word a few times. What do you tell u. S. Investors was your question . I always believe customer number one, employee number two, shareholder number three. Today what weve got is not the money. What weve got is the trust from the people. Millions of Small Business. Im very honored. Youve got to trust the Chinese Government, as well. Its a very complicated structure here. 200 billion is the indication. 81. 14, a 200 billion market. They valued it at 1. 67 billion last night. Who better to talk about the buzz than our friend jim stewart amid the frenzy. There are a lot of people here. We remember during the candy crush digital ipo, there were walking candies. Seaworld there were dolphins and penguins rocking around. Jack ma, according to reports, wanted to make it less theatrical and dramatic. Its fairly dignified. They have a great story. Its a simple story, one anybody can understand. Numbers are great. Growth projections. Even talking about google and facebook, people didnt understand how this business was going to work. This is clear cut. I dont think they need gimmicks. If this opens at 80, 82, Investment Bankers always told me the perfect ipo is at 15 pop at the opening. If alibaba pulls this off, i have to hand it to them. That is the perfect ipo. The stock market has been making record after record. The chinese economic boom story. This ipo stands for so much. Does it worry you at all that it is just so enormous and creating such a buzz . It does. As an investor it would worry me. Number one, all this excitement. Youve got to assume what i call the excitement premium. This excitement is so big, i say the excitement premium is 15 to 20 right off the top. Number two, the growth story. Its clear, simple and looks like its working. It depends on alibaba continuing to dominate retail commerce in china the way it does now. Why do we think that will happen . Is there any other measure reasonably mature market in the world where there is one retailer that has the market share alibaba has . No. The United States is not true. Why do we think the chinese will not eventually develop some of the brickandmortar competition that does not exist there . That there will be other niche, specialized internet retailers that provide the kind of services they dont do now. Others failed. We have spoken a lot to executives who tried many ways to break into the chinese market. Ultimately failed and had to trust jack ma. We all know the consequences with alipay, so on and so forth. He exists as a very large player at the behest of the Chinese Government. Therein lies the risk he is chasing whatever wind they have when they would next like to innovate. Thats why you get these bizarre m a stories breaking through. Why hasnt anybody else succeeded so far . I think the simple answer for yahoo is they are not chinese. There are potential rivals there that could move into this sphere. The governance issue, absolutely right. Theres a lot of trust here. Theres also so much at stake that i would think both the Chinese Government and the heads of alibaba have to be really, really careful about how they deal with this. In any event, investors i talked to are brushing that aside saying, first of all, its not a shortterm concern. Well worry about that down the road. Well hear the rumblings. Its the ultimate black swan event, somebody wrote. You dont know when its going to appear. It could appear and devastate shareholders. That is true. Theres got to be some reduction in price because of that initial risk factor. I dont think that has been reflected in the stock. Chinas ipo university of florida has run numbers. Average decline of 1 during the first three years as opposed to 7 upside. People admit they dont understand the ties between commerce and government. That probably weighs on some of these issues. That probably does. China is still a frontier. We dont have long trading patterns. Its not a mature market. There is uncertainty about that. I have a lot of caution about it. At the same time, this is not o outrageously overpriced. Its rich when you look at ebay. When you look at chinese, baidu. Not so bad compared to chinese valuations. Its not off the chart outrageous, but a rich prize. You talk about the chinese economic growth. The lowest since 1990. Another great thing they have in their story is internet penetration, computer usage, and the size of the population. Its huge. Those numbers are a big part of the story. You write about this tomorrow . Right. Congratulations to the scots. Im proud of them. They did it peacefully. They were rational in the end. Good for them. Welcome back to britain. Jim stewart, as always, a class act from the new york times. We are waiting the first trade for alibaba. Once it begins, our next guest says he will be buying. Walter price, senior Portfolio Manager and managing director with allianz global investors. Welcome to the program. The only indication is we could open to 80, 83 a share. You would be a buyer at that level . 200 billion in total valuation . Its not as attractive as at the ipo price. We are looking at the valuation of the company at 80 or 83 at about 30 times next years earnings. We think thats reasonable valuation. 30 to 35 times for a Company Growing their earnings on a secular basis of 30 to 35 . We think that is a reasonable valuation. Because its grown so fast, you could make a lot of the valuation. James caldwell at Atlantic Equities looks at where you might be in 2016. He says the expected earnings there, could you justify 100 a share today. The growth is almost exponential, isnt it . I think at 10 of ecommerce, 10 of ecommerce as a percent of commerce in china, the growth rate is not exponential. Its more like 40 or 35 . I dont think it goes to 60 or 70 . I think you can say buy it today, it will be 100 in a year. That is a reasonable expectation. Interesting. Can you talk us through the atmosphere amongst the Investment Community . Kayla was talking earlier about the fact that they really tried to ensure they have a solid Shareholder Base coming into this floatation. Roughly 11 billion with placed with 25 accounts, all of which were mutual funds. Throughout this process, they nudged the price higher in order to try to build support with the biggest institutional shareholders. In stark contrast, many people would say, to facebook. Do you find that attractive . Does that increase the potential for this stock, in your view . I think this is probably ive been in the business a long time. This is probably the best run ipo ive ever seen. Management was very meticulous looking at the shareholder list. Who wanted to build a partnership with the company, and allocating shares on that. You dont have a lot of people that will flip the stock out after making 10 , 20 . They tried to eliminate those people from the book. Therefore, i think youll have a much more stable, steady stock price. Can you talk quickly about whether you are concerned at all or whether investors should be concerned about this unique structure variable interest entity . Senator bob casey raised this concern to the s. E. C. This idea that its a different Corporate Governance structure most american investors are used to, and a lot of the control of the board, most of the control of the board is the actual owners and executives. The way many of the Internet Companies in china have been set up. It doesnt bother me. Ive been investing in china over ten years. Thats the way the structure is. Thats because the way the government has rules about internet, internet finance and so forth. The control of the board isnt a lot different than you get at google or facebook. Those companies are controlled by a small group of investors with super voting shares. I dont think its different. Its a big day for us here, walter. Thank you for joining us. You can see the skeen down here at the new york stock exchange. Crowds surrounding post 8 awaiting the very first trade from alibaba. On the broader market, s p 500 just hit 2017. We a we are higher across the board. Greenline do for you . Y [bell rings] time and sales data. Splitsecond stats. Its so close to the options floor, youll bust your brainbox. All on thinkorswim, from Td Ameritrade. An Unprecedented Program arting busithat partners businesses with universities across the state. For better access to talent, cutting edge research, and state of the art facilities. And you pay no taxes for ten years. From biotech in brooklyn, to next gen energy in binghamton, to manufacturing in buffalo. Startupny has new businesses popping up across the state. See how startupny can help your business grow at startup. Ny. Gov thats keeping you from the healthcare you deserve. At humana, we believe the gap will close when healthcare gets simpler. When frustration and paperwork decrease. When grandparents get to live at home instead of in a home. So lets do it. Lets simplify healthcare. Lets close the gap between people and care. We have new indications. 82 to 85. What size are we talking about . They are saying there is still another 42 to buy at that level. Above 90 is when you start to tease out more sellers. We are chasing to find sellers here, even at those price levels. You just gave us important information. Not just 82 to 85, but youre saying that there is healthy indications for sellers in the 90 area. This could drift higher towards 90 . What theyll start to tease out at higher prices, how much additional sell side liquidity comes into this. This is that classic auction process. People looking for prices here. I want to get something very clear. This is going to be the biggest ipo ever, am i correct . Absolutely. What you are looking at now is as the price is expected to open above the ipo price, that will likely mean that the underwriters will exercise the green shoe, which will mean this deal will be over 25 billion in size, the largest in history. Good point to education people on what the green shoe is. It is an option by the underwriter to exercise an additional 15 of shares on the market. Explain that briefly. In every transaction, 15 of the deal is sold and allocated at the ipo, on the allocation last night. Thats the green shoe. Its closed in one of two ways. Either the stabilization agent, underwriters are buying below the ipo price. Or its closed by exercising the green shoe if the stock is above the ipo price. So again, theyve got 30 days to do that. Most likely scenario is they will exercise the green shoe. The important thing is we had 320 million shares that was underwritten. There was an additional 15 . That would bring it to 360 million or so. That additional allegation is going to be exercised. Therefore, that puts you over the top into the 25 billion area. That is bigger than the former record holder for ipos. Ingagri china. We are seeing a deliberate and controlled process trying to find liquidity. 82 to 85. As you hear, healthy interest around 90. That should give you an indication of the direction we are headed. Can i just say at 85 a share, which is where we are at the moment, that is a market cap of almost 210 billion. Its bigger than facebook. When they were talking about 90 a share, thats 222 billion in market cap, if they get that far. Youve got this 8 billion worth of stock people can sell right off today. When they talk about hitting 90 share, its presumably those positions you are thinking about liqu liquidating. You talk about 90, you are bringing hard sellers out. At 90, it gets rich. There were a lot of disgruntled people on the floor who will tell you a lot of the minority brokers got absolutely nothing and are getting a check for their troubles rather than anything else. There are people that didnt get the stock they wanted, clearly. They spent 9 1 2 hours yesterday going through the allocations. Joe tsai going through every single account. To figure out who got what. 9 1 2 hours tells you how much time they spent thinking who got in this. The investor interest continues to pour in, waiting the first trade. You spoke to jack ma, the founder and chairman about what it means to be a public company. Here was his message. I dont want to disappoint shareholders. I want to make sure they are making money. Im sure, and i really want to tell the team, that shareholder number three, thats not a name. Its the discrimination. We respect from the heart. The thing that you do better when you care about the customers, you make those innovative young people successful. The shareholders will be happy. There is a live shot of jack ma. There he is with our cashin. On the floor of the new york stock exchange. Hes been very friendly. I saw him shaking hands with people as i came up to the exchange. He shared with you some of those personal anecdotes. I thought it was interesting he said one of the alipay decision was the most difficult he had to make in the history of this company. And he said one day he will tell the full story. A couple of years ago they transferred alipay out of alibaba. Yahoo was a significant holder. Was very upset with that decision. We dont know all the details. We do believe it was about licensing. It would lose potentially its license. Alipay is crucial to the alibaba success story. He guarantees the money. It goes through an escrow. If the goods dont arrive, you dont have to pass the money forward. From post 8 to 87. 85 is an 85 pop. Good morning. Thanks for having me on the show. You seemed happy to see jacks story in the new york times. That big takeout on the origins of the company. Incredible path to success. Did anyone back at 05 see this coming . Jack wanted someone when you meet for the first time creates a real impression. He is a one of a kind entrepreneur. I met very few of those in my life. He has a 100year view, even 1,000year view. He had tremendous ambition for this company, even back then. You heard about him talking about conquering walmart. He is thinking about the future well beyond his lifetime. He is certainly not focused on how the stock price will open today. Stick around while i check in with bob pisani at the post. Sorry. We are making sure we get the numbers straight here. Its 84 to 87. Any indication of the deal size. At 84 to 87, there is a remainder 20 million to buy. Last range 40 million. Slowly starting the buyers satisfied. Im smelling a pattern here. We are jumping in 3 increments. Sounds like the next one would be logically 87 to 90 or 88 to 91. Im following a pattern here. Well say within the 3 increments until we start to narrow from there. There is still 28 million buyers out there. At some point those are going to be satisfied. There will be sellers out there. Looks like we are getting closer to that particular area. We are close, but not quite there. Again, i think we heard at 90, there is still a significant amount of searching for sellers. Give us a time frame now. I dont know. This is going to be the battle here to find sellers here. There is the team. Bottom line is nothing happens until those guys say it happens. Back to you. Interesting, we have part of the discussion that gets lost on a day like today is the impact it will have on yahoo. What do you expect them to do with that 8 billion . I cant speak for them since i no longer work for them. Yahoo are investing heavily in mobile. I think they are investing in making yahoo more a part of what people do every day. I think, im sure theyll return some of that cash to shareholders. I wonder if we are missing the most obvious thing. The front page of usa today is we are witnessing a wakeup call for u. S. Technology companies, particularly google, apple, facebook and amazon which rule the consumer internet. Its by no means a mistake they are here with the other three Major Chinese players about to take on this country and the biggest market as it stands at the moment. Do you see what we are witnessing here as a direct threat to google and to amazon and to facebook . Its going to be bigger than facebook on the valuation we have at the moment. Alibaba, no question, is one of the greatest internet businesses ever created. It is up there with google, facebook. It has a phenomenal business model. The Network Effects create tremendous value for buyers and sellers on the platform. Most of this discussion on the program today has been about 10 penetration in china, how much can that grow . Opportunity is outside china. I expect them to bring some of the technology and platform into the u. S. Market. Forgive me for interrupting. All of the ones named here. Google, apple, facebook and amazon. If they are to take a hit from where alibaba is heading, would take the hit hardest . The closest businesses in alibaba in the u. S. Are ebay at the time was competing to buy the stake in alibaba when we did it in 2005. And amazon. Google itself, which currently directs a lot of consumers into ecommerce may see an impact as alibaba builds its own direct marketplace business. Im curious about your take on the future of yahoo . It has clearly ridden the wave of the excitement towards this alibaba ipo. They will still have a 16 stake. What does that mean for yahoo . Will Marissa Meyer use the cash of this sale wisely . That is a great question you should ask marissa. Its a shame the company did sell down half its stake. That would be worth another 20 billion or more today. The same shareholders arent benefitting from that today. I dont think they could possibly invest this money back into the business. Yahoo is in the process of reinventing itself to be much more relevant on mobile where it struggled in the last few years. I expect yahoo to continue to build and buy in that area. Toby, great having your insight today. Thanks for your time. Thanks for having me. Congratulations to jack and the team. We got art cashin. We saw you taking shots with jack ma. Not literally doing shots. Pictures. It was the highlight of my day. He came by and a said to the exchange people, i cant leave without having a picture with art cashin. Thats great. So we took pictures. See what cnbc does for you . The legend, the man. Talk about what this day is like. We have not seen a crowd like this at the new york stock exchange. Hundreds of reporters from china. Hundreds of people waiting around that post for the opening trade. We are hoping that it will hope shortly. Twi twitter opened around 10 46 a. M. It gives the underwriters a chance to kind of straighten out the International Books and get things ready. We may indicate it higher. You cant escape they decided not to go with the nasdaq because of the way nasdaq bungled the facebook ipo. As we watched this process going on behind us now, how would you describe it . Is there an element of risk to everything they are doing . Is there a value judgment in what they are doing or very much step by step a process that you just basically work your way through . Ive been doing this for 50 years. This is a vetting process that goes through. Hopefully, it prevents, unless there is a technological problem, much of an era. You can tell people what it looks like, when you are getting closer. There are very few surprises. How much of this, what is going on, all the excitement, is an indication for the broader markets . We are seeing gains across the s p, nasdaq and dow jones. Is it a sentiment indicator . Does it tell you anything the way alibaba trades . It does to a degree. It talks about the overall interest. We had at one point probably 95 million shares to buy. Some have limits. I think thats there then again, a theme ive been talking about all week, people who raise money to buy alibaba couldnt get in on it. Now they are redeploying that money. That was part of the conversation i had with jack a few moments ago. I said you realize you put a boost on the markets here. He said i hadnt thought of that. S p 2015, amazon is up today. There are a couple of curious. And the expiration, of course. We did 360 million shares the first 30 minutes. A normal day would mean we do 3 billion shares today. Its an expiration. The first half hour is when its very busy. This doesnt rank in the top ten in volume of expirations. Yen is down. Art cashin, thanks for joining us after that moment you had meeting jack ma. Obviously, a big day as we await the first trade over at post 8 of baba. vo rush hour around here starts at 6 30 a. M. On the nose. But for me, it starts with the opening bell. And the rush i get, lasts way more than an hour. announcer at scottrade, we share your passion for trading. Thats why weve built powerful technology to alert you to your next opportunity. Because at scottrade, our passion is to power yours. Open port twentytwoohoneseven on the firewall for customer db access. Install version twopointthree of db connector and ensure verbose flag is set in case of problems. clapping sound isnt the cloud supposed to make business easier . Get the one that can connect to the systems that you already have. Today theres a new way to work. And its made with ibm. We are starting to tease out the sellers here. Bottom line is we were talking last time there is 28 million buyers out there that hadnt been satisfied. How much further are we to this . Can we now expect something . 89 through 90. We are toeg to take as much time as we need to tease out the right amount of liquidity. It does not feel like we are imnaemtly close. Again guys, 86 to 88. Still got tens of millions. Tens of millions to buy at the higher end of the range. Well be here. What if its 88. 88 . Keep a multiple in mind here. This is the time in which twitter traded on its ipo. We are on the right track. In the meantime this is a huge day for apple fans. From the east coast to the west coast of the United States. The new iphone 6 and 6l appear in the stores. On the left of your screen in the apple store in palo alto where steve cook the ceo has just arrived. They look to get their hands on the iphone. Finally arrived as simon mentioned. Lines around the globe. Who better to talk to you about the inner workings of apple whats going on and the branding . Ken segal joins us. The ad guy responsible for putting the i moniker in 1998 which has been on everything from imac to ipad. Its not any more on everything. Apple pay. I think the end is near for the i. Im sorry to say. Tim cook putting his mark on things. I think the i was a distraction, to be honest. Calling things apple something. Apple phone, apple pad perhaps in the future. Its a more direct branding. Something could be said for that. What do you think about the new phones . S obviously people are waiting for many, many hours and days. Is it revolutionly enough . I think its really huge. The big screen was way overdue for apple. I personally thought we would see it last year. The trend was clearly towards a bigger screen. The main driver for people to go to samsung and Companies Like that. I think with the bigger screen, an awful lot of people will come home to apple and be a lot happier with that. I think we have video of tim cook arriving at that store on the west coast, the apple store. This is a big day for him. Analysts go to these lines to try to figure out how many people are in line. I think its going to set records. Whether we flooded the globe with people who can afford an iphone. That may be growth for phones goes negative in 2016. I know you are not a supply chain analyst. Which sounds more likely to you . I think there is an awful lot of up side for apple in phones. Theyve been constrained by their lack of competitiveness with the screen size. I think theres a whole new waive of confidence in apple and the new phones. I think apple is in a great place moving forward. If you look at any company, if you look at what they did, they have a big range. They took it down and concentrated on a few offerings to the marketplace. Now having bought bates, expanded the watch, the danger is you lose control over the quality of design and offering to the public, dont you . Its becoming a scatter gun. Look at the way in which they are recruiting people from so many different walks of life. That isnt one view any longer. Its a very good point these new products, especially the watch being a fashion item and apples seeming decision to market it as a fashion item and bring in all these fashion people. I always argued for the simplicity of apples product line. It is pointed out correctly so this is anything but simple. There are going to be millions of combinations. It is a fashion device. You are not going to want to wear like samsung has a watch. How many people want to have the same watch everybody else is wearing . I think there is some very smart thinking behind this. Do you see any of steve jobs legacy steve jobss legacy in the apple watch . I do. I think the presentation itself and the features and the way its been rethought and the Digital Crown is a very interesting take on how watches can work in the digital age. I could imagine steve giving that presentation. You know, the big question is would steve have done all these different models and all that kind of thing. But again the world changes and apple will have opportunities that steve could never imagine. So. All the apple fan boys point to ive. Smart move . I do think so. Apple has prided itself on integrating hardware and softwa software. And for several years there was a gap between the two and johnny ive and scott forstol who who apparently didnt get along all that well to have this one thing that interacts and the beauty of the product and the interface i think is very smart. Ken, thank you for coming by and sharing your thoughts on apples new debut. In the meantime the show continues after a short break. It is one of the biggest days for the new york stock exchange, the biggest ipo ever in this country. Were awaiting the first trade for alibaba. Yahoo also trading higher. Currently looking at the range of 86 to 88 for alibaba a share. That is a top price of 217 billion dollars. When change is in the air you see things in a whole new way. Its in this spirit that ing u. S. Is becoming a new kind of company. One that helps you think differently about whats ahead, and whats possible when you get things organized. Ing u. S. Is now voya. Changing the way you think of retirement. My motheits delicious. Toffee in the world. So now weve turned her toffee into a business. My goal was to take an idea and make it happen. Im janet long and i formed my Toffee Company through legalzoom. I never really thought i would make money doing what i love. We created legalzoom to help people start their business and launch their dreams. Go to legalzoom. Com today and make your business dream a reality. At legalzoom. Com we put the law on your side. The all new, head turning cadillac ats coupe. Its irresistible. Sfx ambient park noise, crane engine, music begins. We asked people a question, how much money do you have in your pocket right now . I have 40, 53, 21, do you think the money in your pocket could make an impact on something as big as your retirement . Not a chance. I dont think so. Its hard to imagine how something so small can help with something so big. But if you start putting that towards your retirement every week and let it grow over time, for twenty to thirty years, that retirement challenge sfx crowd cheering might not seem so big after all. Squawk on the street at the new york strex awaiting aliba alibabas first trade. Another new indication on pricing for alibaba . 87 to 89 right now. That is important because we are only two dollar increments and seem to be getting closer. Scott tell us more. At the high end range we have 25 million paired, buyers and sellers paired at the high end. More importantly thiere is stil an extra 15 million shares to buy. Were getting close but still 15 million buyers not finding a seller. That is indication we might go above 89. It is also important when you open that price you want residual buyers there because you dont want the stock to open and immediately drop. So you are not trying to tease out a point. You wanted residual buyers. This is going to open when. Probably 30 minutes away. Thank you. Thats what we want to hear. When we open there is a break system, a limit up, limit down. A Circuit Breaker its called essentially. Explain in 20 seconds how that would operate in the event it s necessary. These are rules by the sec across all markets to make sure there is an orderly market. Once the stock open, limit up, limit down bans are set and here it will allow the stock price to move within 10 . If we were to gap in a 10 move we would halt the stock across all markets and reopen. Well talk more about that as we get closer. Sarah. We have a live shot of the tim cook at the apple store greeting employees out in palo alto for the store at the launch. They will probably open their doors soon for a bunch of fans eagerly awaiting and have been lining up for day, the release of the iphone 6 and 6 plus. Well see if bigger is better. By early indication of the lines we saw them here in new york city down 20 blocks long. People want the new phones. I also heard people are due for a product refresh. A lot of the phones out there on the market, the iphones at least half of them have been two years or older. So its time to trade it in. Get your new phone. But there is also a lot of excitement norm the innovationings, namely the bigger screen. I know you are getting one. Excitement isnt translating to the stock. Roughly flat. Its been tough for apple to crack that 102, 103 level. So something to watch if the numbers are good on monday. Kayla, more on the floor. Hey, yeah there is a ton of buzz on the floor but also a good bit of buzz on the retail side. There were reports of strong order flow at Td Ameritrade and im told by my resources roughly about 4 of the stock is going to Retail Investors and about 6 or 1 billion and a half of shares is going to friends and family of the founders. Of course this is a program we reported on a little earlier in the week. And that is actually the amount we reported on. So interesting to see that allocation has stayed flat. That being said, the bankers i spoke with said there was some surprise, as the book was allocated at the aversion to hedge funds. And that hedge funds are basically shut out of this deal. And there was preference a very strong preference given to investors with whom jack ma and jo is a, the founders o thf company had a prior relationship or at least a one on one meeting and there was strong preference given to those people with whom joe and jack have strong relationships. With that said retail did not get completely shutout. 4 is not the allows weve seen in recent deals. So interesting they did choose to give a slice to the investor at home even a i mid the buzz here at wall street. Different from facebook, where i think a quarter of the offer went to the retail insiil investors. And we saw the result there. Could you say that again . I dont think my mic was up. I was just saying its very different from the facebook offer, where from memory a quarter of the offering actually went to the retail. Percent went to retail. But the difference is that facebook was a household name. So many consumers used facebook and they knew facebook and they were the core of its user base. So there was a propensity on behalf of the company to let those users take part in fact offering. Of course that strategy back fired and alibaba has taken that lesson out of its play book. And i think we had the survey suggesting 8 8 of people in this company dont know what alibaba is. We just want to show you this live shot of the opening of the Palo Alto Apple store where tim cook is chatting with employees. Is he actually unlocking the doors himself . He is. You know, iphone sales are more than half of apples 171 billion in revenue. And Profit Margins are 15, 20 higher than any one product. That is where they make that you are money. We talk about apple pay and maybe that will be the business down the road. But apple is through and through an iphone company. Is that an apple iphone song they are singing too. We should learn what that is. I think hes going to speak actually. So lets try to listen in. No speaking but a lot of applause. It is an important moment for tim cook with the unveiling of the products. This was the point he could say really it was miss company and not just the legacy of steve jobs working its way through. This is a good picture here. People have been