Netfli the dil media outfit crushed earnin expectation a lot more international and dome subscribersn many thought ty would. People are signing up to watch its line up of new and original shows. R the quarter, netflix earned 12 cents a share, doub fore rose 31 to more than 2 billion, and with that, the 20 in initial after hours h tradin julia has more on what netflix beating trong quarter. Acro the board as subscriber numbersd expectation and the price hike proves not to be00er at all. 56 million new subscribers, 2 milln fro overseas, bringing the count to 87 million the fourth quarr looking y rosie. Netfli forecasting it will as a far better than expected 5. 2 n new subscribers sayi the results are driven by excitement around its orig content. In the pas quarter, its hit stranr things and narcos in particular. The results push the company to cont to invest even more in prod its own original conten Julia Boorstin in los angele knew to ibm. This came despite growth in its cloud and artificial inte units. Big blue earned 3. 29 a share, 6 cents above estimates. Revenu came in at 19 billion, slig lower than a ye but it was the smallest drop in revenu in more than f as for the stock, it was vola in after hours trading. Josh l has more on ibms 8 billion. That was one big number in ibms latest report, and that refers to revenue in a company soc strat imperatives, wher nose emerging growth areas, like cloud technology, analyt and security that repr growth of 15 adju for currency. Jmps Greg Mcdowell an ibm bull, says that number is critical for big blue, because when it comes to i. T. Spending, that is where the growth is and other tech gian like amazon and micros Strategic Imperatives now reprt some 40 of the compan revenue. The question for an investor, though when will those new busi lines be big enough to offset the older ones . Lets turn now to david josh gher for more reaction to the tech earni out today. And what the results may mean for you and your money. Hes principle at jva research. Welcom lets sta with ibm. What did you think . Whats the strong point and the spot . For ibm, its been a long four and a half years for the ceo to be overseeing a company seei its revenues do nothing but decline. Grante the strategic initia getting up to a 40 of total revenues and showing grow of 15 year over year is impres, b in the tech sector, you have to look at companies out there growg ear and revenues on the factor of anywhere 30 to 50 . Large blue chip obviously a company i seeg growth in these areas, its still lagging other Companies Whose market caps are not necessarily all that diffe in size. In terms of their revenue growth. Obviou from that standpoint, ibm, a laggard, has done well in the market, in terms of perc so far this year. But were not surprised to see some profittaking here after hours. So how do they change that . They he bn aquizive. Do they buy that growth in the form of another company, david, or do they have to keep trying to turn it around organically . Well have to do both. Certaiy what weve got with respt to the artificial in offer with wats and the extent to which that is being licensed in a wide range of partnerships, its cey very promising for the compan at the same time, ibm ha an aggressive acquirer and will cont to be so. We dont think theyll go up in value if they acquire one large its a matter of being patit if youre an ibm inve and seeing them piece it together. We think that they wl get to that point, because we think the artifi intelligence is certy a substantial future market, and probably ibm is the least expensive way for inves to have a way to effey pla the growth in artifi intelligence. Quick thought on netflix. Youve called yourself a skeptic on that company. Did todays numbers change your view . Well, it certainly made netfx a more expensive stock s trading a about 50 times its earn before interest, taxes and depreciation. Certaiy commend the fact they e out there growing their subss as they are. They do have limitations overse in terms of trying to penee mar like china. But we thi that, you know, when people look at netflix as an investment, the fact that the company sai they want to raise orig content programming from 600 hours this year to 1,000 hours next year, granted, obviou thas going to take inve dollars. They he indicated theyre going to lever up. And obviously, theres no guare that every show they put out is going to be a h. At the sam time, there are other compa with amazon, with prime offering, also moving into original content. Netflix does not have the fiel to itself. David, thank you. As always, great to see you. David gherty with gva research. Now to bank of america. The secondlarge bank by assets reported its first profit increa in three quarters. And it comes despite a drag from contin low Interest Rates. Bank of americas results were held by an increase in trading revenu just as jpmorgan and citibank and on the conference call, ceo Bria Moynihan sounded op we saw better client activity drivin the best third quart result weve had in five years in investmen banking and in sale a. And were doing that with a smalle balance sheet, fewer people and lower value at risk or var. Shares of bank of america rose slighy in trading today. On wall street, stocks clos lower as oil prices fell, and investors evaluated those quary r weve been talkin about. Econom repor were in the mix too and comments from a fed official have more in just a moment. The Dow Jones Industrial average fell 51 to 18,086. Nasdaq dro 14 and the s p 500 was off six. Outputted manufacture incr for the third time in four months. Factory productio rose 2. 4 in sept and the rebound last month led by the construction suppli and petroleum products. A separate reporting showed a contn for the third stra month. New orders and shipments and employ all fell. Federal res vice chair, stan fisher, says the economy is very close to the feds empl and inflation target to the Economic Club of new york, the Central Banks numb two also warned of the dang of low intere low Interest Rates makes the econom more vulnerable to advee sho that could put it into a recession. Operatg clo to the effective lower bound limits the room for centra ban to combat recess, using their conv p that is by cutting the policy in mr. Fisher added that low rates can threaten financial stabil thoh he does not think tha threat exists right now. Octob as you probably know, is an historically vola month. But so far, this october is turng out to be relatively calm. That may be just what inves do mike santoli explains. Even after some choppiness in past with, the stock market uncommonlily calm so far. The s p 500 index has traded in a narrow range this month and is less than 3 off its record high. Invests looki for a nice fourth rally should prob be wishing for more nervs trading andr bull backe in the second half of the month. Pronou octob weakness is a strong setoff for the end of th. In the past 25 years, an october pullba of at least 3 when stocks wer already in a bear market has led to an even better fourth gain near 7 on the bear market bit is signif 2000, and in 2008, with the u. S. Econo in recession, an october d proelded further declin. Year offer a bit of a counr example. October was unusually strong, the stocks rising 8 as the market rec from the deep late summe selloff. Yet the indexes peaked and the mark went on to suffer a nasty into february. The seasonal factors are not laws of nature. Corpore Earnings Results wilhe the market and bond yields and whethe the feds expected dece rate increase generates much financial stress. History suggests a good october scare that drops the market 3 to 6 can give way to a strong spri into t for nightly bu im mike. Look at all those people havi fun. Still ahead, pricing pressure. Cali tackles the rising cost of prescriptio with its own ballot initiative. But what is the right way to fix visas ceo stepping down. He says he can no longer spend the time in san francis necess to do his job effe and wants to be clos to his family in new york. Former presid fred kelly will take over starting on december 1 no caterpillar ceo will retire earlie than expected and step at the end of the year. Has been with the company for 41 years. Hell be replaced by the current head of caterpillar engine busine pepsi is making big chan. The compa not only wants to cut sugar, but its also making a commitment to th sara eisen talked to the ceo about her newly outlined longt help pepsico setting ambis goals for itself in resp to consumers eating heal and Regulatory Press to cut salt and sugar. Specif pepsico now says two of its beverages will have no more than 100 calories from added sugar per 12 ounces by 2025. Bevera digest says thats about 40 for pepsi so there is wo to do and there are risks. Cost, for one, and also that it the company also wants to cut salt level and saturated fat in frito lay chips, doritos and other salty snacks. Thats a challenge, because peop love fried snacks. We had to really invest in tech to reduce the satud fat level. Us a while, but now we he done two things. We are trying on snacks in many couns wit hearthealth oil and we ha a technology breakthr significant tech breakthrough, which is now commerciall being adopte in china, which is a new frying technique, which actually reduce saturated fat levels by about 20 , and increases capa of machine by 25 . Pepsi moving away from carbonated soft drinks and cola at a when coke is doub down. In terms of snacks, amongo lease is cutting sodium and saturated fats by 10 by 2020. Compani are setting their own targets, and moving to foll the consumer. That includes efforts on sustai as well. Somethg peppy is laying out. We have been maniacally focud to reduce the water use in our operations and ensure the entire commu around us is d thats our goal. To make sure that we get welc into communities and societ not shut down by comms and society. And by doing so, we actually save money. Because we dont have to pay for water to run our operation. Our Sustainable Initiative has saved us 600 millio i would say to you, envin ability is not a nice to do, its a fantc profitdriving initia, w also is the as a result do for society. Bett botto line performance, pepsis sto is up 7 so far this year, outperforming many of its competitors in food and bevera d today we got a bigpicture view at how the Company Wants to keep that u m sarah eisen. Ureport, United Continental results fly above expectations and that where we begin tonights mark focus. Despite seeing a drop in profit and sales, the airline did mana to beat analysts estima the company also reported a narr than expected drop in passr uni revenue, but said it expects that to fall between 4 and 6 this quar shares ended the day down frac at 53. 0 3. Super value plans to sell its Discount Grocery chain, save a lot, to a equity firm for more 1 billion. Last year the supermarket oper said it was considering spinni off the division. Superv shares rose nearly 6 to 5. 30. Tesla and panasonic have sign a nonbinding letter of intent to manufacture and prod solar energy products, but theres one caveat. The electri car maker said the agreem only goes into effect if teslas proposed acquisition of solarcity receives shar approval. Tesla shares were down 1 at 193. 9 hasbro topped sales estis a inventories ahead of t shopping season. Profit also bette than expect up 7 on the day to 81. 82 Charles Schaub hassin incr in fees and brokerage acco that helped top analyst expectat to 31. 69. Trucki transportat. Omp jb hunt saw its earnings due in part to weak demand for servic and a rise in driver wages. The company also said higher main costs conditio to the worse than expected profit. Overal revenue did rise. Shares fel almost 2 to 78. 45. Constellati brands will sell its canadian wine business to a pension fund for nearly 800. The parent of corona beer and vodka says it plans to buy sevel brands from a private wine company for 120 million. Shar finished down 1 to t high price of pres is not only a hot topic nationally but also parto in california, where ts weekend vermont senato ber campai in favor of a contro balt initiative, that h would help lower but as meg tirrell reports, not everyo is i rep it called the cali drug price relief act and suppo may be gaining steam heading io election day. Also known as prop 61, the act would bar california state agen from paying more for pres than the u. S. Depart of ve the v. A. Is allowed to negotiate with drug companies. Somethg medicare, for example, cant do. And proponents of the bill say 5 billion over ten nians more propon will include senator bern sand who rallied in suppor of prop 61 in san an stand up to the greed of the pharma industry, char us, by far, the highest prices in the world for pres drugs. While e making tens of billio of dollars in profit every year. Thats wrong. It could potent be the most e ballo initiative in cali with more than 100 mill donations, the vast majo of which oppose the measur n and pfizer lead the way. Those opposing include veterans who fear it wouldnt be lower pric for everyone, but higher pric for them. Drug Companies Respond by elimg discounts that now go to the v. A. And major cali newspapers have both weigd in against prop 61, citi potential unintended. You have a real divide on policy. S both nationally and in many states, seeing the issue as one where they dont want to limit research and development as opposed to supporters of ball initiatives like this who just want to flatten the prices, regard of what the other impacts might be. Many californiane bill. Two polls done in july and septemr put support at almost 70 , among state voters. Oppones s thats a dangerous positi. Polls were taken a number of weeks ago, and we think that when they take a look at the detas in proposition 61, theyl recog that this is a Flawed Initiative that wont the financial impa to pharml compan though, may be limid if prop 61 is passed. Accordg to rbc capital its Research Shows a decrease in revenue of about 2 in 2017 and 2018, pro stretc to all ooh states. But the politic focus on high drug prices looks like its not goin anywh any time soon. Meg tirrell. So with californ in on the battle to stem soaring drug prices, is this the best soluti lettin sta fix the problem instead . It come from the michel mellow is a professor of law and professor of health, resear and policy at Stanford Universi and she joins us now to talk about that. Profes welcome. Its nice to ha you with us tonigh guess the question were posing is, we know we have a prob with soarin drug prices t better to be federally mand or state mandated . Well, as in many areas of health policy, the types of init were seeing out of states are not the first best soluti but theyre the solution that appe to be politically feasib at th partir i assume thats because there is no consensus in congress or betw the administrat and congre on how to handle this. I would like to go to the questi in front of the voters, propos 61. And one of the concerns is those uninte consequences. In othwords, if you reduce pric for the state workers in califo for retirees, cut employees, people who rece medicaid assistance and so f that somewhere, someho the prices are going to go up, maybe even for veterans in california, as a resultf this. Do you share that view, or worry . Well, i think any economist would share that worry. The fact of the matter is, there not one drug price in the united states. There e hundreds of drug pric. And without regulation that prev companies from raising prices in one part of the market when they forced to skrikt them elsewhere, on payer pays less, ano pays more. Do you k the industry, if indeed this proposition does pass in california, they have been under an enormous amount of soaring drug prices. Because do you think it might act as a detet to them if this propos passes so they dont contin to raise prices, or not . You know, it would be great if the industry saw initiatives li this as a strong signal from the public that they need to take voluntary action to rein in cost growth. Where we seen action by the indust, it has bn in respon to a very discreet and acute outcry, for example like the epipen pric by mylan. D limited in nature. Compans have adopted solutions to attempt to respond to public conc like offering discount coulpleases. But those solutions dont tend to save us money. In fact, may cost us money. So while i would love to see an indust solut here, im not optimistic based on what we ha seen so far. You began the discussion with a very interesti answer. You sa this is a solution, but probab not the best so what would be the best solution in your view . Well, drugs are a National Market and it calls for a nati solution. But congress in its wisdom, when it passed the Medicare Part d act in 2003 chose to explicitly state medicare would not be nego as it does for other servic. This is an extra step to take. I know you said there is no conss in congress about how to do it, but there was a conss and the consensus is, lets devolve that resp to hundred and thous of individual pharmacy benet managers. That creates a very fragme market, where each manar and each payer is pitted against one another, and were not able to effectively. So there a a number of stra that our congress could consider that other countr have pursued that would sti maintai a lot of our marke approach, but impose some discipline on a very undiscd market. Professor, thank you very mu for joining us tonight. Ichel mello with stanford coming up, extreme makeover. A classic and iconic home is taken into the 21st centur they the iconic homes of san franci the painted ladies as theyre known. And now one of the victorians is gettin a very modern makeover. Aditi roy h rep at first glance, this iconic, victorian house in san has stayed remar the same s built in 1992. The newest owners have preserved nature chandeliers. Hopedic on the roof, you find something unmist modern. Solar panels to power the home. Were big believers in sust energy and renewable sources of energy so we thought, wouldn it be great to get solar. He says he and his wife chose to go solar, because it also makes financial sense. Sun run, the Solar Company tha they hired to make the switch, says they offer the installation clients agree to let sunee, as run manag their electricity f the company says by going solar, the average custome reduces their month electri bills by 20 the benefits for going solar first are cheaper electricity. Yo dont have to compromise to swit over to solar. And that news to a lot of people they part of a growin trend. The solar energy industrys asso reports 1 million amer currently have resi solar power. And the Group Projects the solar. Ndust will grow 85 year over part of the reason for the expln of growth is a gove tax credit, which went into effect the end of 2015 and has bee extended through 2019. They hope by switching over to solar power, theyll show other potentl c that somes even the most tradl hom n having a solar system on the roof reall doesnt impact us dayto. Just feel good about the they ha also consume. Incl other modern technology in this historic home, outfit it in smart tech, like a dual zone furnace and even an automatic wine dispen for nightly bu report, aditi what a beautiful home. Yeah, lovely place. Really pretty. That does it for us tonight on nig sue herera. And im tyler mathisen. Thanks ver for joining us. Have a great evening, everybody. Well see you back here t [dramatic music] evening paper. Evening paper. [birds chirping]
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