1. 8. Housing starts not too bad. Road map begins with netflix shares vaulting in premarket after the company trounced wall streets and its own expectations for the quarter. Ibm moving in the other direction. After revenue and guidance came in below what analysts had been looking for. President obama outlining his plan to help the middle class removing Tax Advantages benefiting the wealthiest americans. First up shares of netflix up sharply in the premarket. The company exceeding its own forecast adding more than 4. 3 million streaming subscribers in the Fourth Quarter, posting profits that blew past street estimates. During the interview, Reid Hastings asked for his latest thoughts on the companys ability to reach 60 million to 90 million subs in the subs. Looking very good. 39 million in the u. S. Adding 5 plus million a year. So the trajectorys great. And you know if you step back and you say is internet video going to be in every home in america in ten years, thats a pretty clear yes. So tons of potential there. Were very excited about just continuing to improve our service. So this morning, jim, everybody and their brothers upgrading or taking their price targets higher. Lets talk about jon blackman and scott. They came out last week stock at 323 and both said this going to happen, this is the breakout quarter. Cowan had done a survey of 1,000 people saying theres a dramatic increase in time spent on netflix. Stifelle said they could do 100 million and a lot because the compelling risk reward and the International Growth both cited the fact that marco polo did well. Renewed for season two. 90 million price tag, not a cheap show. Talked about how these are expensive price tags on stuff they do themselves, its much cheaper. I was reading Netflix Hastings letter and i was with a bunch of people at dinner table and said i want everyone to read this. This is what you do when yoi you triumph over pessimism and do an amazing job. Now youre cocky, do they not deserve to be cocky . This was a tom brady Conference Call. With a fully inflated ball. Yes. It was a combination of roger saying, relax and belichick saying were just going to cincinnati and Richard Sherman saying dont compare me. It was one of those nfl calls, super bowl super bowl they won it congratulations, Reed Hastings. When you think about the longer term, whether they can be a dynasty perhaps or win backtoback to continue this analogy, i mean they are all right, at this point, theyre very similar to hbo, theyre an independent programmer with hundreds of hours now of their own programming, with movies thrown in thats trying to get into as many homes as they possibly can. Here in the United States and around the world at a certain price point. Okay, i like it i suppose. 100 million. As yeah as you know internet tv. Its 100 Million People they could have by 2018. Not everybody has hbo. Hbo doesnt great question. It was addressed throughout the Conference Call. Basically, theyre saying the more the merrier, hbos terrific. Or amazon. They have developed a core group of people who love their programming and they have this momentum at a very low price point that they could raise. Theyre very visible in the countries. Theyre talking about 200 countries that want this. And i find it its unassailable reasoning if they think that 2017 could be this monumental theyre talking about numbers of material global profitability in 2017. This is the opposite of amazon. This is not willynilly growth for the sake of willynilly growth. This is willynilly growth for the saek ofke of big profits. I found it impressive. Hbos got i could make a case, theyve got a lot of upside. Hbo a powerhouse no doubt. Absolutely. The downgrades are factuous. People look back to the last Earnings Call stock down 19 after the last earnings obviously different picture this time. Its a reset. Look i didnt watch marco polo. Looks like people played marco polo. Numbers 14 million. How 14 of the people watched this better than house cards these are the things where people love u. S. Programming then talked about that they like western programming, they like u. S. Programming, they like british programming. Netflix has a real good call of what people want. Yeah. And a decent interface. Id encourage all of them to improve them. Hbo go never using the Cable Service im paying for but using the broadband, i will tell you all could improve interfaces. Internet neutrality. The president came out against buffering again last night. The guy, he must hate buffering. Hates buffering. Havent you seen the video of him with his ipad talking about you know he wants to go here and there he keeps ending up in google fiber territories to talk about high speed in 100 megabits. Well, it was it was a speech that as if he won both the house and the senate and his confidence level yeah appreciate that guys confidence level. He had the confidence level of the colts, of the colts going into new england. They were like all fired up. Right. They came to play. Well talk more about netflix later on. Got to get to ibm as well. Better than expected Fourth Quarter operating earnings of 581, consensus it misses by the way as big blue fails to generate yearoveryear sales for an 11th consecutive quarter. Full year guidance below street forecast. Earlier, the ibm cfo expressed optimism about the growth prospects. As we shift to value and our strategys very much around the shift of value, as we shift to value in the clouds and analytic we see very good margin opportunities and growth prospects. Obviously very tough Services Revenue down seven. Cash flow flat according to what we heard. No outlook for increased revenue in 2015. They are the most optimistically pessimist people. Isnt it terrific to rebuilding here. Its a reset. Reset. Yes. I dont know what you do other than what theyre trying to do. The question is when theyre going to be able to successfully execute over time. Your points are well taken, why would i want to own the stock during transition . If im on the board of directors and ive got a ceo outlining a strategy saying im going after cloud, going after mobile going after security this is what im doing, weve made these changes in the past during the long history of the company, youve got to kind of go for it. The question is it going to work . Why you take the pain . What happened here frankly, a great example if you had come in and not owned 20 estimate number. Just come in and say, listen guys, earnings power here 12 bucks, going to do it all over. Brightest spot i found, page 16 using the analysis theres their relationship with twitter. Huh. They cited that as Something Real good. The twitter relationship. Twitter relationship. Maybe go buy twitter. Ibm. Are you kidding . It would kill them. It would hurt their earnings. Do you think anybody cares about their earnings . A fee when twitter is sold. There isnt anyone im not trying to sell it to. Really isnt. Ive been trying to sell it to davos, theres a half dozen people in davos, interviewed this morning. They love the apple relationship. If in fact that ticket gets signed, i want a piece for you. You deserve it. I think so. Nbc nigh my philosophy. Always be closing. Anybody about costello. Cant wait to have him here for earnings in a couple of weeks in hes a nice man there on ibm, you mentioned i think they will fully admit, behind closed doors perhaps, they made a mistake enwhen taktake when endorsing that road map. It was one of the things that they got rid of it but if they had gotten rid of it earlier, it certainly might have benefited them. Right. The example is Brian Cornell at target, had he waited one more quarter and not closing canada i would have felt that he was, okay, i own canada, its mine ive taken it in im going to fix. He said canada wasnt mine. She now is kind of stuck, you know stuck with that big buyback. Well theyre redoing mainframes c13 could be something down the road. Sold a lot. 7 billion of revenues as you know, of businesses. You cant do yearoveryear comparisons in terms of sales. No. How much lower do you think the stock can go. Cash flow say earnings go to 14. Its still a cheap stock on the dow. People dont like other than for Oil Companies down earnings yearoveryear. When you come in in january and say were going to be down, people want to say, wait theres nothing you can do with the giant company . They are doing everything as like Bill Mcdermott when he talked about s. A. P. On earlier on squawk cloud is a challenge. The guys who pulled it off, adobe, oracle my hats off to them. When i read cloud, cloud, cloud, and i say theyve got a great deal with apple twitter, i say, look youve got a core business and its getting hurt china did come back. I can come up with positives. Right. Amazing how audacious that 20 for 15 looks, a promise they broke six months ago. Not even. Did the interview last quarter. When are you going to do the special, ibm broken promises . You know i wasnt that with dell. I think im curious to see why we havent heard or will hear from mr. Buffett as well. Silence on this. Yeah. And if youre to find out he sold his stock, a demarcation. I dont think thats the case. I dont know. Look hes not spoken up one would expect you would have loved the largest shareholder to have endorsed dispatching with the road map finally as the company did last quarter. Again positives. A couple of areas that did better, they are trying very hard to reconfigure the company. They are. Which they have done successfully in the past. Thats the history of the company. Transitions are never easy. And they take time. But if there were a sports teaming baseball take is along time to transition. Mets had to start years ago, theyre getting there. Hopeful for this year. Phillies talking 2018 the year. Ibm is talking similarly. Its not nfl where you fire the coach, bring in 2 and 14 youre 14 and 2. This is a monumental turn not unlike a baseball team. Like the mets or knicks . The knicks and the sixers together have won like 12 games. Sixers theres a plan. Yeah. Sixers ibm is not tanking to get the first draft choice there is no first draft choice. Shrink to grow. A draft. Wouldnt that be great . Shrink our way. You look at like the companies that are social media they get the top pick. How about this . Ibm, its not as bad as it was. Its trying to get better. There. Great. Thanks for that. What am i supposed to say . Terrific . Of course not. Cant say that. When we come back House Speaker john boehner holding a News Conference reacting to the president s state of the Union Address last night. Well bring you that live. Interview with jpmorgan chairman and Ceo Jamie Dimon live from davos. His take on the state of banking and future for his company. Premarket, havent had a threeday win in 2015. Shooting for one today maybe. More squawk on the street from post 9 in a moment. Your old 401k is rolled over into a Td Ameritrade ira. Yes so no set up fees wooh yeah so i get help from rollover consultants . Wooh yes no rollover hassle. Great. Woah oh, were spiking things, robbie. For all the confidence you need. Thats better Td Ameritrade. You got this. I take prilosec otc each morning for my frequent heartburn. Because it gives me. Zero heartburn prilosec otc. The number 1 doctorrecommended frequent heartburn medicine for 9 straight years. One pill each morning. 24 hours. Zero heartburn. The president heading to boise, idaho. His big focus on taking steps to help the middle class in the economy, including closing tax loopholes, benefiting the wealthiest americans to pay for certain programs. Take a listen. Lets simplify the system and let a Small Business owner file based on her actual Bank Statement instead of the number of accountants she can afford. [ applause ] and lets close the loopholes that lead to inequality by allowing the top 1 to avoid paying taxes on their accumulated wealth. We can use that money to help more families pay for child care and send their kids to college. And whether its taxes education, infrastructure, net neutrality, the argument today is that he doubled down on liberal legacy. Clearly. Interesting, the reference he said the Small Business person if she could spend more less on accounting. But you have to hire accountants to deal with aca, Affordable Care act. You cant figure it out without them. Little out of sync with whats really happening. Obviously, you want to go theyre going back im surprised he didnt say we want to go back to reagan days and make it you may more with Capital Gains. Step up in basis would cost a huge amount of money for wealthy people. I pay 52 of my income in taxes. I was calculating last night, this would take me to 56 . I would get a Solid Capital gains. If you took me to this. If you got everything approved, 56 of what i make each year would indeed go to taxes. And i regard that as somewhat high. That means i when do i start making money. You regard that as somewhat high. When do i get paid . Labor day . When does karen cramer get paid. Im in new york city. No, were really in trouble if youre in one of these areas where disposable income requires you im not saying im in trouble. All right. All of that being said republicans say none of its going to happen. No. The question is are we going to see any progress at all on any areas of shared interest . Larry kudlow yesterday talking positively about the hope of Corporate Tax reform. No thats dead in the water. Paul ryan thinks maybe theres a shot. No chance. Didnt hear much about it last year. Unless you have individual breaks youre not going to get corporate breaks. I look at the speech and i think that most possibility is the fact that maybe going after isis not pharmaceutical kind the bad kind and that i thought it was interesting, taking troops out. But theyre adding troops. A lot to basically say, were going back to the days when there isnt a 1 . Well did you heard anything that is a liability on a certain sector or certain stocks . Does it make you think differently about keystone or in this case about content distribution . Stevenson on squawk, it would throw wrenches that their plans for Capital Expenditures in the year as head. Look its kind of he said the republicans basically, all you want do do is a pipeline i thought that meant, youre not getting your pipeline. Thats one thing he can veto. I dont know. Look, it was it was very old throwback, you put it when you go back the old liberal agenda to make the pie bigger. That was the Lyndon Johnson quintessential liberal spender. Guns and butter. Here you dont have the guns so much. I dont know. Im sure maybe it gives people hope who dont have a lot of money, and a lot of people dont have a lot of money in the country. Hes not oblivious. No wage growth at this point. The cleavage between income disparity grows. Labor doesnt get as much capital in the country. Right. I think hes probably thinking its his legacy that got worse. So far, it has. Davos has more money than the 317 Million People. Yes. Right . More money in davos probably more money in davos than 2 billion people. 1,000 private jets in davos right now. Looking look around at davos and say, all right, all americans here are equal to all of the rest of america. I think that probably would bother jefferson. I think yefjefferson wouldnt go for. The 2 guy wouldnt go for it. Cramers mad dash. Count down to the opening bell. A look at premarket on wednesday. For january, got similar moves year to date for all of the major indices. Down 1. 7 for the dow. Looking for bearish action in a few moments. Can it make a dentist appointment when my teeth are ready . Can it track my crews performance and protect their heads . Can it tell the Flight Attendant to please not wake me this time . At cognizant, we see opportunities for every company. To meet the new digital demands of their customers. Can it process my Insurance Claim . Like, right now . 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One of the worst performing stocks. It was. It was. Theyre on a new track to success. Yes. Theyve gotten theyve gotten look theyre a serious operator, a great place to shop but figured out how to make certain changes including remodeling 77 of the stores. Thats important. My whole foods looks great but its a new whole foods. Retail, you want to get to another call this morning. Morgan stanley goes hold to buy lowes thats discretionary spending, link that with gasoline. I thought interesting, buy whole walmart, lack of margin growth because of investments. Its investing year. Butting looking this stock, what a run. Okay, maybe it stalls here. But this is the ultimate gasoline play other than hes doing those smaller foreign factor stores. Youve been close to walmart. Dont you sense theres a ree