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tv   Street Smart  Bloomberg  April 23, 2015 3:00pm-5:01pm EDT

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alix: welcome to the most important hour of the session. i am alix steel, and this is "street smart." breaking news for you, comcast said -- that to plan to drop the time warner deal. this is on the deal of the sec launching an investigation and hearing into that which tends to lead to a really bad sign and draw out any kind of decision-making. time warner cable than 2.5% to
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session lows. -- down to 2.5%. scarlet fu joining us that our breaking news desk. "street smart" to update you on the breaking news, comcast planning to drop the time warner cable deal. said to plan an announcement as soon as friday. stock is down as much as 2.5 percent. scarlet fu joining us at the breaking news desk with more on this startling announcement. scarlet: startling announcement but perhaps not so surprising. the sec has now joined the leaders at the justice department in opposing this time warner cable deal. this time warner cable purchase.
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there is a lot of deals in its wake including at&t for directv as well. now this would threaten composition and innovation and should be resolved or at least addressed in an administrative hearing. comcast saying it is not worth this to pursue the time warner cable deal. this would put the hold on this and allow the ceo of comcast to plan for its next up. richard bloomfield spoke earlier this morning and was discussing the likelihood of comcast looking at an overseas acquisition. certainly taking advantage of the strong dollar, but looking to complement the full suite of services and products rather than going after another company with there may be regulatory issues. time warner cable shares risk -- falling in response to this. certainly not a surprise.
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we can see that comcast shares are moving on the announcement also. not an announcement so much as the reporting that shows comcast is likely to drop time warner cable deal. we will bring you confirmation whether that does happen. right now according to the reporting. shares are seeing a little bit of an increase, up by more than 2% to $50.01. alix: alex sherman joining me. what is your take on this news that comcast could drop time warner cable? >> we are lucky to have the story first, and of our reporting is accurate, comcast made the decision of this point they will pull the plug on this deal. apparently they may be having a board meeting later today. a decision has artie been made at this stage.
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if you have been following the coverage starting from last night, it may not be a surprise with the fcc recommended this gets hit -- gets hit to a hearing. the company spending the time and money to fight this thing and the doj leaning to soothe this deal, it may have been too much. there is no breakup fee. when comcast signed the deal way back in february 2014 a green to do this, they knew there was a chance regulators would not take too kindly to a deal that consolidate so much power so much broadband capacity, plus nbc universal is owned by comcast. we thought for a little while the deal would go through because comcast and time warner cable do not compete with each other. this is not nearly as straightforward. in a sense that a competitor would be going away, which has pricing power implications.
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this was a bit hazy air and has been up until last friday when we broke the story that the doj was leaning toward potentially suing to break the deal. that fell off a cliff in a hurry when comcast announced and we are hearing comcast has already made the decision and formal announcement could come as soon as tomorrow. alix: this event unfolding very quickly. also joining us, cory johnson in san francisco. what is the significance of comcast potentially walking away? cory: i think the significance is huge. first, as it relates to the deal, this transformative deal will make sure that most american to receive the broadband internet from a single company it would create a massive power for comcast as one big company in terms of deciding what deals to strike with the likes of disney and others and cnn and those important
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companies. the implications for the company that sells enterprise hardware to the broadband providers like comcast and time warner. one fewer customer to deal with. that will be a very big deal for the enterprise hardware company. i think this is a big deal from the regulatory framework. for the department of justice to apply a different rationale, a used to be they would look at geography and say as long as the geographies don't overlap when it is a telecommunications kind of deal, if the geography does not overlap, the deal should be ok. i think what the department of justice recognized as we are talking about a different kind of business. maybe those standards should not be applied to the modern era of broadband and the service overlap and the power this
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company would wield across the country was too much for anyone company to have control of. alix: scarlet, you have been looking into effect on the stock as we continue to talk about the headlines. looks like time warner cable is back to neutral. scarlet" if you: if you pull the stock on how it is trading it it is basically below the unchanged line through most of the trading session. right there, the leg lower at 1500 that is when the headlines crossed the bloomberg terminal. you can see the dramatic drop in the move right back up. back to where we were. as alex sherman was saying earlier, if you have been following the reporting, there were indications there were increased challenges happening. this is the big slide blower and
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recovery. comcast getting the lake higher following the headline of a 2.2%. in addition, charter medications as well. charter tried and failed trying to award the bit. does charter communications come back and here to try to make another attempt to buy time warner cable? it is unknowable right now. the stock is up by half of 1%. alix: that is a good question for alex sherman. you have been talking about the implication. the stock is up on the news. what is your take away? >> i think it is one reason time warner cable's stock has not taken a huge hit downwards. there is a theoretical buyer in the wings. the question is how soon will it come together?
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craig moffett has been covering this. he said it is probably more of a when then and if -- then an if. will the deal in fact be friendly? this actually push time warner cable toward comcast. can besides get it done in a friendly manner -- these two sides get it done in a friendly manner? >> this could be a whole new world when it comes to cable acquisitions. the department of justice has their head around a different notion of what competition means when the geographical borders between consumers matter less to the department of justice and the control any company has over the way they received -- we receive all of the information on the internet whether it is news programming or cat videos.
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some rules that may apply to the time warner deal, maybe it is a whole new rulebook. surely they have private guidance if the deal is approved. alix: is this really a doj story or fcc story? the news today was about the fcc wanting a deal. cory: both problems have been raised. i think this is also a shocker for anyone who thinks anything that happens in washington is predetermined by how much money is and by the lobbyists. comcast is spent only second to grumman. the revolving door as well. people leaving government and the sec going to comcast lobbyists. that revolving door as well did not seem to work in favor of comcast.
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again, i think the rules may have changed and it could have a lot of implications for deals that may have looked like a clear path in the past. >> from our reporting, the sec was not all that pleased with how comcast dealt with the conditions when they bought comcast universal. that may have been a big factor why they did not want to accept the deal with time warner cable. we reported about hulu where comcast may have interfered with the potential sale of hulu and were supposed to be passive investors. there may have been other things. potentially we will find out more. we definitely have heard from several sources that the fcc has not been pleased with how comcast has adhered to several conditions on the nbc transaction. that is one of the reasons why they were not comfortable accepting a deal with conditions. alix: can we also learned what the fcc was asking of comcast that might have made them walk
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away? >> i think that is absolutely true. what time warner cable is 7 billion u.s. cable subscribers. comcast could cobble together may be slightly less. close to the number with several different m&a deals, smaller deals. smaller companies. cablevision or cox they could buy and a couple of different deals. those deals would not have restrictions on them theoretically. why take a big tight if you are going to be tied up with a lot of restrictions, one of which may have been a read -- a would have agreed to title ii restrictions. there will be a lawsuit on title ii as a bunch of different companies are suing to make this not law. if title ii were to disappear and comcast was restrict it by title ii where all of the other competitors were not, that would put them at a severe disadvantage. that may be another reason why
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they came to the conclusion that it makes sense to walk especially with no breakup fee. alix: peter cook joins us now with the d.c. angle. what has been the rhetoric in washington? peter: the rhetoric is that it should not move forward in the first place. there are some members of congress and we had al franken who was arguably leading the charge in washington on capitol hill against the deal. not claiming credit but certainly feeling like their message was heard at the this end at d.c., the concerns about the combination here the concerns regulator should have as well. this is a big decision. the doj and ftc to indicate to contact -- indicate they were not on board. alix: if you announce the deal,
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you might have felt like the regulatory environment was favorable. you have been looking at comcast past purchases. can you give us perspective? >> brian roberts has been described as a serial dealmaker. he makes a lot of acquisitions. what you will see is the company historically has made a 122 purchases worth a combined $207 billion. of those 114 of the transactions were in north america. only about $120 million were outside the u.s. for separate transactions in the u.s. and one separate transaction is -- in asia. there were six deal specifically in 2014. any of them companies you may not know that much about. there was a time warner cable purchase and now it appears to
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be dismissed or dropped, but you had comcast mining freewheel media and maybe quit for an undisclosed amount. if you look at the largest purchases the company has made the biggest is comcast court -- court in 2001 for 76 ilya dollars. that was before my time to be honest. after that comcast buying nbc universal for $16.7 billion. this is a company that has made acquisitions to give the growth to scale up. if it does not go through with the time warner cable purchase then where does it go next to go europe asia? another space outside cable television? the wireless space broadband? alix: all this question -- these questions, and we've seen the
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fcc be relatively more aggressive. i am thinking of google in the case lever there. >> it is an interesting point. if you look back historically to deals u.s. regulators have blocked, there are the big deals over the past 12 years that have been in the yuan -- u.s. telecom i industry. they blocked the 39 billion dollars deal back in 2002. they block directv dish. those are the biggest deals the doj has blocked. there is some sort of consolidation in this industry. the big deal that comcast it was when they bought a pb -- app broadband. the cable industry and general has been a little different than where we are seen satellite and radar. now we are seeing the industry is consolidating to appoint
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printer with comcast owning nbc universal where a large cable deal apparently is unacceptable to regulators. alix: does this mean charter will have to drop it been for bright house? >> we don't know. that is a great question. there somewhat down the road. not necessarily. the deal for bright house was a cash and stock deal. the deal is possible. certainly when charter was trying to buy time warner cable initially a big deal was how will it be structured? how much cash? how much stock cap that things may have changed because without the buyer, there is no other buyer for time warner cable. time warner has earnings in a couple of days. we will hear from the ceo, and will he tell us we have some reporting already he plans to
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make an argument that says time warner cable can function as a standalone company. that they have gotten better. he will say we can make it on her own. he is a deal guy and will get paid $80 million if time warner sells. if he has incentive, to potentially get something deal -- done with charter. alix: what do you think about the possibility of that? the cable world and merger world unwinding knockout do you think time warner can go it alone at this point cory: i think this could have implications for at&t dish. if the rules of the game have changed. all franken asked -- betty liu asked the question isn't bigger better. he quickly shot back eger is not better. a big ok -- bigger cable company is not better.
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you look at the community interest, and the way they are looking may be changing when you recognize the services we get from these companies are very different. not just from the way the regulations are written but even 10 years ago. what we get is very different. the quality of the service and this bead of the download are so great. you wonder if they are looking at this with a different world of rules going forward. alix: we have peter cook. cory johnson bloomberg west editor at large. alex sherman in the newsroom as well as garlic fu at her breaking news desk. thank you so much. counting down to results from amazon, google and microsoft plus starbucks and pandora. the nasdaq climbing above the dot come era. i have every angle of the market covered. i have adam parker. moments ago, mayweather pack yet
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tickets went on sale to the public. -- themayweather and paquia tickets went on sale. ♪
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alix: the breaking news continues. comcast potentially dropping their bed or time warner cable. we have adam parker looking at the s&p trading 22.75 for the year. staring down the barrel of 1.2 gdp growth for the first quarter. where do you see the most mna
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happening. cable companies are sort of consolidating. mna is different now than it was years ago and the dealers -- the deals are immediate and iris are out performing. i think it will continue at a good pace because access remains pretty good. i think health care is a big area you are seeing it. i think you will see it in the industrials and energy. the area that will be least likely will be financials due to regulations. i and pretty optimistic it is good and is good for stocks. the surrounding ones tend to get up on the dream they could be taken out. alix: from where you set, and you were looking at a set planning to raise rates soon what is the risk on the gold -- global capital deployment world? >> generally in the trend we of
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seen toward m&a is not good for business investment. in terms of economic growth if means you do not see act of m&a. if you take a step back and look at the overall economy and the trends that we of seen so far, you are seeing momentum build about concern over a soft patch in the first quarter. taking it all together it seems that that is on track to start normalizing a very slow pace of interest rate hikes. it will still be accommodated environment. alix: you are saying mna is good for stocks that bad for the economy? is that what i am hearing? >> i know you know our economists. we disagree on a lot of stuff.
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economists want capital spending . i do not want a lot of capital spending because i want margins to go up. so there is a lot of tension sometimes where what is good for the economy is not necessarily good for the stock target in a shorter term timeframe. i want margins to go up. every economist calling for a normalization process. so we kind of have the stock economist thing embraced. alix: what will it take for more organic way versus original weight? >> yes, you want it to go up but why? you wanted to go up so they put the money back in the economy. you have shares of profit that have gone to labrie during the recovery, it has been a historic low. i think it is a case it has been a good entirety -- environment for equity.
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the question is when do you see that's built through the greater economy. alix: you are sticking with me. back in just a few minutes. much more coming up on comcast dropping potentially the time warner cable deal. ♪
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alix: breaking news comcast saying they plan to drop the time warner cable -- time warner deal. joining me to talk is michael cox, the former commissioner for the federal commissioner for the fcc. what was your take on this? what did the fcc wind up telling comcast that made them walk away potentially? i don't know what they told them but if it is true, it is enormously good news for consumers and citizens. i think it became clear in recent weeks that this issue has a lot of interest throughout the
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united states of america. this is coming to the forefront. people realize how important this is. they were behind the open internet decision, and the decision on time last -- comcast time warner issue. it is all about gatekeeping and the potential for gatekeeping and the internet. alix: from where you said, why was this deal so different from other deals comcast pursued like a comcast deal or nbc universal gekko why did the fcc have such an issue with this one? >> i don't think it was all that different. as you may recall, i was the only commissioner to vote against that. public interest has grown in this. we have a different commission in washington with different leadership now. i think they will proceed but
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perhaps there is no way to save the public interest. i know that the fcc and doj have not formally reported on the but there is tremendous skepticism if not more than that. i think comcast, if they do proceed, making a smart decision or myself. the primary way for consumers and citizens. alix: thank you for joining me. joining me is adam parker of morgan's family and michelle meyer of bank of america merrill lynch. one potential thing comcast could do is look overseas for a potential deal. this is money going out of the u.s.. you think from where we -- from where you said that we will see more of that? >> i don't know. i am not really in a burden on this.
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there are businesses that trade below, and i think there is always logistical challenges, so it can be trickier than it sounds on paper. it is outside my. alix: we of seen this in europe with the antitrust case in europe as well. what about the currency? the higher dollar, the weaker euro. maybe comcast they be looking to europe? >> it is possible. i am not a next art. you have seen a dramatic move higher in the dollar. so i think that trade flows are obvious going to be adjusted. this will probably in the business decisions. >> on matters of investing, i think the area of mergers and acquisitions, it is out right of what i focus on. there is a lot of implications to it. alix: joining us for more on the
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time warner comcast deal is an mna attorney from cromwell and send them -- 11. you said that fcc will be a bigger deal than the doj. that is a darkly but we will potentially wind up seeing. what is your take on this? >> i go with the view that it is still alive deal as long as the parties they it is alive deal. they may renegotiate. they may continue to the renegotiate -- two renegotiate. having said that, the signs are not good in the past 24 hours, so we have to take that as it is. clearly the fcc putting this to its administrative hearing at this stage fifth teen months after the deal announced is not a good sign. it gives further delay and opponent the chance to attack
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yet again. if comcast wants to get this on, and they may very well be committed to getting it done as a set in the past, you could see this come together. we have to wait and see. i am always an optimist. sometimes parties will make the decision to walk away. certainly your colleagues are reporting they are preparing to throw in the towel and your colleagues are often correct in their pronouncements. alix: from where you sit, what is the relationship of the at doj and lobbying we have seen from congress with some members very opposed to the merger? >> traditional lobbying design of big effect on how the regulatory agencies operate. they tend to operate very
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independently. what i would say to the extent regulators will take positions that might otherwise be criticized or unpopular, if they have support from congress or support in the public, they are probably going to be a little bit stiffer back in it. at the end of the day, they really do follow what the law and regulations have to say. i think it is only at the margins that has any real effect. alix: what is the biggest distinction between how this might go down between time warner and comcast and others that? >> it is always tougher to do a deal after your done other deals as the market share in concentration is a. if there is a consolidation, i would rather do the first deal than the 12 deal. alix: does that mean comcast is
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forced to go elsewhere to the that kind of growth? >> maybe, maybe not. we do not know what that is russians are. to a certain mix and we do not know what the real issues are. so it is really hard to tell. we also do not know how to knowledge he changes, and it changes very likely. the landscape they be different in a year or two and may allow them to do something then that they cannot do now. they still have not announced the deal is over. it may very well happen. alix: appreciate that. a little optimistic. michelle and adam are staying with me. we have a lot more to discuss like housing. sales slumping falling to a seven-year high. is will supply to lame yet again? we will like down -- break down the data.
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coming up, tickets just went on sale to the public. tickets have sold for up to 17 grant. we will have this later in the show with michael your mac. boxing champion and drove your and -- boxing champion andre ward. ♪
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alix: welcome back to "street smart." here are the top stories we're watching ahead of the closing bell. petrobras ruling out a shares fell. the company ceo speaking to bloomberg saying for capital increase this process needs to start a year and a half and advance. there are no procedures in the works they can have been three or four years under any offices. there are conflicting reports on how much elon musk was paid last year. some reports say $35,000, but according to the bloomberg k index, he took home 102 million
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because of the option. a spokesperson has declined to comment, although the company said he never accepted a salary. the vendor says he changed his mind a lot and made large trades. he made the disclosure in an e-mail last year to the financial this conduct. also known for harassing software providers for enabling him to trade as fast as he wanted. has the housing market hit a wall? falling from a seven-year high. other housing -- housing data has been lumpy. here to make sense of it all is adam parker, chief equity strategist at morgan stanley and michelle meyer, with bank of america merrill lynch global research. how do you categorize where we are in the housing market right now when you have this pretty lumpy data coming out? >> the
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housing data is exceptionally noisy, especially during the winter. you have to be careful overreacting to any given report. today's home sales was disappointing, but if you look at the trend, it made sense there would be some reversal. yesterday existing home sales were exceptionally strong. it shows that things are improving. it is slow, gradual and a bumpy ride. we have a great chart that actually came from you. talking about where is the home loan -- a different chart. talking about home loans. we are talking about actual loans. how easy it is to get a mortgage. what is it like right now? >> i would say how hard it is to get a home loan. it has been a really difficult environment for accessing
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homeownership. if you look at another trend, we are back to levels we were running at in the late 1980's and early 1990's before you have the expansion in mortgage lending and the mansion and the government involvement in the mortgage market. i think what we have returned to is environmental mortgage climate where the pendulum has swung to the extreme. it is taking it harder to access homeownership and made people rent a little bit longer. it is making people create a little bit of difficult ride for housing construction. alix: this was confusing to me when we take a look at the housing data. it is lumber prices. lumber prices are really tanking. five is that? you would think if you do not have as much supply as you need and demand is relatively moving in and of fort trajectory, why
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aren't we seeing that kind of demand? but i think there is a big difference between multifamily and single-family economic impact. multifamily has taken a lot of share so you can get more. supply and demand is the answer from my perspective. i am observing all of the stuff around me. the stock market is at an all-time high. i want to talk about that. alix: we will, don't worry. i think things are improving. it is choppy but improving. earning estimates that are too low. i think the market is going higher. alix: we do have is that local upturn. -- cyclical upturn. housing a good area to talk about if you want to talk about housing. this took the drives the recovery.
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certainly what we are seen as housing has not been contributing to recovery like it has in the past. the interest rate sensitivity has diminished. i think it is a modest tailwinds for growth. alix: thank you so much. such a pleasure to have you here talking m&a and housing. taking with me to talk about what is burning a hole in your pocket. he is excited him a we are excited. we're watching amazon, google microsoft shares. ♪
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alix: this is "street smart." the tech trifecta, google microsoft amazon that three set to report after the closing bell. scarlet all three of these
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company shares are rallying. the focus for investors will be on the division the commercial business. last quarter earnings were in line for commercial licensing sales and missed estimates. that caused a 9% tumble in the stock. that is what we will be focused on. as for google, a strong dollar could put pressure on revenue. the average cost for advertisers pay has been relatively flat after several years of decline. it may even rise. watch expenses. google has been spending, mainly on hiring. alix: you will be breaking all of those numbers after the bell. the nasdaq at a record high timing to the highest level in 15 years, expecting those earnings after the closing bell. adam parker is still with me. he wants to buy some stocks.
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>> i like the market. i think the economy is going to improve in the next couple of quarters. i think the alternatives to equity looks pretty weak. i think it is a good time to buy u.s. equities. alix: when you see the nasdaq is a 15 year high. >> the cash balances and everything is at an all-time high. i would expect the market to be up. nowhere near like 1999. i think the comparison is not relevant. the big companies that were crazy expensive back then is not the case now. the return to the shareholder. there is a number of things that make the 2000 comparison irrelevant i think. the companies are better than they were back then. alix: what makes them better? what makes you worried? >> i think that there are risks that are out there, whether it
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is the fed reacting to aggressively. whether it is a slowdown were sustained soft patch in the u.s. economy. part of my view is we will remain slow but improving growth . i think a big celebration i would be worried about that. -- deceleration i would be worried. alix: strong dollar. we see that from all the tech companies. >> historically the stock market does not go down because the dollar ratio expands. you want to play that by avoiding staples, machinery, avoiding chemicals and select health care. overweight banks and other areas where the currency does not matter as much. alix: adam is excited. we believe it there. really appreciate you joining us for the whole hour. adam parker for morgan stanley. moments away from all of the earnings with me -- microsoft
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google, amazon. ♪
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alix: welcome to our viewers around the globe. you are watching bloomberg television. this is "street smart." we are moments away from the closing bell. the nasdaq climbing to the highest level in 15 years. stocks rising despite the disappointing earnings and manufacturing data from across the globe. we are moments away from earnings from google microsoft, and amazon. we also have oil rising to a four-month high. for all of the details, scarlet fu was at the breaking news desk. scarlet; finally the nasdaq has
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moved past the closing high. it has yet to make a new intraday high. it would need to climb above 51.32 to get there. it is knitting a lift from the likes of microsoft google -- all the companies reporting after the closing bell, which we will bring to you live after it happens. the s&p 500 closed at a record time nearly 30 times last year. you're not quite there yet. this is after each of the for economic data reports released today came in weaker than expected rather it was jobless claims or new home sales. you mentioned oil prices at the highest level so far this year. saudi arabian airstrikes on yemen renewing concerns about supply issues and hope so increase supply from asia has helped oil to rebound, and rebound is the word. 22% off of the six-year low set back in march. at the top of the last hour we
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reported comcast is planning to drop the offer to buy time warner cable because of resistance from regulators all according to people familiar with the matter. this is an alex sherman exclusive. the sec joined doj lawyers and opposing the combination. leaning toward recommending the deal does not help consumers flock of questions. what happened to time warner cable? does charter communications come in? who does comcast buy next? alix: that is the million-dollar question. i am joined by lisa abramowicz 's. our investment management ceo and chief investment officer catherina would. talking about the comcast potential snubbing time warner cable. do you care? >> i really don't care. i that netflix is happy. alix: wide-out you care -- why don't you care?
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>> we look at this as old tech. you look at what google is trying to do. i think technology companies are finding ways around the duopoly's and monopolies. >> there is a reason why they are trying to join forces in the first place. the reason why they are looking to get more critical mass. alix: the terms of where do we wind up going instead and why we see so much consolidation. one trend we have seen is a strong dollar. taking a toll across the corporate sector. just today 3m, pepsi, caterpillar -- all failing this dollar crimp overseas. from where you sit, what kind of a detriment is this? >> the interesting aspect is the effect of the greater dollar is stronger than what analysts have been anticipating. is it a question of just the
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stronger dollar or pairs with generally weaker growth across the world that is bringing >> we are hearing the closing bell. the s&p above its record intraday high but closing lower, unable to hold onto those record levels. the nasdaq closing at a record high. the nasdaq is racing losses since 2000. an unbelievable run. higher for four days now, racing losses. nine out of 10 sectors did finish higher. it was telecom that led the way. we are moments away from a huge tech names that have contributed to this record rally. we have name is -- amazon microsoft, starbucks.
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we will bring you those results as soon as they cross. kathy and unbelievable run. what is different now than it was? kathy: we are not measuring stocks or evaluating them by the number of eyeballs. facebook users are important but they are translating that into revenue and earnings. there were no earnings and no revenues in the bubble. we're in a different world. back then the tech stocks that were bid up so fantastically were not the ones that were going to take us to this new world where we are now. in 2000 they got something right. the internet was going to be a big deal. that was 10-15 years too early. alix: we have amazon earnings crossing. what do you have? julie: amazon is coming up with a lawsuit at $.12.
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the company's sales coming in at $22.7 billion. an increase of 15%. the company is giving a forecast for the second quarter for sales of 26 billion dollars. that would be sales growth of seven to 18%. i'm not sure how that compares with estimates. the estimate is 22.09. it is above or in the range of what analysts were expecting. the second quarter operating loss is going to be $500 million to a profit of $50 million. a big range there. they range whether you're looking at the sales or the profit forecast. alix: we do have a google earnings crossing as well. scarlet: we have earnings per share number that appears to be
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a myth compared to the estimate of 663. i'm trying to figure out the revenue number. i will have that shortly. i do have some costs per click. they dropped 7% year on year. that is a bigger drop than analysts were looking for. increase searches on smartphones. smartphones carry lower advertising rates because they don't look as good and advertisers are reluctant to pay up. google is trying to address that. in terms of post-cliques, paid click some of those increased 13%. the consensus was for an increase of 15.1%. on several metrics, google is missing estimates. advertising revenue, $15.5 billion.
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i do have the first quarter revenue. it is $13.9 billion. that is an increase from the same time last year but it falls short of what analysts were looking for. alix: we have microsoft earnings. we are looking at earnings backing up items coming in at $.62 a share. that is higher than analysts had estimated. it is higher than the highest of the range for analyst. $.62 a share in terms of revenue. microsoft came in a little light. 20.2 billion. revenue they're are going to book down the road. microsoft's seeing an increase in service. they want to see how much money they are making from the cloud. we are continuing to dig through
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these numbers for microsoft. a starbucks earnings also crossing. julie has some more. julie: starbucks earnings per share rising in line with what analysts had been anticipating. a lot of focus on the sales numbers in the united states. we saw better numbers than anticipated with the stores increase of 7% with a 3% increase in traffic. the estimate was a 5.1%. that led the overall number to rise by 7%. why the number is important is because the americas is seen as a maturing market. starbucks has been pushing on some levers including mobile payment and its online app, it's loyalty app driving a lot of sales.
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the other number that stands out is the china a's of -- china asia-pacific numbers. analysts are looking for a gain their of 7%. that is better than estimated. the one number missing is traffic. the sales are up 2%. alix: we do have more numbers trickling out for microsoft. scarlet is looking through them. scarlet: there are a lot of numbers we want to go through when it comes to revenues per segment. commercial licensing is a big question for so many people. the last time they reported results everything was ok except for the commercial licensing sales number. this time around microsoft has sufficiently lowered expectations among analysts for what it would report there. you have two -- that is higher than what analysts were looking for.
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also, the devices and consumer licensing business was better than anticipated. the devices and consumer computing also coming in higher than anticipated. i know your husband is a big fan. maybe he has something to do with it. there were concerns that the strong dollar would hurt the commercial revenue business. microsoft has warned that would be an issue. because they had warned that analyst took their estimates down. microsoft was able to clear the bar. certainly a change from the last earnings report. alix: all three big tex stocks jumping higher. joining me is cap you would -- kathy wouod and lisa
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abramowicz. amazon is down. google having a huge move. what is your take? kathy: part of what is going on is linked to an improving economy. i was looking at the biggest gain, the biggest surprise. intel was a disappointment. that says people up for microsoft bank a disappointment. that is part of that explanation. amazon may be down. amazon web services is going to be disclosed for the very first time. we are trying to figure how big it is. if it is over $6 billion that would be good. very interesting. jeff bezos has said this will be bigger than the retail business long run. the retail businesses almost
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$100 billion. that is saying something. if retail is much less profitable i just don't know. we will have to get that break down. alix: do these numbers justify the run-up we have seen? kathy: i think there is an excel rated shift to the cloud. i think enterprises understand if they don't go there they will not be competitive. they have to do this. amazon is doing all kinds of things challenging others in terms of competition. one of the biggest ones as robots. they went to 15,000 robots in one year. everybody has to follow. alix: to your point, we are getting their cloud numbers out now. first quarter 1.5 -- $1.7 billion.
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kathy: 6 billion was expected. the question is what was the profitability? alix: the cost per $1.3 billion. kathy: that is saying that retail is less profitable than people expected. alix: cloud did well that retail was less profitable. kathy: cloud is going to become a bigger business for them long run than retail. it is much more profitable. alix: we have seen the stock fluctuate as numbers roll. we have much more on these stocks coming after the break. thank you. after the break we are going to dive into the numbers and forecast behind the earnings report. more news from the media world. espn and verizon are ready to duke it out over cable packaged
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bundles. 3 ♪
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alix: welcome back. earnings bonanza. amazon has sales that be estimates. they broke out revenue services. here to break down the numbers, paul sweeney and kathy would. joining us from frost advisors. let's get to the shareholder. what did you think of the results? guest: we were generally pleased. thank you for having me.
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i think there was speculation about margins after last year. they had to match competitive price thoughts at microsoft and google, and cut pricing and half for the cloud infrastructure products. some speculated that would break even to possibly lose money. with this increased disclosure you see a nice 17% operating margin. not to exaggerate they are only going to increase their scale and efficiency, it makes the story cleaner. you see positive margins on the north america retail segment. it is easy to understand they are investing in building competitive advantage outside of the state. alix: we continue to see deceleration of the numbers. paul: some of the guidance from
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the upcoming quarter, lower than what people were expecting. the longer-term issue, the disclosure for the aws business. that is going to be a bigger part of the amazon story. getting bigger story on that is good. it is profitable with that 17% operating margin. that is going to be the more important issue. it got it's ok. alix: kathy, do you agree? the company is saying a $500 million operating loss. kathy: every single quarter they have given ranges you could drive a truck through. i think the more important point here, amazon web services is more profitable than we expected. at $6 billion you could be valuing it for 50-60,000,000,000
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dollars. this is only 6% of their revenues. their market cap is 150. this could be 60 billion of it. when people put that in perspective the stock will go up. alix: are you buying here? guest: i can't tell you what we're doing in the market now. i can say our bias was i rather see the stock down three or 4% then up given that we like what we are seeing. alix: they are digging through the prime numbers. what do you have? >> the only thing they will say is it celebrated its 10 year anniversary. tens of millions of prime users around the world. one thing that analysts like to talk about when it comes to prime is that it is an ecosystem and the members are estimated at
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$36 million globally. the company can use the prime numbers to move to higher margin digital services. the company is very quiet on how big the prime membership is. we didn't get any new read on just how sizable the community is. alix: moving forward, what do you want to see from this company as they roll out their second order estimates here? guest: talking amazon? what i can say is we are happy with the increased disclosure around aws. the company mentioned the prime program room membership by 50% last year. more than that internationally. prime is becoming strategically important for the company performance. to get more disclosure around crime and the economic impact they get against the consumer
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cloud services would be a positive. alix: we are not done yet. we have kathy and paul. more on the tech earnings season and why core fundamentals are no longer good enough for investors. it will talk about google and microsoft on the end of this break. ♪
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alix: you are watching the tech earning praise on street smart. dig through google's headlines. scarlet: imb wilderness. the only thing google says by way of outlook they see great
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momentum in mobile advertising and opportunities for brand advisors. not numbers they can get their hands around. the first quarter numbers missing analyst estimates. the mess is what is notable here. analysts rose 13% year on year. cost per click dropped 7%. a vigorous often anticipated. it had been declining. is continues the trend. i'm curious as to why the stuff is rising. even if by a little bit. alix: still with me for in-depth look, kathy and joining us on the phone then does with frost advisors. paul, why is the stock?
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we are seeing lower cost per click. paul: they are looking through the story here, long-term surge long-term display and growth rates, all of which google is well-positioned. as we take a look at the click of and the cost for click down that is the cost of doing business in the mobile world. google transition from the desk top to the mobile world. the pricing is lower in the mobile 03 try to make up with that by selling a lot more ads in a mobile environment. he tried to make it up. here the numbers want quite as good as what the street was looking for but we will have to see how it plays out. alix: we look at the spreads, it is getting tighter. they are losing more money and not making that up as much as they had before in terms of paid click. guest: i have not been able to
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get the release in front of me yet. here, we have a much longer horizon than our peers. we look for companies that benefit from long-term secular wrote such as the transition from linear tv to web distributed tv from desktop to mobile. cloud computing, which we see better than expected, so you're getting a read through from the positive amazon margins. not having seen the numbers, i think you're going this gradually more does closure around youtube as the dominance of webtv continues to manifest itself. facebook may amazon prime netflix, those leaders in these areas that have tremendous tailwinds will just continue to
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see more data points. kathy: we begin -- we agree. google has 90% of share. that is pretty amazing. maybe the metrics this quarter have to do with an accelerated shift to mobile, which depresses cost per click. we do want that. i think mobile will become much more valuable than desktop over time as people are walking past stores and stores can invite the men as they are passing with their cell phones. i think this is short term. alix: much more. thank you, paul sweeney. kathy, you guys, thank you both joining us there. after the break, what shareholders want to hear from howard schultz on starbucks performance last year.
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alix: welcome back. a slew of earnings out after the closing bell. the highlights of the breaking news desk. kick it off. scarlet: why don't we start with starbucks? second quarter profit matched analyst estimates. sales beat analyst estimates. starbucks focused a lot on the discussion of digital services. being able to order on your mobile to you can pick up your coffee and not have to wait in line and not get caught up in that line that can be so frustrating. the strong dollar is a headwind.
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the company reaffirmed its forecast for comparable sales. was notable here in contrast to the other food companies that have reported mcdonald's and yum! brands their sales rose 12%, which is higher than what analysts had been anticipating. all those are food companies. i don't want to say issue so much as past incidents with their food suppliers. starbucks is a coffee company. but it has expanded into snacks. i wonder that is going to be an issue going forward. alix: historic spansion has been a big growth driver for starbucks. you have bloomberg intelligence noticing the acquisition could be a catalyst for growth in the region.
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coffee prices have been low. starbucks has locked in 90% of their coffee for 2016. scarlet: they know the costs are fixed. let's move on to google. i know you and paul sweeney were discussing this. i can't figure out why the stock is trading higher. fy 2.5%. profit and sales missed estimates. paid click's did not rise as much as analysts had been looking for. cost for click fell. it is not a surprise. you have more people searching on their mobile phones using the search function. that carries lower advertising rates. when it comes to any kind of outlook or forecast google does not say a lot that gives people reason to buy the shares.
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they say they continue to see great momentum in mobile advertising. that is not enough for me if i were an investor to buy the shares. alix: it is a longer-term play as they migrate to mobile. in terms of amazon, it is a similar story. we had seen the stock moved lower in the after our market dealing with the cloud revenue but overall that means this week are profitability. scarlet's: i was looking at the web services business, the business they broke out on its own, making clear that it is a $5 billion business with gross -- growth rates that most companies would dream up. so much of the proposition and amazon is. they will only say they have membership of tens of millions of people. alix: paul sweeney sent us any
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most saying the reason why the stock is up is because of foreign impact numbers. if you back out the higher number it would be $14.6 billion. that would be the street estimates. scarlet thank you so much. breaking in the last hour bloomberg reporting comcast is planning to walk away from its $45 billion takeover of time warner cable. they will withdraw its lid -- its bid as early as tomorrow. back with the latest on this story is the hardest person in the newsroom, alec sherman. what do we expect right now? alec: that they have decided to move on from this. it will be interesting to see what they say. clearly regulators push them in this direction. i am curious to come out and hear what they say. but we have heard for months now
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is that they really think that they were on a strong legal footing that this deal would not have been blocked. but the fcc came at them and said we are saying we don't want you to go forward with this deal. we should look to see exactly what they say. then comcast will have to change their strategy. if a large company. they can do different things. they can go the wireless route. they want to expand internationally, they only have the foreign currency impact on google, they are a u.s. only business as the u.s. cable providers. comcast may want to change that and make a large international acquisition. i've heard it could be in china or in india. alix: what happens to time warner cable?
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the stock was trading at $96. even if charter does not to come in and buy it, how does it do it at that price? alec: on the flipside child or -- charter is the only buyer. all of its employees have assumed there why did he on this deal. it will be interesting to see about what he has to say in terms of army ready to go at this standalone company or is there going to be a message saying we are still up for sale if charter comes up for us at the right price. alix: thank you for bringing this to us. and other top story we are watching this afternoon, sheryl sandberg sounding off -- sounding optimistic. sales gaining in the first quarter. she sat down for an interview with emily chang and talked about facebook's shift to
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mobile. samberg: we are excited about the opportunities in front of us. facebook is well positioned to take advantage. americans are spending 25% on their phones. facebook and instagram get 20% of that time. we have a great ad product in the markets. it integrates in news feed. with four mites -- with formats like video, that is a pretty exciting ad format. marketers love the ability to tell their story. emily: what is good about video in terms of attracting ad dollars? sandberg: it has been important for big brands to tell their story in an emotional way. what's exciting about facebook
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is we let smaller companies do it too because it is cheap and affordable. we have one million small businesses who have uploaded a video to facebook. that's an expensive proposition but uploading a video add to facebook is something you can do. we have 2 million advertisers all over the world. alix: seymour of the interview on her special balancing act tomorrow. you do not want to miss it. coming up next andre ward joins me to give his take on the future of boxing in america along with michael your mac. you don't want to miss it.
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alix: throughout the last two hours we have been tracking ticket prices for the fight between manny pacquiao and floyd mayweather. data shows the high asking price is nearing $50,000. the median price is 15,000 price. michael and andre ward with us. the only american male to win an olympic gold medal and boxing in the last decade. a pleasure to have you both. when we have these crazy numbers for a boxing match doesn't indicate america is thirsty for more boxing? andre: they are thirsty for this fight specifically.
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mayweather and manny pacquiao. you can do those things with the tickets. alix: you have an announcement to make for us now. you are thirsty for boxing yourself. andre: i have been off for a little while to work on. i'm excited to be back out. my fans are ready for me to come back, june 20, on the bt network. it's going to be a big deal. alix: how did you decide what network to go with this? michael: we wanted the biggest platform we could get. for his return fight, it was important we had the biggest reach we could find. we created a strategic partnership with the et. they are excited about showcasing andre giving the visibility he deserves. we are excited. it is an historic partnership read bt has never done pro boxing before. alix: what do you say to people who say boxing is a little old.
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how do you get people excited? especially younger kids? have you expand its reach? michael: the reason we got into this business is we thought to be a difference maker. the younger demographic has walked away from the sport. it is important to bring back the younger generation. when you to integrate entertainment, music into boxing . that is something rock nation has started and will continue to do. you will see in andre's fight on the bt network. we need to think out of the box and do things differently. we need to be entertaining and create entertainment that appeals to a younger generation. alix: how do you deal with that question like you are trying to fight and win per you can't be entertaining at the same time. andré: you can. part of my job is to be an entertainer. when i step in that ring there is a crowd, a viewing audience and a live audience.
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i'm not only have to win but i have to do it in style. doing my part that michael talked about, that is what keeps boxing in the forefront. you have to acknowledge manny pacquiao and floyd mayweather. boxing has been around for ages. it's not going anywhere anytime soon. alix: you heard it. boxing is not going anywhere anytime soon. michael, you are sticking with me. we have breaking news on google. we will go back to scarlet fu at the breaking news desk. scarlett's: if you look at google's shares this is the move after the results came out. google shares have extended their advance as earnings call takes place. what is going on in the earnings call is the company is saying headwinds will persist and continue to affect 2015 results. paul sweeney figured out why google shares or higher. despite every number came in weaker than anticipated.
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the strong dollar hurt revenue. it would have been $14.6 billion. topping the average analyst estimate. the actual recorded revenue was $13.9 billion. if you combine that that may be one reason why shares are trading higher. alix: you finally feel better about that i can tell. after the break, in addition to be et, rock nation has teamed up with title. how -- with tidal. ♪
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alix: as a landscaper media continues to change, roc
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nation is looking to change. in addition to this fight from andre on be et, it is also going to be on tidal. why did you choose that? michael: we wanted global reach. it is going to be a big night of boxing with andre ward. our streaming service has done live events. we are trying to create as much content as we possibly can. this is to provide additional value to the subscribers of tidal. alix: when you talk about how -- are you good? when you think of how people view sports, who thought that a boxing match would be so big on tidal years ago.
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andre: it is a broader audience. have to respect the showtimes and hbo's are needed, but this adds to the sport. everything we are talking about alix:. what is the next step. andre: it is called prize fighting for a reason. we fight for glory and for a prize. the top prize in boxing. the right monetary price. with roc nation and myself that is what we are looking for. alix: i box with evander holyfield. i want you to come up and show me some tips. i am right-handed. look at me.
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andre: left foot in front. put your hands up. right hand. then duck. alix: do it again. do it again. andre: and duck. alix: you get over here and do it. give my knees a break here. michael: let's start again. andre,: duck, duck. alix: thank you guys. all right. thank you so much. good luck on your fight. we are going to be back in a few minutes. ♪
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alix: martin grew up in a zimbabwe slum. finding money for school was almost impossible. with the help of his penpal, he was accepted to villanova. she was determined to help them find a way for -- to pay for it. get sponsors and we bike ride. today he is an associate here in new york city. they have written a book about their unlikely friendship. welcome. i'm in the middle of reading your book. it is a stunning story of friendship.
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why did you guys decide to be penpals? caitlin: it was, we were friends. we were friends through letters. that cap dust together. we genuinely had an interest in each other's lives. alix: what was it like for you? kate winslet was radically different. you have this amazing generosity towards her as well. martin: for me it was the life she pretrade over here in america. which is different than where i was coming from. it inspired me that there was more to where i was. we kept writing back-and-forth building a relationship. with this goal that we would meet and that i would be able to live -- be able to leave the abject poverty. alix: we are looking at pictures you exchange. what was it like when you came to the united states for the
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first time? you're going to villanova. you met caitlin. martin: i remember the day i landed. that day my life changed forever. i met my penpal and best friend caitlin and after writing for almost a decade. it meant a lot. things have been going well for me. i have managed to get a lot of opportunities, meet people that i would have never met if i had stayed back home. i'm grateful for my relationship and friendship with caitlin. we grew up together in different parts of the world, 1000 miles apart. alix: what did you hope to get out of it? what do you want to have me get out after i finish reading it? caitlin: kindness comes in small
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forms. it makes a huge difference in their life. alix: it can be hard without being condescending. it is hard to draw the line. kaitlin: i want kids to know that sometimes if you just do what is right in your heart, and be interested in somebody else 's, and be kind to them, that we are all the same. alix: i've member getting a penpal at some point. maybe i wrote a letter. i didn't care. you had such an investment in this. martin, what was it like when you got the first letter? martin: it was very exciting for me. it was the first time for me to connect to the outside world given where i was growing up. i was curious to learn about caitlin what background she was in, what america was about given what i know that america was what i read in the newspapers or watching on tv. connecting to a real american
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meant a big thing for me. alix: a great story. thank you. i recommend the book. "i will always right back." ♪
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mark: i am mark halperin. john: i'm john heilman. we have been doing this for so long that we don't need to be in the same room. mark: happy national cheesecake day. first hillary's reading list. undisclosed donations speaking fees, tax return errors, and much more. the


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