tv Closing Bell CNBC April 23, 2015 3:00pm-5:01pm EDT
the department of justice announced it's filed a lawsuit against quicken loans. in the lawsuit the department of justice says quicken improperly originated and improperly wrote or caused submission of claims for hundreds of improperly underwritten fha insured loans. interestingly this comes on the heels of quicken filing its own complaint last week against the department of justice. quicken's ceo said that the department of justice's investigation here is a shame. melissa, back to you. >> thank you so much eamon javers. great job, brian. i'll see you all tonight on "fast money." straight over to "closing bell." hi everybody and welcome to the "closing bell" on this thursday, bill. as we eye new highs across the major indexes, i'm kelly evans down here at the new york stock exchange. >> i'm bill griffeth back here at cnbc headquarters.
this is a day when you think about it more than 15 years in the making. the nasdaq on track finally to end the day in uncharted territory. trading above its march 2000 all-time high. that close was at 4,0548. set back march 10th of 2000. we're a little less than 16 points above that level. the other number we're watching this hour the s&p 500 also flirting with new highs. the previous all-time high on the left, 2,117. there's the current level. we're flirting with that one. see if we can do that in the next hour. the market's very next direction could be determined by a huge batch of earnings after the bell today. it is highlighted by google amazon microsoft and starbucks. we'll hear exclusively from starbucks' ceo howard schultz right after his numbers are released, bill. >> we have a lot of ground to cover this hour. markets trading right now
though, interesting pop midday. pushed the dow up. it was up more than 80 points for a time. i think it was a 90-point gain for a time. now up 65 points at 18,103. we're still 130-odd points from an all-time high. s&p right at that level, up nine points at 2,117. the nasdaq in record territory as far as a close would go. up 30 points at 5,065. let's get more on nasdaq's big day. here's bertha coombs. >> bill i'm so glad that you're here today. it is the first time the nasdaq crossed 5,000 this year you weren't here you didn't believe it. today we have seen it firmly above that all-time high close. the all-time high intraday is 5,132. nonetheless, today we've just seen big momentum. volume has grown here this afternoon. lot of traders are saying they're not really sure what is moving this beyond momentum at this point. because this morning it looked like we weren't going to get
near there. disappointing numbers coming out of qualcomm facebook really dragging on the market. but we've seen some of the other big names that posted better earnings, like o'reilly automotives, ebay helping to lift this market here. starbucks ahead of its earnings this afternoon is also higher. some of the usual suspects have piled in investors coming right back into biotechs today. they are leading the way higher even as chip stocks today are a big drag. and you can't talk usual suspects without talking apple. topping $130 a share for the first time since february 27th. apple doesn't report until next week. of course the watch is out tomorrow but we've gotten such good numbers out of at&t and verizon that has a lot of people thinking we've got to see some momentum come out of apple as a result. >> bertha thank you. let's talk shall we in our "closing bell" exchange here today, jim lowell from advisor investments. steven parker from jpmorgan private bank.
hank smith from haverford trust. heather hughes from sun america trust and our buddy, rick santelli, in chicago. there he is. jim lowell we talked about the tradition the early part of april the market might struggle as people sold stocks to pay their taxes. then the second half of april might do better as people get their refunds and buy stocks. seems to be working here doesn't it? >> well that may be part of it. i think what we are really seeing is we can now keydeclare an earnings trend. whether it was port shutdowns, currency issues geopolitical issues. business management seems to be weathering this soft patch here in the u.s. reasonably well and also tactically capable of engaging reasonably well in areas where currency headwinds are present. i think what we're basically seeing the market react to is there hasn't been a significant reflection in the earnings of a major slowdown in at least slow growth, not no growth here at home and globally. >> heather, when you look at the
market do you stick with some of the value big-cap names or do you go small here and go with some more of the momentum kind of plays? >> that mega cap sector. we are seeing broad market participation not from the nasdaq and s&p but the russell 2000 which is the small cap names. we didn't see that last year and we are seeing this this year. from a value perspective, large cap is bigger better and that still seems to be the case right now, but we are seeing small cap participation across the board kind of confirming that trend that we're seeing in marketplace right now. but i must say regarding earnings, even though people are beating earnings above average here beat on earnings the bar is set extremely low. despite all of the obvious cop-outs, the weather, the strong energy been, we really don't have a bar that's set that high as far as expectations. >> expectations low for the first quarter but they're coming
down for the second and third quarters but you think second and third quarters will be stronger. why? >> first, the economy is going to rebound just like it did last year because the soft patch in the first quarter is really the transitory issues of bad weather in the northeast and the west port coast strike. they'll go away, just like the polar vortex last year went away and created a lot of pent-up demand. also i think the effects of the higher dollar are going to be a little bit mitigated. we don't expect the dollar to continue ascending at the same rate. also, bill put on your list that here we are about to make new all-time highs in the s&p 500, and we have a halt in corporate share buybacks until earnings reporting season is over. so once that's over in another couple weeks, we're going to havele tailwinds of share buybacks coming in. so we're quite constructive here. >> steve i want to pick up on this fallen angels theme.
cocoa la- coca-cola. do you think this is where investors should be? >> i think people are looking for quality. i think what we're looking at -- you heard bertha when talk being about the nasdaq -- we're looking for some more pro cyclical parts of the sector. sure, if some of those names are within the technology space where you can get the growth. >> such as? >> i don't have individual names. we like tech in general. we like consumer discretionary. we like the banks. these are a part of the market we think are exposed to the rebound coming in the u.s. economy and where you're going to see the earnings growth delivered. last year when you looked it was really defensive sectors that led, bond proxies. those have gotten really expensive. some of consumer staples with a lot of international exposure. the dollar is going to be a headwind there. so we want to look for whether it is some of the pro growth stocks within the u.s. and also looking internationally. i think there is a lot of opportunities outside of the u.s. >> rick santelli here we are about to set all-time highs
perhaps for the two major averages in the equities market but in the currency markets, kind of stalled. same thing for treasuries. we've been in a tight range for a while. what's it going to take to break those ranges do you think? >> well i think if the equities continue and other indices follow, kind of the lead of the nasdaq and do some surprising moves or more surprising moves to the up side i think that could ultimately weigh on treasury prices a bit. it is a big counterintuitive today we are looking at treasury rates moving down. but then again you hit on it. i think treasuries at this point being in a 5 1/2-week closing yield range between 1. 585 ant and 1.98, traders are buying it. we could talk about sequential earnings versus the last several reporting periods, we could have that discussion. but i would say forget about it.
more of the same. the nasdaq is very important to traders, especially if you believe there is a frothiness in the air, because technology should be maybe less inclined to be affected by some of the dynamics that are changing in the economy, small increases in interest rates. so much more of the same. one thing we want to watch, whether bill gross is right or not, it is very interesting that we did see bund yields go from seven or eight basis points to 16 or 17 basis points. but don't look at that as a percentage. eight basis point rallies in yields aren't that incredible. they're only incredible when they represent a doubling of the ultimate return. >> steven parker are you guys in that camp? have we put in a bottom for the german bund yield? do you think europe generally will start to lift and will that affect u.s. interest rates? >> i think we've probably gotten close to a bottom in rates. we do think that the trend is going higher but we think it is going to be a gradual pace. i reason i think we saw bund
yield rise today is because they came out saying they are upgrading their expectations for growth. there are signs growth in europe is getting better but better growth in europe means 1.5%. so that doesn't lend itself to much higher rates. what you're seeing what it means for the u.s. markets is rates probably move higher but there is a cap because given where bunds are, given where japanese rates are, international buyers continue to flood in to u.s. markets particularly as the dollar gets stronger. our view is rates going higher but not at a significantly fast pace. >> that's exactly right. the fact that rates around the world globally are so low, who is the biggest beneficiary right now of low rates? it's the american consumer. the consumer discretionary sector has fared very well and what are they buying? they're buying homes. we heard that this morning existing home sales are skyrocketing over the past year right now as a result of a deflationary period the strong dollar and interest rates staying lower because of an accommodative fed right no you.
>> helps a lot of companies, too. leth heather, everybody, thanks this afternoon. great to see you. heading to the close here 50 minutes left in the trading session. if you're just joining us we are watching a couple of the averages. the s&p and nasdaq which are flirting with all-time high territory. the dow is up 80 points. s&p about a point above its all-time high and the nasdaq is about 18 19 points above its all-time high. 15 minutes to go and a harsh winter in most of the current apparently didn't stop those consumers from buying not just some housing that we were discussing but a lot of doughnuts and coffee. up next dunkin' brand ceo nigel travis breaking down the company's strong first quarter earnings results. wait until the see the tidal wave of earnings headed your way after the bell tonight. google amazon microsoft, starbucks just to name a few that will be reporting. we'll have the instant analysis of all those results and the important market response. and then don't miss an exclusive ibts viewnterviews with
starbucks chairman an ceo howard schultz just after the coffee giant reports its earnings. keep it here. you're watching cnbc first in busy worldwide. it took tennis legend serena williams, fencing champion tim morehouse and the rockettes years to master their craft. but only moments to master paying bills at chase.com. depositing checks at the atm and transferring funds on the mobile app. technology designed for you. so you can easily master the way you bank.
welcome back. green across the board again today. the dow up almost 90 points to 1,8125. the s&p adding 11 to 2,119. the nasdaq again in record territory to 5,069. >> we have some breaking news right now. julia boorstin with this quick "market flash." julia. >> that's right. comcast shares moving higher. they're now trading up about 3%. the
stock hitting highs of the day. the all-time high was set at around where the stock is right to you. now the shares are moving higher on a report that comcast is going to be dropping its bid for time warner cable. this comes on the heels of news of the fcc putting a potential road block for that acquisition. >> thank you. we've had officially no comment from our parent company but it is clear, kelly, that the regulatory environment, regulators were really going to be asking for major concessions
when they met with both sides earlier this week. >> we've been hearing reports for days now that the tide was perhaps turning against this deal. other deals obviously affected by this include charter, brighthouse, look for liberty, look for john malone again on reaction to all of this. that's why some of these names are moving in a big way today. the debt has also been moving. now that the fcc's asked for
this review panel in the last 24 hours, that also was an indication that there may be some real hurdles to get this done. >> we'll keep you updated on this story as it continues to unfold throughout the in text couple of hours here. it is not your imagination. today has been the busiest day of the earnings season. >> morgan brennan wrapping up the big earnings movers for us. >> let's kick it off with gm falling 3% on weak earnings the auto giant missing on both top and bottom lines hurt by demand in russia and south america. united continental trading lower despite beating estimates. the company cut its capacity
forecast for 2015 noting the strong u.s. dollar has weakened demand abroad. pepsi beating profit estimates thanks to growing demand for its frito lay snacks but revenue fell 3% on the strong dollar. that stock down 1%. staying with the food stocks hershey earnings and revenues coming up short. results were pressured by weak sales growth in china and higher spending on advertising and marketing. lastly dunkin' brands up little over 8% on track for its best trading day since its ipo in 2011. beating earnings expectations and hiking its full-year outlook. >> a huge pop in those shares. thanks very much morgan. you just heard it dunkin' donuts delivering big numbers for that first quarter. >> let's talk to the man who makes the doughnuts. chairman and ceo, nigel travis here. we had to give it to you. you're on a roll here. the stock's at an all-time high. earnings have been there. the keurig coffee your coffee
brands are doing very well right now. where's the softness? what's keeping you up nights. anything? i doubt it. >> well i worry about our business all the time bill and kelly. i think that's one of the things that is important in the way we manage the business. we treat all the franchise stores as though they were our own so we worry every single day. one thing you didn't mention, bill, we also had a spectacular quarter on baskin robbins, up 8% in the u.s. all together that led to earnings per share above 21%. >> nigel, that's exactly what i wanted to pick up on. let me get this straight. january, february and march, one of the coldest three-month periods certainly here in the northeast where you do have a high concentration of stores how in the world did you get 8% out of your existing locations in terms of growth? this wasn't growth through additional openings. was it? >> no it wasn't. this is comps. i have to say, kelly, you nailed it. this is like magic. and i've asked the same question over the last couple of weeks.
it's down to the following. we had great innovation. we had new products. we had our perks program boosting loyalty. so we kick it out to the park on the marketing side of the business. but nothing works unless our franchisees are open. and despite all the snow our franchisees got their stores open. they got up early in the morning. they got their crews in place. one time in february i was downtown boston -- >> wait a minute. are people eating ice cream for breakfast? what am i missing here? >> no. i'm talking about dunkin'. baskin is less impacted by the weather because that's a more west skew. they may be helped a little bit by the drought. >> i have it on good authority -- i know you have these cheesecake squares that you've introduced. i guess you're doing okay. >> these? >> yeah. i thought you'd have one there. but here's one i bet you don't have there that we've got a picture of. somebody tweeted a photo of a
deluxe bacon doughnut that you guys are testing out in providence, rhode island. you're going to the bacon route here, are you? >> well bill we've had the bacon route before and last time anything like this happened we had the doughnut where we put the bacon in the middle. and we were going through our testing process. it became a big hit very quickly and we rolled it out quickly. so the same thing may happen. you're the third person to ask me about that today. and i haven't seen it for several months but it is in test in providence. >> listen i don't want to harp on this nigel, but how did the drought actually help your performance at baskin robbins? >> i think we had very warm weather in california. we got 456 stores in that state. obviously the drought's a bad thing. i think it was like the third year running that the weather in california was pret itty benign for the winter.
warm weather goes very nicely with weather. but it is not just the weather. baskin robbins, we're operating well. we've been using our own line cake ordering to increase the prominence of ice cream cakes. that's worked very nicely. and again, our franchisees did a super job. again, i have to say this is one of the best quarters i can remember in my time in senior management. >> be that as it may. i read two research reports today from analysts who still hold a neutral rating on your stock even though you're sitting at all-time highs. they are still neutral on this. it is not because of valuations. they are looking a the a couple of headwinds i want you to address very quickly here. on the basskin robbins side, they are looking at stiff competition from city of serve yogurt stands that are becoming very popular in other parts of the country. the other headwind -- i know we talked about your expansion out west, but tle see that as a very long term prosect because of the lack of brand identity that you have for dunkin' donuts west of
the mississippi. what do you say to those research analysts? >> well the first one -- let's talk about dunkin' donuts. one of the reasons we launched our cake out to 60,000 retail locations is to build our brand relevance. that supports our western expansion. when we launched packaged coffee back in 2007 that helped. we got national media everywhere. so i'm not worried about that at all, bill. in fact i think we're on a roll building the brand relevance going west. on the baskin robbins side i think the doughnut trend is over. we're seeing large numbers of doughnut stores closing particularly in california. and baskin robbins is thriving just about everywhere. >> but it is the yogurt shops they're looking at these self-serve soft yogurt shops they're talking about. >> but those are the ones that are closing now. i think those trends have come and gone like it did at the back end of the 1980s and early
1990s. we don't see that as competition at all and i think people are back into ice cream. >> all right. >> i know i am. thanks nigel. great to see you, as always. nigel travels, ceo of dunkin' brands and baskin robbins. >> still just thinking about maple and bacon. it works for me there. >> good combo. 37 minutes left in the trading session here coming off highs for the dow off just 68 points. if the s&p closed right there it would be a new all-time high. the nasdaq if it closed there would also be at a new all-time high. first time finally in 15 years. meanwhile, the corruption scandal at petrobras costing the oil giant near a15 billion. michelle cabrera is live from rio de janeiro with details. could a new controversy involving russia and the clinton foundation affect hillary clinton's presidential campaign. still to come on "closing bell."
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70-point gabe forin for the dow. but we're closely watching the s&p. if it closed right there, that's an all-time high the nasdaq in record territory. all it has to do is hit above 5,048 to close above that record that was set back in march of 2000. a different story if the southern hemisphere where
brazilian oil giant petrobras reveals how much damage was done in a scandal. >> reporter: $17 billion worth of write-downs and charges. $2 billion related to corruption. then another roughly $15 billion related to the decline in oil prices making their assets less valuable. i just sat down with the cfo of petrobras. i'm in their headquarters right now. we spent a lot of time talking about the corruption issues they are trying to overcome the earnings report that came out last night but also about the future hurdles for the company. remember know key issue worrying investors -- the high level of leverage. we built there graphic so you can see. this is the most leveraged major oil company in the world because they have borrowed so much money. they have promised investors they're going to reduce leverage dramatically. they're going to sell assets. ivan montero told me he's convinced they are going to get a very good price. >> one of the most important
protections in this year 2015 was the transaction between bg and shell. shell released at that moment that one of the most important drivers for this transaction was the assets that see as brazil. it was good for the markets that brazil has very good assets. >> reporter: so with selling assets, also cutting the dividend as well that's one of the ways they're going to try to preserve cash. they say they've also lined up enough financing for the year and they're already looking now for financing for 2016 as well as they've really tried to right the ship here and stabilize the share price and the debt. guys back to you. >> they got their hands full on that one. michelle caruso-cabrera in rio. time for a market update with sue herera. ex-cia chief david petraeus just received two years
probation and a $100,000 fine for sharing military secrets with his mistress paula broadwell. he's seen here arriving at court. he will, however, i allowed to travel including traveling internationally. the department of justice has filed a lawsuit against quicken loans over allegations the company improperly originated an underwrote mortgages insured by the federal housing administration. this covers the period from september 2007 through december of 2011. members of michael brown's family along with their attorneys announced the filing of a wrongful death lawsuit against the city of ferguson. police officer darren wilson and former police chief thomas jackson are also named in that suit. michael brown was unarmed when he was shot and killed by wilson last august. on a lighter note the super bowl champion new england patriots visited president obama at the white house today. patriots owner robert kraft presented the president with a new england jersey with the number 44 on the back because president obama is the 44th president of the united states.
one notable absentee however, patriot quarterback tom brady. that is your cnbc news update this hour. back to you. >> where was tom brady? >> we don't know. he is a busy man. got a lot of commitments, family commitments. you never know. he's been to the white house before, however. >> oh my goodness. >> must be nice. >> sue herera. been there, done that who needs to go to the white house. >> bad form tom. >> 30 minutes until the close. >> where we are looking like we'll set records for both the s&p an the nasdaq. finally. got another brutal winter in much of the country powering earnings for utility provider aep. the ceo will break down his company's bottom line for us. the pentagon is moving west with plans to open its first office out in silicon valley. will it be able to lure talent away from the tech world as it tries to develop more advanced weapons and intelligence systems? that's later on the "closing bell."
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the nasdaq though still comfortable above its previous closing. we could finally after 15 years get a new all-time high for nasdaq by the top of the hour. >> japan was first this week over there with its nikkei. cold weather still talking about the weather. heating up those earnings for american-electric power -- the company out with its results today beating wall street estimates on earnings per share and also its revenue. >> here in a cnbc exclusive, we welcome the cfo, neal aikens. somebody likes the harsh winter weather we went through last year. you. >> we are an odd bunch. we like the coal weather and we like the extreme heat as well. the cold weather certainly contributed the first quarter. there's no question about it. >> all that said nick shareholders seem to be much more scared about interest rates these days. you are a strong quarter but still a little bit struggling year to date.
what happens when the federal reserve raises interest rates, whether it be june or september or thereafter. >> there he a always concern about that. but the way janet yellen has been dealing with the interest rate issue, we really consider some of that may already be priced in. so we'll see what the effect ultimately is. but it really is -- not much we can do about interest rates other than borrowing and insuring that we do wisely. we'll continue along the vein of the emphasis we have on investing and investing in transmission regulatory -- regulated companies and infrastructure and wires to make sure we improve customer service. that's what we're about. >> one headwind that you are trying to fight is the -- those epa regulations cutting back on coal-powered generation more toward natural gas by 2020. you feel you could pull this off by 2030 but 2020 is a little soon here. where does that stand right now? >> yeah. i think the industry and aep are certainly concerned about the
2020 target that was set out in the proposed rules by the epa. 2030 is much more reasonable but 2020 the states have to be able to look at their own resources and then you have to have time to construct additional resources as a result. so that's going to take some time. we need to make sure that the epa ultimately in the final rule observes that kind of requirement for infrastructure build-out and the state processes for approval. >> how much are you for coal powered right now? >> we're about 65% coal-fired power. this next month we're retiring about 20% of our coal fleet. so at that point in time we'll be a little bit over 50%. >> nick how is america's power grid changing? we're talking a lot about the disruption coming to our other infrastructure systems, whether from silicon valley or what have you. what are the next couple of years going to look like and where are you committing capital? >> there is no question we are in a transformational change in the industry when you think
about distributed generation like solar power, energy efficiency, renewables. all those types of activities are changing the way the grid actually operates. so we're heavily investing in the grid grid infrastructure making sure it being a dates not only two-way energy flow but two-way information flow as well so we can be more wise and efficient about the way we use electricity. then the customer side that customer experience is extremely important. so we're going to make sure that we invest in our ability to ensure that we do have that kind of mechanism in place. so for the industry itself, it is in a very transformational time that we are focused on emergeing from that kind of activity. as far as the distribution generation is concerned, we're also investing in solar, investing in wind investing across the board from a resource perspective. >> did i read this report correctly, the shale production as it pulls back will hurt you a
bit because you supply power to the shale producers up there. is that right? >> yes. it's sort of interesting with we continue to see the last quarter, still a 14% increase in our shale gas counties. so we're still seeing production. of course the well head activity is starting to reduce somewhat but we feel like we have a natural hedge associated with that. because if you look at the sectors of the economy, the chemical manufacturing, the construction, all those areas that benefit from low natural gas process and low energy prices are also continuing to increase. there is sort of a natural hedge that is present in our system. >> but you are rooting for higher crude oil prices right? so they can keep the pace of production going. >> that would be great. obviously we want to make sure that we continue to advance from an overall standpoint not only chemical manufacturing but also in terms of natural gas prices and make sure from the customer
side that we can lower costs as much as we can. >> fascinating stuff. nick, thank you so much for being with us this afternoon. >> thank you, kelly. >> appreciate it. nick akins, ceo of american-electric power. cnbc has learned comcast could drop its bid for time warner cable as soon as tomorrow. >> let's get more from julia boorstin. julia. >> that's right. now we are learning c nabs's david faber confirming that comcast is expected to drop its bid for time warner cable. this of course comes on the heels of fcc putting up a new regulatory hurdle for the deal. the big question now is what's next for the table business. comcast is expected to use some of the cash and go after other potential acquisitions. it could go after cox, it could be interested in acquiring some wireless spectrum through the likes of some of dish's assets or it could be interested in beefing up some of is broadband subscriber numbers. shares are going up on this news because of the idea that cable
subscribers are less valuable than they used to be. cable users shift towards this idea of streaming video over the internet and more of their dollars go towards that broadband subscription. we'll have to watch what happens to the cable landscape and other potential deals right now. >> this could have a cascading effect. shares of charter, they would receive some of the divestitures from comcast under this proposed deal. >> well yeah. so that deal would fall apart. right now charter had a deal to make some acquisitions of some of those subscribers of the combined time warner company/comcast. but if this deal falls apart, then that would free up charter to go after an acquisition with time warner cable as it had previously. so with this deal not happening anymore, we might see a charter/time warner cable deal that could free of up comcast to
shore up more cable subscribers. >> i think it is important to remember that comcast would not have to pay a break-up fee. they're in a position where if they don't like or they don't like the fact that they're facing all this regulatory scrutiny and all these challenges, they're actually in a better position walking away from this deal. they don't have to pay a fee and the kinds of concessions that could have been required may not have made it worth it for them. >> all right julia. thank you very much. we'll have more on that as we get more details. heading to the close, 19 minutes left here in the trading session. the dow up 69 points. the s&p is going to go out if we do right at the level it needs for an all-time high. the nasdaq up 31 also in all-time high territory. then after the bell -- google amazon microsoft and starbucks all set to report their results. can't wait to hear what this he have to say, how those shares respond and our earnings central
team is standing by for a preview of all of those numbers straight ahead. don't miss an exclusive interview with starbucks' ceo howard schultz. find out how much the company is benefiting from the 20% decline in coffee prices this year. that's coming up later on your "closing bell." the technology changes the design evolves the engineering advances. but the passion to drive a mercedes-benz is something that is common... to every generation of enthusiast. the 2015 dream machines, from mercedes-benz. today's icons. tomorrow's legends. visit the dream machine event today for up to $3,500 towards purchase.
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welcome back. google will be the headliner for what is a huge slate of earnings after the bell. >> jon fortt has a preview now for us on google. >> the street's looking for net revenue of $14.05 billion. three big questions from animal gists generally. can google grow the top line especially on owned and operated sites after facebook's strong report and its momentum in video that's worth watching. then there's paid clicks and costs per click. analysts at red bush said their checks suggested a slowdown in paid clicks. this wouldn't necessarily be a problem if costs per click were better than expected. it could soon google is focused on ad quality. we'll see what they say about discipline in spending. >> jon, thank you. another well-known brand name investors will be watching closely, amazon. >> julia, busy this afternoon rejoins us covering those
numbers. what's the street expecting here? >> well wall street expects amazon to grow its revenues 13% but it is expected to lose 12 cents per share, that's down from earnings of 23 cents per share a year earlier. the big focus here for amazon is all about the cloud. for the first time amazon's breaking out results of its web services business. analysts will look for insight into its profitability. now if it is not profitable that could actually be a good sign of the strength of amazon's u.s. retail business. some other areas to watch include expenses as the company has a tendency to spend to increase market share. we'll also watch amazon prime. that's a big driver of their profits. 15 minutes to go into the close. before we get those results with the dow up only 54 points now certainly coming off its highs. the s&p hanging on to a gain of about eight points. >> will the nasdaq be able to end above its all-time close? it's been more than 15 years in the making. stick around anything can
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dropping its bid for time warner cable. david's on the phone. david, what are you hearing in terms of timing? >> i think the timing is very near term. expectation is as soon as tomorrow is certainly a possibility. judging from the conversations i've been able to have at least with people familiar to the situation. that said i can't give you a great deal of detail because i'm not getting it in terms of the decision making that went on behind that or why there was decisions dropped to perhaps to try to negotiate something other than the assumption that whatever it was that might have been negotiated was something that wasn't amenable to either the government or comcast. >> do you think that comcast folks are surprised at the amount of pushback that they ended up coming at them? >> no doubt, bill. listen. there is an expectation in these kinds of matters that if you're going to be dead you'd be dead fairly early. i say that in a sense of when you think of t-mobile and at&t
it didn't take long for that toto to -- in this case you're talking about over 14 months having passed. i think for certain people the expectation is that it would have taken that long had they been opposed to the deal. certainly at the doj level, there's not that much on the competitive level for them to get involved in given these companies don't compete with each other. fcc was always much more of an issue. particularly market power as defined on broadband as it is now newly defined. but i think there is surprise. no doubt about that. the questions now are what does time warner do and of course what does our parent company comcast do. this morning i was able to share with people in my reporting charter is still very much interested in acquiring time warner cable. but the key question is what does time warner plan on doing. how hobbled is it as a result of
the long dispute that's gone on. the company's asset performance has not been that bad at least judging from their last quarter. we'll have to see what they choose to do with their plan b. not to mention our parent company, comcast, and what its plans are after that. >> looking at shares of charter down about 1%. on this news of course comcast trading up about 2%. the market reaction indicates i guess that taking on time warner for either one of these companies would be a financial challenge. >> that's what surprised me frankly, kelly. comcast is making an expectation that they take some large-share buyback perhaps. this is an all-stocks deal not an all-cash deal. that said charter's stock price has been a very solid performer for quite some time. we'll have to wait an see how this plays out. people are just trying to fully understand all the implications. one of the implications is that
charter failed to acquire bright house that failed to happen. that was a large transaction announced only a couple of weeks ago. another company called great land is companyno longer going to be in business. as for the performance of the stock, i think some people are surprised comcast is strong here given there was a great deal of strategic rationale why you'd want to do this deal. everything i picked up indicated the cost savings may have been larger than anticipated early on. >> you have to believe time warner cable's notkicking themselves for not having a break-up fee. they can just literally walk away. >> our david faber. more next hour for you on this deal and the future of the cable industry. we'll come back with the closing countdown. the nasdaq and s&p trying to close at new all-time highs. you're watching cnbc, first in business worldwide.
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and so it begins. with e*trade's investing insights center, you can spot trends before they become trendy. e*trade. opportunity is everywhere. coming up on the three-minute mark here for the market. did anybody believe back in march of 2000 when the nasdaq hit that all-time high yes, we were coming off the dotcom bubble but did anybody think it would be another 15 years before we got back to those levels again. that is exactly what happened. from march 10th of 2000 until
today, looks like we're going to close above that level. we have a 15-year chart to just show this vast valley that was created when the dotcom bubble burst. especially those first few years. then just kind of sideways action. and then the move higher starting in 2009 or thereabouts at the end of the financial crisis. now here we are today finally at new all-time high territory. joining me from the new york stock exchange our friend bob pisani and larry mcdonald senior director at socgen. larry, i'll ask you about your tweet in a moment. first your thoughts, your perspective on the nasdaq finally hitting a new all-time high after so much time? >> well it is a big relief. imagine getting into equities in 2000 1999 2000. if you held it you're even now. it's a big relief to some investors that have been trying to ease that pain for a long time. >> bob, if you had asked us 15 years ago how long it would be
before it got back to those levels, i don't think we'd have guessed that long. >> i think this is significant and this is the kind of thing that might make a little bit of the front pages maybe. we've been waiting for the public to get interested in the rally. it's been five years already. there hasn't been a lot of exuberance about it. i think this is an important data point. everybody complained bitterly the technicals have been bad, not a lot of volume ubl, not, not a lot of volatility. earnings have been weak because of the dollar strength and oil weak fles. can you make an argument that that may be a temporary take phenomenon and maybe earnings will come back. >> well within the earnings, what bothers me the most -- >> let me just say, your tweet -- you tweeted out a few minutes ago, companies gaming earnings season? question mark? go ahead. >> well here's the thing. if you look at the companies coming if to the quarter that have taken the guidance down versus taken the guidance up that's the highest in six years. what blew me away is not only that number, but if you look at the response to earnings this
quarter, so say 170 companies that have reported when you looked at how the markets responded, it is an average of 1 to1% to 1.1% to the upside. that's the highest in years. the companies have lowered the bar down so far -- >> my point is we're getting lousy revenue numbers, much of it due to the strong dollar. a difficult time with earnings because much of it is due to the weak oil situation. if both of those metrics changes, earnings an revenues should improve somewhat. that's why im'm not willing to say earnings are going to be lousy for years. we don't flow that yet. >> quickly, cash as a percentage of debt on the balance sheet is the lowest since 2007. that's growing problem, down to 15%. companies are issuing debt to buy back stock. it is a game. they're game being the system. >> good to see you, larry. . bob, check back with you later. the s&p was flirting with an
all-time high. doesn't look like that's going to happen though. but we are finally going to get one on the nasdaq after 15 long years. up 22 points today at 5,057. stay tuned now. the flood of earnings coming your way around an interview with the head of starbucks, howard schultz coming your way with kelly evans. see you tomorrow. thank you, bill. welcome to the "closing bell," everybody. i'm kelly evans. sitting here looking at that graphic. the nasdaq today just right now closing at all-time highs. all-time highs. it is the first time we've been able to say that for the nasdaq. we've said it for the dow. we've said it for the s&p 500. we have not yet been able to say it for that nasdaq in 15 years. today we've done it. up about 20 points on the close to close at a new all-time high of 5,056. let's get right to it now as we summarize the day on wall street. and look towards some earnings
and reflect on this moment as well. my panel joins me here. mike santolli sharon epperson and jon najarian. "fast money" trader tim seymour, welcome to you as well. mike santolli obviously in 15 years' time in real terms the nasdaq needs to close much higher from leer. still, what is the significance of what we have just done? >> it is really a lagging indicator of how far this whole market has come. i don't think today's nasdaq to be honest really resembles the other one that much. so i think it is encouraging because of the can. kind of companies that are working right now, large organic growth companies but i don't really think that it is a signature moment for investors. >> we are up 7% year to date on that index. half of that coming from pharma and biotech. sharon at least those are areas where we see significant top line growth and now a lot of deal making. >> a lot of attention paid from retail investors from markets to these records.
it is a far different nasdaq than it was 10 15 years ago but it is something that gives the individual investor another reason to say, hey, i need to be in this market or i am going to be missing out. >> as we talk about the nasdaq google is out with its earnings. we're going to get to nose in just one moment for you. we are waiting on google amazon microsoft and starbucks for everybody this afternoon. i believe we have those numbers now with our jon fortt. >> hey kelly. let me run through these, if i might. google revenue, gross revenue, coming in at $17.26 billion versus $17.5 billion expected. earnings per share coming in at $6.57 versus $6.60 expected. traffic being a which is costs were expected to be $3.48 billion. it came in a little lower at $3.2 billion, from what i can see. and paid clicks and costs per click. those are numbers we always look
for. aggregate paid clicks up 13%. that is down slightly from last quarter. cost per click, down 7%. and that -- that's compared to quarter over quarter versus year over year. aggregate costs per click year over year down 7% that's down 5% quarter over quarter as well. i'll go through here and look for capital expense, as well because i know spending is something that we'll be looking for. let me dig that out and i'll get back to you. actually i see capital expenditures expenditures, $2.345 billion versus $2.9 billion last year. cap x coming in a little bit lower, kelly. >> google shares down then up on those results, now up about 4% after hours. jon, thank you. we'll get more reaction in a moment here. we got to look at amazon
moving big on its quarterly results. julia boorstin with those numbers. >> hi kelly. amazon earnings reporting a loss of 12 cents per share, right in line with expectations. but the company reported greater than expected revenue growth saying net sales rose 15%, compared to expectations of the company report inging $22.7 billion. the company finally breaking out its web services business saying amazon web services is now a $5 billion business and growing fast. then jeff bezos is quoted as saying in fact it is accelerating saying born a decade ago, amazon web services is a good example of how we approach ideas and risk taking. breaking out $5 billion for amazon web services and that's an accelerating business. we're continuing to dig in here. they are talking about various different parts of the busy including amazon prime celebrating its ten-year
anniversary. they don't seem to announce any numbers there as expected. it does look like the guidance is light but the stock is moving higher on the better than expected revenue as well as the $5 billion for the amazon web services business. >> julia, thank you. amazon shares moving higher in a big way, up 7% after hours. we're going to flip over now to starbucks as well as the earnings parade continues. that company's quarterly results hitting now. jane wells has those numbers for us. jane? >> hi kelly. a beat on the top line. they are saying that it came in at 5$4.6 billion. that's 18% growth. this double-digit growth keeping going on and on. gap earnings at 33 cents a share came in as expected. the top line beat eps as expected. comp store sales rose 7% globally. that's better than expected. 7% in the americas. again better than expected. 12% in china and asia pacific. again, better than expected. although overall global traffic
was up 3%. i'm trying to look through the guidance. it looks like they've re-affirmed their guidance for the year. i believe the stock today hit a 52-week high and it looks like again that for full-year guidance -- oh. they're now expecting full-year eps in the range of $1.77 to $1.79. that is higher than expected. third quarter eps in the range from $39 to $40 also better. looks like they are raising guidance. i know you'll talk to howard schultz more about mobile ordering, when that's going to happen. delivery they're testing later this year. this new roastery tasting rooms are expanding. also the higher costs of employee benefits and maybe he'll talk about what happened in the quarter with the race together initiative which just kind of came and went. again a beat on the top line. it looks like guidance has been raised and a meet on the bottom line. back to you. >> i think that beat is appropriate. back up the truck seems to be the message for investors to all of these results thus far, jane.
thank you. starbucks shares up 5% trading just under $52 here. i think it is going to be a quadfecta to the numbers results. josh josh? >> microsoft just reporting. reporting 61 cents on $21.7 billion. analysts were looking for 51 cents on $21.06 billion. that is a beat there on the bottom and the top. just looking through the divisions, kelly, devices and consumer revenue up 8% to $9 billion. that is better than analysts had forecast. commercial up 5% to $12.8 million. that also beats. commercial cloud revenue up 106%. also microsoft saying they returned 7.5 billion mr.$7.5 billion to shareholders in the quarter. we'll get more from the ceo on the call which starts at 5:30 eastern. >> josh, thank you. those shares up about 3% after
hours. let's bring in robert luna and david garrity, along with the panel for their reaction to these numbers. gentlemen, welcome. should we begin with google? robert maybe you can explain why you miss on some key metrics and the shares respond positively. >> i'm still scratching my head at that one, kelly. unfortunately i haven't had a chance to look at the numbers really but everything seemed a bit light to me. when i heard it was up after hours i was a little bit surprised. i don't know if guidance was positive but the pay her clicksper clicks decline was really disappointing. when you hear those mobile numbers coming out of facebook it is clear to me they're taking share from google. with youtube only 3% we need to see better numbers out of google. i'd like to hear why the stock is up. >> david, your thoughts? >> i think in terms of google one thing we didn't know is the impact of the dollar on the revenue line. the dollar miss wasn't that much. it could probably be explained by currency.
to the extent there wasn't much of a miss on the eps line relative to the revenues my story for google is that obviously the fourth quarter is seasonally the most important. the clicks didn't fall off that much. people may start to get some insight that perhaps the company will get religion on controlling their expenses and start managing for profit margins which i think people wanted to see for a long time. >> do you agree that facebook might be taking share? >> it's clearly -- it's very evident that facebook is taking share. the question here is to what extent was google basically engaging with them seriously rather than engaging in a lot of projects that weren't necessarily directly competitive. i think obviously here what we need to see for google is focus on running the business management for margins and basically going head-to-head with the likes of facebook. >> let me go down the road here before we have to go. dr. j, which of these results -- or is it the sum total -- speaks to you right now? >> i'm impressed with virtually all of them. microsoft, that's a really strong looking number as well.
and what surprises me somewhat kelly -- i'm sure michael and sharon as well is that these numbers all of them came out well before the futures are closed. a lot of times big s&p 500 companies hold those numbers until we get to 15 minutes after the hour when the futures close. these were all coming out as close to the bell as they possibly could which is a change. you don't see that happenespecially with big companies. these are the four horse men really. these are pretty big stocks in the tech sector in particular that are coming out and they had plenty of time to trade these futures. normally they wait until the futures have that 15-minute window of closure from 4:15 to 4:30. >> for people not trading the futures but holding on to these stocks longer term in their 401(k)s, their i.r.a.s, fidelity funds, vanguard funds, a lot of them own a lot of these companies an that means you own
a lot of these companies and it is a good day for those investors. >> i think the reaction to google without looking too deeply into the numbers is probably the most positive in terms of implications for the broader market just because of the willingness to say maybe there is a better story here. yes, even though the on-average stocks have responded positively to almost any kind of earnings i do think the fact that you can take an ambiguous number and react positively -- >> tim seymour, you think it is the dollar that hurt these results? >> i think you have companies where the bars were real low. i think capital intensity at google was a big relief. google and amazon very important for this market. >> we'll leave it there. thank you everybody, so much. stick around catch tim seymour and the rest of the "fast money" crew at 5:00. they'll have the latest headlines from tonight's earnings calls. microsoft and sam saddam kickamazon kicking off at 5:30. up next we'll talk to
howard schultz, ceo of starbucks. and later, kelly king chairman and ceo of bb&t will join us to discuss the bank's earnings and its profit slip. you're watching cnbc, first in business worldwide. te for a future without accidents? why do any of it? why do all of it? because if it matters to you it's everything to us.
welcome back. starbucks just out with its earnings. let's take a look at how shares are reacting after hours. positively. up 4%. we're talking about some 52-week highs for this company. joining us rights now for more in an exclusive interview, starbucks' ceo, howard schultz. and also with us from the "mad money" studio our own jim cramer. welcome to you both. >> thank you so much. hi, jim. >> hey, howard how are you? >> very well thank you. >> howard let me begin. in the quarter, the same-store sales growth is impressive. what were some of the levers that you pulled that drove that momentum in terms of traffic, in terms of ticket what are you seeing out there from the consumer? >> well i believe this is the strongest non-holiday quarter in our over 20-year public life. so it's pretty incredible to have a 7% comp on our store base is probably unparalleled. but what drove it was 3% traffic
globally. 2% traffic domestically. we're seeing a significant level of interest in our new beverage called flat white. the relevancy of starbucks in terms of sense of community, the relationship we're building with our customers in terms of our loyalty program, the ongoing success of mobile order and pay, first in portland oregon and now in 600 stores in the northwest, we're seeing the beginnings of incrementality as a result of that. then you look at what happened in aslaiaasia. 12% comps in china. majority came from china. then record developments with our cpg development group with 60% increase. this was a quarter with stunning performance, multi-segment, multi-channel and multi-geography. >> howard, you also announced during the quarter that you'll be offering college funding tuition assistance to your employees. what kind of take-up and
response have you had to that thus far? >> i'm glad you asked that. because for many many years now starbucks has been the kind of company that's balanced significant shareholder value with trying to have social impact and doing everything we can for our people comprehensive health insurance, equity in the form of stock options and now the first company in america to provide free four-year college tuition for our full-time employees. we feel strongly about it. we made a commitment that we hope to graduate 25,000 starbucks partners by 2025 and we made another announcement saying we're going to high 10,000 disconnected youth in america, train them bring them into starbucks, and put them on a pathway to college. we strongly believe that our financial performance is linked to the reservoir of trust of the brand, the humanity of the company and making sure we share success with our people while we're billing long-term value for our shareholders. >> howard how much of this quarter, both united states and
worldwide, can be explained, at least the increase by technology initiatives? i mean i think you're doing some innovation that's making it so that we're not going to have as long a lines. people are buying more at starbucks. it just sounds like technology's playing a role in the huge quantum jump in same-store sales. >> jim, there's been no question that we've been able to crack the code on creating the kind of technology that is seamless for our customer. we now have 16 million people who are going through mobile -- i'm sorry. 16 million people who are transacting through their phone. we added over 1 million people alone to our rewards program this quarter. there are 10 million active members alone so that we're in a position right now where we're leveraging technology in a way that is rewarding our customers, speeding up the line and doing things that i think demonstrate
that the equity of the brand, the relationship we have with our customers is both in-store out of store. i would also say what's coming in terms of delivery all of these things are integrated into the rewards program so we think we're going to get better and stronger and the attachment that our customers have to starbucks as a result of technology is only going to reinforce their emotional connection to our company and make the bricks and mortar part of our company stronger. the other thing i would say is we're leveraging this technology outside of the u.s. this is not only a u.s. story. all the learnings and everything we're doing with regard to elevating technology inside the starbucks ecosystem in the u.s. is now being transferred around the world. when you look at what's happened in china -- i can't be on a call like this and not speak about it. we're almost at 1,700 stores. 12% comps most of the traffic. we have become part of the daily life of local chinese people in over 80 cities in china and we
really have broken through. this is a growth story in china that's in its nay cent stage. when i look at the 7% comp in the u.s. for all those people who a year ago -- just a year ago said that starbucks is reaching saturation in the u.s. we're finding more and more ways to grow and when we get on the call today we'll be talking about a new business unit which will leverage the learnings and unbelievable response we've had to the starbucks roastery and really taking coffee to the ultimate premium level in terms of a new business. >> you can't just leave us hanging there. new business unit. is this about moving roastery nationwide or is this about a new kind of craft coffee we'll be buying in stores? how big can this be is this. >> well the entire plan of the roastier from day one, which goes back years, was building a new ultra premium brand. almost taking a page out of the fashion industry and leveraging the infrastructure of starbucks and the fact that we knew that
our customers had the ability and wanted us to take them to a place that was very different than the core business at starbucks. the roastery and response we've gotten from the roastery has given us great confidence and optimism that we have an opportunity to build that brand in a unique way and i'm sorry you're going to have to wait for the call. i'm sorry, jim. >> howard while we do that just a quick last question on apple pay. one of the first things people talk about with this watch technology is being able to pop in to a starbucks, for example. we know the watch isn't really out yet but what can you tell us about apple pay and the phone so far around what you anticipate in terms of pay with the watch demand? >> i think starbucks has a wonderful relationship and partnership with apple. i think it is safe to say that we're in conversation with them on a number of issues. i think we have a lot to offer them in terms of the fact that 60 million customers a week coming through our north
american stores. and obviously the fact that we've been able to crack the code in being the leading company -- leading retail company in the world in terms of mobile payment. there's an opportunity for apple and starbucks to do something. but that's as far as i can go on the call. >> all right. we will have much more to listen for. howard schultz we'll let you go. thank you so much ceo of starbucks. >> jim, quick last word here. the quarter in 140 words. >> i don't know how he did it. i honestly -- this was not because coffee went down in price. this is traffic. it is through-put. getting people through the stores. it's brilliant. >> there will be much more coming up on "mad money." thank you so much jim. good to see you. cramer has three big exclusive tonight. skechers, dominoes and snap-on tools. find out how far they could fly with those interviews tonight. coming up here streaming music service pandora out with its earnings. morgan brennan has those numbers. >> smaller than expected loss for pandora, an adjusted 12
cents versus the 16 cents they were expecting. music streaming service offering current quarter and full year revenue guidance that largely in line with the street. 79.2 million active listeners. . street had been looking for 1 million more than that. listener hours of 5.3 billion also coming in light. it is those stats that are sending shares of pandora down in the after hours with pandora down about 4% right now. back over to you. >> the odd man out tonight in terms of earnings. thank you, morgan. the deal between comcast and time warner reportedly off the table. up next we'll discuss what that means for the future of both mergers going forward and how this will impact cable stocks and the industry.
welcome to you both. frank, how significant is this deal if it falls apart to the industry? >> clearly it is the biggest deal in the industry at the moment. the biggest deal that's ever been in the industry. what's going to have to happen is that another deal or a series of deals is going to take its place because the sector is
changing rapidly because the technology is changing rapidly and the delivery system is changing so you're going to see many deals happen. >> would this consolidation, whether in a comcast/time warner form hurt or harm consumers? is there a real anticompetitive threat as these companies inevitably tie up or no because of some of the innovation we're seeing? >> it is basically innovation. problem is that the companies are large and therefore not liked in washington. but relative to their competitors on the internet side they're not actually that large. therein lies the conundrum. i think consolidation is inevitable blausecause uncertainty as to which way technology is going is so great. >> explain that if you would. >> bundle is starting to come apart. no one's quite sure how they're going to sell the product. everybody is moving into everybody else's industry with google beginning to ramp up on
the wireless side as well as cable end of connective. that just creates greater uncertainty. >> it is an interesting question. if ultimately you move away from cable delivery to more broadband over the top kind of delivery doesn't ma mean that it matters less going forward geographically where i am or where my customers are because i could potentially pick from all of these operators. right? so there would be more of a competitive concern for the consumer if they all get together. correct? >> exactly. and a big part of the comcast/time warner cable deal was broadband. not just simply the cable portion of the deal. >> and what i wonder about for that reason if in fact it goes this way and comcast pulls back and abandoned this deals, we don't have any guidelines from a government regulator that's said this much is too much internet broadband service for you to control. i wonder if that means people are just wary of doing any of these horizontal mergers from here on. >> the one thing i wonder about -- again, comcast may have
a better sense of this because they were in the room. they've talked to the fcc. they've talked to the doj. but comcast is unique. they're your parent company. they're a content provider. they also own a big stake in hulu. they are a big player at many levels. they are different from some of the other players in this sector. >> i wonder about the fcc hearing if that were to take place, that's what many have said would be the big obstacle even more so than what the doj could do. is it a hearing like that that we could anticipate if there is any type of potential merger like this in the future because the government really doesn't know what could be next with this, and the hearing is just a way to kind of get in the public eye, what all of this would mean if a merger like this was to happen. >> maybe. i think the question is if the fcc thought it needed administrative hearing, like this, why didn't they decide to do that in march of '14. why did they wait 14 15 months to do that. >> john? >> i would watch charter in that
they announced they're buying brighthouse for $10.4 billion but said if the time warner/comcast deal falls apart they'll have the option of pulling out of brighthouse and obviously bidding on time warner cable. that will be a very different deal in the sense that charter is a lot smaller than comcast and that would force the issue. >> what would happen then? it doesn't feel like that's the end of the road for this industry, john. >> i think this industry is changing so fast and it is so uncertain as to what's happening is that if you're running a large media company, you're looking for safety because of the uncertainty in size. >> frank, last word to you. again, playing the deal argument here. who do we watch from here? is this charter? is it liberty? >> i think you certainly look at charter. but i think you look at all the players in the sector because as john said the bundle is becoming unbundled and the big
players are going to have to scramble. >> thank you so much both of you. john tinker and frank aquila this afternoon. back to sue herera for a cnbc update. at this hour ex-cia chief david petraeus sentenced to two years probation and fined $100,000 for sharing military secrets with his mistress paula broadwell. at the sentencing hearing petraeus apologized for the pain he caused everyone. loretta lynch has won confirmation to serve as the country's next attorney general ending months of delay. vote was 56-43 in the senate. she replaces eric holder to become the first african-american woman to hold that position. the final span of the long island bridge in boston harbor was demolished this morning. other portions of the bridge were taken down in controlled demolitions which began last february. the brim was closedge was closed last fall because of safety concerns. the hubble space telescope was launched from cape canaveral
25 years ago tomorrow. nasa released specktacular images showing a giant clutter of stars that resides some 20,000 light years from earth. pretty darn amazing stuff. isn't that just incredibly beautiful? >> that could be a great screen saver. >> it would! absolutely. >> if people still use those things. >> that's a bill griffeth story. he loves space stuff. >> i thought you were going to say screen savers. thank you, sue. the earnings are fast and furious after the bell today. we'll recap the results for you coming up. first, bb&t reporting weaker than expected results selling shares lower today. we'll talk to the bank's chairman and ceo, kelly king about those results next in a cnbc exclusive. back in two. it took tennis legend serena williams, fencing champion tim morehouse
welcome back. there's shares of bb&t. or earnings per share. the regional bank missing its earnings estimate after lower net interest income took a bite out of its bottom line. that's a theme we've been hearing a lot about. for more in a cnbc exclusive, kelly king. >> thanks kelly. nice to be with you.
>> tell us how much of a hit you are taking from the low-rate environment and as specifically as possible if you could. >> well as you know this has been a very trying very low, flat extended interest rate environment. it clearly makes it very difficult on spread banks, which is what most of the regional banks are, because you know the deposit rates can only go so low and the loan rates keep going lower. and so that spread just continues to get narrower. it makes it very very hard. so even when you have fairly good loan growth because the spreads or the margins keep getting lower, you don't really bring through much pure net interest income so it's a challenging time for us and for banking industry today. we're very fortunate we have a lot of other non-spread businesses that are doing quite
well. our miss today was a small miss. it was really around some of our consensus estimating not recognizing that our first quarter is a seasonally slow quarter for us because we have about half of our business kelly, coming in throughout normal what we call community core bank. about half of our business comes in through other non-bank businesses. and so those businesses are not as correlated with the normal interest rate cycle. and they do really well. it is just that the first quarter is a soft quarter for them so we're not particularly concerned about that. we do think though the protracted interest rates is an area that's problematic for all of us. >> well for consumers who are looking at of course the loan portfolios declines are not good for your company but does it necessarily mean that we're seeing a healthier consumer perhaps that they're not perhaps as mortgages as they have been in the past and that's my first question what you are a he seeing on the consumer side.
i would also like to know a little bit about what you're doing to make up for this decline in the loan portfolio growth. will we see increased fees perhaps for consumers. >> right. so the consumer response or effect is really bifurcated. soyour borrowing consumers really like these low interest rates. makes it very very good for them. on the other hand, remember that your senior citizens primarily who are not borrowers, they're net suppliers, and they're living on their cds and investments. it is very hard for them. so when you talk to a group of clients, some are really happy, some are not so happy. so it's challenging for us because we get really hurt on both sides. so what do we do about it. we're really not in a position today to pass through a lot of fees in short run to our
consumers. frankly there are regulatory pressures that are holding fees down, and the market is very very competitive. we have a lot of non-bank competitors out there today that are keeping fees really low. so in terms of fees this is a good environment for consumers. but over time kind of to answer your question banks will either have to see a more positive sloping yield curve and some additional spread or we will simply have to pass on more fees. >> kelly, before we go just a burning question. there's got to be, as people are telling us consolidation in your part of banking sector. are you going to drive that or will you worry about others maybe looking over at you? >> no. we don't worry about anybody looking over us. but we are the only major large bank today that has announced three large -- three reasonably significant deals in the last
year. we just closed our second tranche of branch acquisitions from citibank in texas. we have our bank of kentucky deal going that is expected to close in the second quarter. we have an $18.5 billion company in pennsylvania called susquehanna which is a great company expected to close in the second half. we've very inquisitive right now. we always have been as you know. we expect to continue to be inquisitive as we go forward. it is really the only answer right now in this environment. if you think about it rates are slow, going to stay slow for a while. pressures on the margin. not much opportunity to raise fees. what's the answer? you've got to get skill. you grow organically but not too fast. therefore, mergers are a really big part of the answer for the industry and for us today. >> we'll be watching for that exact reason. thank you, kelly king good to see you again. >> the ceo of bb&t. one of the biggest days for earnings it has been this season. we'll recap the highs and lows
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came if light. company reported first quarter revenue of $22.72 billion. that topped expectations. amazon also broke out sales figures for its web services sector. this is the first time it's done that saying it generated revenue of $1.57 billion in the first quarter. up from $1.05 billion last year. moving on to microsoft, that posts quarterly profit and sales that beat the street driven by strong growth in consumer subscribers and cloud computing. you can see those shares up 3.5% in after hours. google reported quarterly earnings revenue and advertising metrics that actually missed analyst expectations. the internet giant said the first quarter saw a 13% year over year gain in aggregate paid clicks. analysts had expected a 14.8% gain. cost per clicks also worse than expected. still shares of google class c, up almost 3% in after hours. pandora posted a smaller than expected earnings loss of 12 cents. revenue topping estimates and guidance in line with the street.
but 79.2 million active listeners fell short as did listener hours of 5.3 billion. shares of pandora are down 4% right now. lastly altera missing on the top and bottom line. current quarter revenue guidance well below estimates as well. shares of altera are down 5% in after hours. back over to you. >> whew! morgan, thank you. start with amazon. mike, maybe you can tell us what's going on here. >> it looks like at least from some of the commentary you are seeing that the profitability in growth in amazon web services was so impressive now that they're breaking out those numbers. people are wondering if if the other side is the core e-commerce business where they were bundled together. there was some anticipation saying you'd want to see them hemorrhaging money in that business. maybe it means the rest of it just looks modestly worse. >> does it make it more or less likely there would ever be a spinoff down the road? >> i think it is more likely
there will be a spinoff down the road. right now it is up $15 from the close. it is up $10 through the 52-week high. at some point, if the shareholders were able to bring pressure -- which they're not, by the way -- jeff bezos would have to decide on his own to make a move like this. i don't believe shareholders could put pressure on him because of the structure of the company. i think at some point it would make sense for them to split it up. >> it is a fascinating point. amazon web services developed totally organically. started with a guy i think in south africa asking for server space asking if he could rent some. now it is this hugely profitable business. again those critics forever who have been saying amazon's core business is just a lost leader and unsustainable, they'll still be able to say that. >> yeah. but there will still be consumers who are on amazon prime all the time. not going to say anyone on this panel in particular -- let's raise our hands -- you know but that's what people are saying. they are looking at this cloud business and that as the way of the future.
now finally we are getting to see real numbers behind that. >> mike flipping back through, we heard from howard schultz on starbucks. is ultra premium brings that he might be launching just a marketing thing or is it going to be significant to their -- >> i think everything starbucks does is a marketing thing but it could also be long-term greedy in terms of marketing. i think they have to do something. they have so many stores. ubiquity is already there. it has to be kind of layering on top of it. >> how do they get this kind of growth? they've been around forever. they seem a bit saturated. yet look at the numbers. >> well they're great operators. anybody who's grown the way mr. schultz has grown this company has to be a great operator. he of course had that jerry maguire moment when he came back and talked about how long it has to take to make that drink and the experience and the smell and all. then he got back to making money instead of worrying about the smell as much. the smell of money is always better than the smell of cup of coffee. >> i will take another side of that, but you need the money to buy it.
still ahead on the "closing bell" -- is the pentagon ready for guys like these? the hbo sitcom "silicon valley" spoofing the tech life of the department of defense wants a piece of the action. we'll explain. space may also be the final frontier but the state of south dakota is telling people forget about all that traveling to mars. come instead to the wildzs of the west and their selling point is jobs and oxygen.
is the department 6 defense trading in suits and ear pieces for hoodies and smartwatches? the pentagon reportedly launching a cyber strategy push out in silicon valley in an effort to recruit top level talent and bridge the gap between the west coast and d.c. does the pentagon stand a chance against top tech giants when it comes to recruiting. joining us is sam hooly from riviera partners. what's the silicon valley reaction to this news? >> thanks for having me. it's an interesting play. i think it's going to take some time because one of the conversations i can see going like this. someone picks up the phone and they say, hi this is bob from the pentagon. would you like to come work for the government? and they are going to respond, yeah, i have a ping-pong tournament in half an hour and massage in ten but let me get
back to you, and by the way, i make $1 million a year so i'll have to do work at some point but it is something that's going to take time. it's certainly worth doing. tons of talent here. not just talent here but pervasive in tech across the country. something we'll have to start now or we'll never ever get there. >> sam, you don't think the pentagon could tap our patriotic sensibilities saying cyber is part of our national security. we need you. feels like rosie the riveter. >> important for national security and intelligence. it's a conversation that will have to take some time and have people understand that there are those opportunities. sometimes they need an opportunity to win in tech in the valley or elsewhere, and then they can earn that spot. >> the first thing that occurred to me it would really be going back to the way the defense industry was built in the first
place, defense contractors. the whole california economy was based on that and now it's startups and a loft. you can draw on that heritage when you look at the big tech players still. >> that's a point. >> the competition for these players is intense, and expensive. so the government is going to pay up and give you the same sort of upside that you would get by going with a tech company. i don't see it. >> the only way i see or one way that it could potentially work well is to get people very young, get a diverse group of people interested in technology and may also benefit from working for the government because perhaps they haven't been introduced to technology or this type of work that they could be doing that could service the military. starting organically from the very beginning, from the high school or younger, that is where i think you really need to start to get people invested in that rather than wait for someone to say, okay after i make my first million i'll think about it. >> that's a really interesting point. why not, a, have the military
schools developing this kind of talent or b, go to the schools which are and recruit there? >> that's a great point. israel does it with the idf. there's lot of great engineering talent coming out of countries like israel. we should start to do that. as well the government should be's dwroer do business with. there's a perception it's tough with the first you know healthcare.gov site and someone from google comes in to fix it. if you can get that perception broken. this is the perception all companies have the perception of working at that company. the government is the same thing. >> we'll see how they pull this off. thanks a lot sam. good to see you. >> thanks a lot. >> mars i is aiming to colonize mars by sending those volunteer astronauts to the red planet for the rest of their lives. south dakota is taking issue with that plan and they are asking why die on mars when you can live here? up next the panel on whether they would prefer or mt. rushmore.
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who signed up recently to take a one-way trip to planet mars goal being to build awareness for the state of south dakota and hopes of attracting new residents. should we do a would you rather? south dakota or mars dr. j? >> south dakota. south dakota is a fun place. >> south dakota is great. do they really need this kind of campaign? >> i don't know why they would need it because they have been on the list of best states to retire for a very long time from a lot of places topping florida, topping arizona in some ways in terms of the crime rate and terms of the low taxes so there are opportunities there for people maybe for later in their careers, but i think they are trying to get people now young in their careers wanting jobs there right now. >> fair point. >> mike? >> i think they said south dakota, plenty nice place to live. wouldn't be talking about it right now. the attention that you get saying it beats mars is probably a clever way to do it. >> right. is this mars thing for real? >> that's the other piece. we were just talking right before this about some training programs that they have going. >> they have already taken kind
of reservations essentially. people saying they would be willing to do it. "new yorker" magazine this current issue has some thing about helping how people might deal with an eight-month voyage to mars. >> i'm reading here some m.i.t. researchers did a big report on this on a permanent settlement on mars which they said is quote, not feasible. humans could only survive for 68 days, so yeah. dr. j, you first, in terms of traveling to the red planet. we'll be right behind you, for sure. >> i don't even like long flights, an hour and a half is fine with me. i'm not a big fan of the 12 and 15-hour flights on an airplane. >> agreed right there with you. a couple seconds left. quick, what are we watching? >> the most expensive tickets ever. pacquiao/mayweather, average ticket price $11,000. >> oh, my goodness. >> sharon, you going? >> no. i don't think i'll be at that particular event. i'm still looking at what we're seeing in terms earnings and
what this means for people who may not realize you own it. in your 401(k) you're involved. pay attention to the sglerngs not a decisive breakout. everyone was watching. 19th day out of 46 we crossed the 2100 line in the s&p. maybe we get another one tomorrow. >> we'll leave it right there. thank you so much this afternoon. that does it. no mars on "closing bell." "fast money" is coming up right now. >> no mars. live from the nasdaq market site, i'm melissa lee. two huge stories. blowout tech earnings from least biggest names on the nasdaq on a day the nasdaq composite hits a new record high. google soaring despite missing on both the top and bottom lines. amazon hitting a fresh record high after hours on a top line beat and guidance says the stock is turning and microsoft higher on a soiled beat all of this happening the nasdaq to record highs. team coverage on all the conference calls as the headlines roll n.plus comcast and time warner one of the biggest media deals of the year could be going bust possibly as soon as tomorrow.