tv Squawk Alley CNBC April 28, 2015 11:00am-12:01pm EDT
♪ the milkman ♪ the paper boy ♪ the evening tv ♪ everywhere you look ♪ everywhere you go ♪ there's a heart ♪ i to hold on to ♪ everywhere you look ♪ everywhere you look good tuesday morning from a windy and chilly san francisco. we are still live here at one market. our new studios in the city by the bay. joining thus morning, jon steinberg, ceo of the "daily mail" north america and with us, john ford, kayla tausche, cold enough for you guys? >> and the chimes are going off? >> this is san francisco. yesterday, i don't know what that was. >> and to think that we're wearing sunscreen after yesterday. >> what a show we have today. joining us in the next hour is a great line-up, former yahoo president sue decker and the president of linkedin, john
hoffman. we begin with apple, shares sliding after hitting the all-time highs, revenue and profit did top expectations after the company sold over $61 million iphones, up 40%. apple saying it sold more iphones in china than the u.s. for the first time ever. tim cook talked about demand for the apple watch outstripping supply with our own josh lipton saying it's a relatively better problem to have, one we know how to fix. >> i think that why the stock might be trading down now is people feeling how it could possibly get better. 20% of iphone users upgraded to the iphone 6 or an iphone 6 plus, in a relatively short period of time. so replacement is there. when they launch the iphone watch, there's a lot of signals that what's to come. and gave the tv hint on the call. citing changes in media that we can be part of.
>> this was a piece of sound that you flagged for us, this is tim cook on the conference call last night. >> i think we're on the early stages of just major, major changes in media. that are going to be really great for consumers and i think apple can be a part of that. >> major, major changes in media, jon. what does he mean? >> i don't know what he means and i don't think it's a good idea to focus too much on that when i've heard tim cook talk about the media area in the past, he talks about it somewhat cautiously and pragmatically. not like he's willing to bust in and try to shake up some of the content and cable players, which we see verizon doing with the content players as it is. but i think the iphone performance was truly extraordinary. they did add a million units of iphone inventory. they're within their target range, unlike last quarter. it looks like to me now, throughout this fiscal year, the iphone sin credibly strong.
its next fiscal year when the comps will be difficult. now that they're within the target weeks of inventory. if you're looking for little things to worry about, no need to do that. amazing quarter. but ipad was really weak. and here's a category where i think early on, apple wanted to see will this perform more like the ipod or more like the iphone. the ipod had some big quarters and have huge drop-offs, you want it to be more like the iphone. it's proven to be more like an ipod. tim cook says they can get did moving again. but it will be a challenge for them to do it for sure. >> we've heard analysts on our show in the past saying what apple does so well is it kills its own product categories with its new products. that's perhaps what it did with the larger iphone 6 plus to the ipad. we've been debating that for a long time. i think a lot of people are rightfully not only looking at the iphone and the sales that are up year over year, but also the average selling price went up by $62. to $659. showing that not only can they keep the revenue growth in that unit, but they also can raise
the price, too. >> yoe if you want your older products killing your new products. they've got the new mac book, it's very celine sleek. think it compete with the ipad. and you bring out your ipad, you sell millions and millions of them and your older products come in and kill it? i'm not sure tsa what you want. tim cook says they can get it growing again. think that's what they want. >> tim cook is a harvard business school case study. he said on the call. cannibalization will be what it will be. that's a very bold statement for him to make. we look at ipad versus iphone versus the laptop. people are replacing, look at the switching that is going on. they highlighted on the call the number of people switching to android, they're 16% to 18% of the smartphone market share. i was out for din wer my dad, showed him my watch. he went over to wireless carrier, canceled his contract so he could get an iphone and get the watch. >> does it reflect the belief in some that apple pai will be a
dmaun starter. that it doesn't have the future that the company clearly hope it is will have? >> i think if you're really interested in apple's ecosystem strength. look at the services line that apple turned in in this quarter. just a hair shy of $5 billion in the quarter. annualized run rate of america than $20 billion just for that business. it continues to grow, it's not cyclical, because it kpoubds upon itself. anybody who is worried or pessimistic about apple pay is barking up the wrong tree. >> five billion services for apple. $6 billion run rate for amazon web services, two big numbers we got in the past week. more bad news for google. more bad news for google. the two people that weren't seen as direct competitors are growing and getting better at the cloud services stuff. while google continues to grow at a relatively modest rate. >> tim cook talked about apple pay merchants tripling over the course of the product's lifespan. some news that i think got drowned out by earnings this week. cramer mentioned it this morning.
the addition of discover to apple pay. now that was the only credit card company that had been outstanding that hadn't signed up for the service, it's probably more of a benefit to discover necessarily than moving the needle for apple. it basically can say now it has all of the major credit card players on board. they also added best buy. which is -- an incremental development. i think compared to adding tens of millions of card holders, you know. >> that's interesting. you know more about this area than i do. but for me, the fact that best buy was in this mcx consortium, that was supposed to be avoiding apple pay like the plague, it was supposed to be writ noon the contracts from what i understood. the fact that you have best buy saying we're doing apple pay. that's clearly a synergistic relationship. people who have iphones buy a lot of electronics, you wonder if this is the first domino to fall. >> we'll see if walmart joins the party. plenty more tech earnings to look forward to tonight. samsung, go pro and twitter after the bell.
positive. the guidance on marvin us willt information that people will follow. >> that's absolutely. think if they put up just something that's modest. high single-digit millions, it will be enough to kind of pacify people. >> john, thanks for people. >> good being here. cool. >> jon steinberg from the "daily mail." >> meanwhile shares of ford under pressure after the automaker missed on the top and bottom line in its earnings. but the company's comments about the rest of the year paint a more optimistic picture. let's get to cnbc's phil lebeau for more. >> we'll talk about some of the comments in just a little bit with bob shanks who is the cfo of the ford motor company. joining frus the headquarters in dearborn. let's talk about the first quarter. what did wall street miss? because you guys fell short of estimatesments and we talked a little bit earlier today about perhaps the communications with the guidance in advance was not
as clear as some on wall street would have appreciated? >> well we didn't miss on the pretax operating profit. we were pretty much in line on that there were two areas in difference in terms of profitability on an after-tax basis. our tax rate was higher than what the average of the first call estimate was. and on the top line in terms of the revenue, our revenue missed and that was largely due to the fact that the street didn't fully appreciate the impact of the stronger dollar on the revenue of our international operations. >> and that revenue, obviously impacted by what's happening with the currency in europe. bob, i want to throw up a chart of ford. i'm not expecting to you sit here and say look, everybody should go out immediately and buy shares of ford. when you look at ford and general motors, your two stocks relative to the rest of the auto industry, you get no love at all. i'm not expecting you to comment on general motors. but for ford investors, they might be looking at this and saying, you're delivering the profitability that people are expecting and yet, there's not the love that's being returned.
in terms of investors buying more of the shares. >> well i think they're going to love the balance of the year, particularly in the second half. and that's something that we talked about today. we also talked about it back in january. based on our product launch cadence, particularly in north america and in asia pacific and new capacity that we have coming onstream in asia pacific at mid year, we're expecting the story of the year to be breakthrough. but built on very strong performance in the second half. so stay tuned, because the second half is going to be very strong for ford. >> quickly you're expecting a richer mix in terms of the f series to continue for the second half of the year? >> you know that's one of the great things i think that we're sharing with everyone today, is we're seeing, we're much more optimistic and positive about the expected overall performance of the f-150 american performance. it's based on our expectations that the mixes will stay at one somewhat richer levels than what
we had expected, once everything normalizes and we've gotten good news on cost as the program has completed. we feel strong about the f-150. we won't miss a beat in terms of its contribution to our profitability in north america going forward. >> bob shanks, cfo of the ford motor company. on a day when ford as you heard bob say, they fell short when it comes to the bottom line, three cents shy of estimates. he points out that look, the tax rate came in higher than many on wall street were expecting, that's their reasoning in terms of the explanation behind the miss. guys, back to you. >> all right. phil lebeau, i'll take it from there, great interview. ford shares still under pressure by about .33%. as the overall markets have been climbing back into positive territory, they've been weaker on the day. dow down 121 at the lowest. nasdaq down about 1% as well. we did get a weaker-than-expected consumer confidence number. but case shiller for february came in a touch higher than expected. shares of merck rallying after
earnings topped expectations, first quarter profit did fall 44%, but merck is still one of the biggest gainers this morning. up by about 5%, carl. quite a move. given all the other earnings names we've seen in the parade. >> best day for merck since january, believe it or not. ton of great names joining us here on "squawk alley." on tap for the next hour, former yahoo president, sue decker, the co-founder of linkedin, reed hoffman and the ceo of t-mobile, john ledger, dow recaptured gains. ♪ if you're looking for a car that drives you... ...and takes the wheel right from your very hands...
advertising market. this disruption accord doing yahoo's former president, sue decker in a post on her blog. she sits on boards of intel, costco and berkshire hathaway and she joins us here at one market to explain what's happening in the online ad market. it's good to have you here. >> i appreciate being here. >> even though you say there are an increasing number of
start-ups chasing this market, the incumbents will end up having the larger slice of the pie. why do you say that? >> i look at market now. you say the top 15 companies globally have 70% of the online ad market and they've been growing faster than the market. actually if you look at last year, the top 15 companies grew 21% in aggregate and the market grew 17%, what's left? the only 30% is only growing 3% right now. happening at a time that it's never been easier to start a company and get funded and there's all sorts of companies out there that will eventually be trying to feed off the trough. >> you're saying what facebook was able to, do the way it was able to wedge itself into that share previously, was an abberation? that that can't be recreated by snapchat or pinterest? >> i wouldn't say that, i think the advertising dollars follow users. and so, those companies that come up with products that are attracting users will attract dollars. i think the key issue for my perspective is, if you look at the companyies out there that
have gone profit, it's taking longer and longer to get profitable on larger and larger user bases. >> in the days of yahoo and goog it will took 30 million years. facebook took seven or eight years and 300 million he'sers to get profitable. it doesn't can count all the private companies that are starting now. the pool isn't growing fast enough to support the different companies that want to feed off of it. >> might you be optimistic? some of these companies may never get profitable. there are a couple of strong players, apple and samsung that have been able to suck all the profit out of that and they're getting increasingly strong. in cloud you've got amazon and microsoft and a lot of others struggling along. from a macro perspective you get a look at a lot of companies. what are you seeing in the companies in the mobile and cloud era in advertising getting a lot stronger while the others fighting for scraps may or may
not even have businesses that survive? >> well i think what's hard to say now is so many of the financings are private companies, private companies are staying private much longer and so, the visibility and to just how well these so-called unicorns are doing from a financial perspective is pretty limited. what i would say is something has to give. either advertising-related companies are going to, some of the wind is going to come out of those sails in terms of valuation, or they may start pursuing more of a subscriber-driven business model. we're starting to see that. and i think that that could offset the slower ad growth. there are companies like link linkedin, survey monkey. or evernote. but for the power users, certain parts of their product, people will pay. that's what happened in traditional media. back in the days of cbs, abc, nbc, all ad models and over time, cable came and the consumers started paying like
comcast and major companies today drive only about 25% of their business from advertising. it's very possible that other models will pick up the slack. but i think the ad model is getting long in the tooth. >> what about the top down. we had concerns about some scattered markets in television, do you think ad spending in general is robust in this country? >> ad spending in general is predictable year to year. it gross in line with gdp. it's about $550 billion on a global basis, think it's grown 4% per year for the last ten years. but it tends to rise and fall and why is that? because advertising is based on a projected sales level. png, the major marketers in this country, auto companies, they figure out what their sales are going to be and increase their ad budgets similarly so the budget itself, ebb and flow with the economy. but it is, all of these new forms of advertising like internet they're not causing the whole market to grow. they're taking share from other forms of advertising. >> interesting in our
conversation about advertising we mentioned facebook. you mentioned alibaba and google in your post. the name that couldn't come up is yahoo, where you were president until 2009. what does that company look like after it spins off alibaba, figures out what to do with japan? how big is the core business in your estimation? >> you know the core business is a relatively small percentage of the stock price now, people might debate whether it's $5 or $10, but it's not a big part of the total. the challenge is you guys earlier were talking about twitter user numbers and things like that. what twitter's done in the last couple of years even in the face of slowing user growth is it's driven its revenue peruser up more than two times, it was less than $2 peruse anywhere 2012 and it's more than 5 now, yahoo in 2008 generated $13 peruser, a little above where facebook is now, today it's sr. half that they're having trouble monetizing their users and figuring out what ultimately is the product that's going to make
it sing. and it's a challenge. >> i know it's a big question that's looming. we appreciate your take this morning. thank you. >> thanks for joining us. >> thanks for having me. >> former president of yahoo. >> we're going to get europe's close in about nine minutes. to that, let's go back to simon hobbs and count it down. >> this is an interesting session in europe, for the record, uk gdp slowing down in advance of next week's general election. but the big picture here is the losses that you see on your screen. it probably shouldn'te this way. the message coming out of the greeks is really good, the greek prime minister did an interview last night on local television where he suggested he'll have a deal on the table with the rest of europe by a week on saturday. and may have to hold a referendum if it's really full of austerity. so we could in theory have rallied on that instead what you've had is throughout the session profit-taking in particular on those stocks that have done very well so far this year. so look at airbus, which is down 5% on the session. still for the year, year to
date, up 37%. and st microelectronics, up 24%. people see that the euro is stabilizing and moving higher again the dollar. maybe it's partly a call on that health care stocks are also suffering from the profit-taking, you see it on this side of the atlantic for one and a half trading sessions andnd you see is in europe. merck, the german merck reported above expectations today. banks also active today. commerce bank is down after a capital increase to bolster its ratio. the real interesting one is deutsche bank down again today in the wake of the restructuring. "reuters" is reporting that co-ceos were looking at turning deutsche bank into the goldman sachs of europe. investment banking and kmernl lending and ditching the retail operations, but they found on their models if they did that they kept failing the ecb stress test. it wasn't stable enough. banks down, europe down, guys,
back to you. >> thank you very much simon hobbs. get you an update on these reports regarding iran and a u.s. cargo ship. dom chu has more back at hq. >> we're going to try to clarify the details here. when we do know now is there has been a cargo ship seized in iranian territorial waters, but it is not a u.s. ship. what we know per a department of defense spokesperson is that iran has seized a ship, but it's the "mersk tigress" that's a danish shipping company and the "tigress" was flying under the marshall islands flag. per the same defense department spokesperson cited by "reuters," there are no u.s. citizens aboard this ship. however, the pentagon is also saying there are u.s. military presence in the area and that they are monitoring the current situation. that chart that you're looking at right now is nymex crude oil,
you can see when the reports first came out, that pop, that spike in crude oil prices, we've now given up pretty much all of those gains. we're now flat on the session for crude oil. so john, just again to be clear, per a pentagon spokesperson there has been a seizure of a cargo ship by iran, but it is the "mersk tigress" a danish shipping company's shipping vessel, flying under a marshall islands flag and right now the pentagon is saying per "reuters," that there are no u.s. personnel aboard the vessel. so again a very developing fluid story. for right now that's what we know and what we don't know. john, back to you. >> thank you for that important update. moving on, the nasdaq near the flat line today, not far from the highs, that has a lot of people asking the question is tech overheated. we have the ceo of unicorn, the creator of microsoft ventures, his gaming company unicorn
announcing a partnership for e-sports and legal gambling. when we first talked about this weeks ago, i hadn't realized how big e-sports had gotten. the terminology, just the scale of this. it's pretty amazing. talk about your long-term vision for how big people watching other people play video games really is going to get. >> first let me talk to you about last year, just to give you some context. 205 million people watch e-sports. e-sports are organized sanctioned tournaments, live gaming tournaments. 205 million people watch them and 40% of those people don't even play games. what's super interesting is, like i'll sort of describe to you an event. i went to an event in san jose at the where the sharks play. you go to the arena, you're sitting in the stands, and you're watching sort of a game show type atmosphere. so on the where the ice is,
there's five on five teams playing against each other and they set up these huge elaborate television displays so people can watch. but you know there's probably like 10 or 15,000 people in the arena. where it gets crazy is there's 300,000 people watching online and it's not a three-hour event, it's a three-day event. they're watching online. they're chatting with each other, they're super engaged and it's all weekend long. >> what's unicorn's place in that? >> unicorn, we have a series of communities, so we've grown our communities from about 2.5 million users to 9 million users. gaming communities and we've built an arena where people can gather, game and bet on e-sports heelly. >> so europe is going to be the place where the betting takes place at this point, right? because in the u.s., you can't do it. how big a piece of the revenue is that gambling going to be? >> i think it's going to be the lion's share of the revenue. i would say that it's actually, if you you ask me rather than asking what places are legal, i would tell you what places are
not legal and really u.s. is problem lit biggest area where it's not legal yet for spectator betting. but we believe that's going to change. >> there are only so many nonwork hours in a day. i'm wondering the increased amount of time that people are watching e-sports, where does it come from? does it come from traditional tv or social media? >> it comes from traditional tv. if you wonder why kids are not in the living room watching tv with their families, they're in the bedroom, watching games, playing games and watching other players, learning how to game on youtube and twitch and places like that. so it's completely changing, like it's a generational thing, right? >> is this a threat to sports? because i mean they're probably not going to stop watching spongebob and watch this this is an adreb lynn experience? >> i wouldn't call it a threat to sports, but i would say the amount of viewers on e-sports is about the same amount of viewers as on nhl hockey.
in 2017 we believe that e-sports will be as big as the nfl. it's only getting bigger. what's interesting about e-sports sit a global viewing audience. you know whereas the nfl is mostly u.s., right obviously people around the world watch it, but it's mostly u.s. e-sports is global, always. >> how long before we see nike and under armor the equivalent, if it's the oakleys of the world, the people who are making headphones, sponsoring these e-sports athletes, for deals worth millions and millions of dollars? >> there are companies that are doing it. razor, hp, lodgitech are getting involved. intel is heavily involved. skull candy. companies like that are heavily involved. you will see more mainstream. red bull, coke larks companies like that will get in within the next year or so. >> it's come a long way since the madden tournament in your basement. >> it is unbelievable. >> we've got plenty of great
guests for you at one market in sfoext linkedin co-founder reed hoffman will join us. and shares of t-mobile revenue topping estimates, that stock back in the green. up by 1% and ceo john legere is with us. "squawk alley" will be right back. but what if you could see more of what you wanted to know? with fidelity's new active trader pro investing platform, the information that's important to you is all in one place, so finding more insight is easier. it's your idea powered by active trader pro. another way fidelity gives you a more powerful investing experience. call our specialists today to get up and running.
the death toll in the earthquake that devastated nepal rising above 5,000 people and the neighboring cities of kathmandu are beginning to pick up their damaged homes. trying to salvage anything they could rescuers were seen using heavy equipment to remove debris as they looked for survivors. as japanese prime minister abe meets with president obama at the white house, investigators in japan are investigating a possible attack on an army base in tokyo. two iron pipes were planted in the ground about half a mile from the base. 12 people were killed when heavy rains sparked two landslides in eastern brazil. rescuers searched through debris for bodies and survivors. four people were found alive. an experimental shingles vaccine appears to work well in older adults, researchers with
glaxosmithkline are reporting that their vaccine is 98% effective in seniors over the age of 70 who are often at risk for the virus, that's our cnbc news update now back to "squawk alley" and 74. reed hoffman joins us this morning live at one market along with our own julia bor. >> we're looking for the seismic shift that's in play right now. what is it to you? >> well i think that we're actually as companies are happening in silicon valley, actually still think we're at
the very early innings of how technology is going to change industries and software is transforming the world. you see unbundling of banking, you see essentially creation of new kinds of financial products, the creation of a number of different marketplaces, as much as heated activity as you see, think we still have a lot more to come. >> so do you think we're in a bubble or are there signs of a bubble? i know we were talking a little earlier about valuations, what do you make of the valuations? >> there's a ton of high valuations, you think there's a bubble. the thing is we're now living in a networked age. as part of a networked age. companies grow much faster, they can acquire customers and revenue. some of the valuations are actually appropriate for certain companies. the trouble is i think distinguishing which companies are actually going to be you know benefit this year, next year from the networked age and which ones are are going to take five years, ten years or not benefit as much. that's the reason it gets complicated on the choice of it
being a bubble. >> one of the head-scratchers for a lot of people is this phenomenon that companies are now basically guaranteeing returns to some investors there was a lengthy profile about box in the "wall street journal" about when they did a round last summer about their ipo, then when they went public they were able to basically offer more shares to the investors, because they, the value of the company went down. does that raise any red flags to you? are you seeing that as a more widespread practice, the guaranteeing of returns in exchange for money? >> that's been a classic trade of the kind of growth private equity. so that kind of financial engineering is actually classic for private growth equity and high scale. that's actually nothing new. we don't do it at graylock, we say look, we just bet on growth. we do on valuation, we don't try to engineer our returns into the vast majority of investments, that tool has been around for decades. >> are we reaching a tapped-out sort of state in the advertising arena?
i know you do not just consumer internet bets, you do also enterprise, linkedin just bout lynda, a nice revenue stream potentially, i imagine can you do things like people who have your career path, were able to earn 30% more after getting these skills. how would you like to take these courses. is advertising as sue decker was suggesting, maybe a little more tapped out and people need to be paying attention to other revenue possibilities? >> so actually i still think we're in the emily days of figuring out what are the right kind of advertising products for online. so you know part of what people are saying banners and you know, that kind of thing. that's all not very interesting. and of course google figures out search advertising. soy think the question is what is the innovation look like? if you say current model, might it be flattening, tapped out? very possibly. but part of what's really interesting about kind of being in the network age and building software is we're just one idea away from a massively new
product which then could of course, have you know, rocket ship possibilities. >> all you need to do is tell us what that is. >> i'm working on it as an investor, who knows. >> sue decker made the point that it's taking companies, especially in advertising right, longer to turn a profit. longer to monetize customers. but because they're staying private for longer, we don't even know how, where we are in that process. does that worry you? >> that doesn't worry me partially because look, as a venture capitalist, as an entrepreneur, i like -- >> you can see the books. >> and i like to actually have enough time to really build an incredible amount of momentum behind a company. so that's actually very positive. i don't think, none of the companies that i'm associated with are having anything that i would, that i would quantify as problems in this. >> now, air bnb is a different kind of business, it's a marketplace and it sounds like you're very interested in investing in more marketplaces like airbnb. why are you so bullish on that
type of business? >> marketplaces are the heart of what capitalism is how do you put buyers and sellers together. when you take the internet marketplaces like ebay, alibaba and airbnb and butt them together. you take out all of the friction and complication and you make a pure play that increases productivity, allows small players to participate, it creates better products and experiences. so marketplaces are one of the things that we're still going to see transformations. back in the day, ebay and alibaba are the only marketplaces and now you've got airbnb and i think you're going to see more in the future. >> any new companies you can tell us about? >> a company called eatwith. turn your homes into restaurants. homes as restaurants. we invest in a company called liquid space, essentially renting like meeting rooms by the hour. so for a sales professionals and other kinds of folks trying to book things on the road. all of these kinds of companies we think have great prospects. >> you've invested in a couple of bitcoin companies, one
investment by yourself personally. and another in a vc fund. why are you bullish on bitcoin? >> bitcoin i think is like the invention of the internet. which is an open tech platform. that softwares can build on top of. i think that bitcoin presents the first infrastructure layer that financial applications can be built on top of globally. now whether or not it happens or doesn't happen, it's very high beta. but if it does happen, it's world-transforming. >> we talked about the challenges of being public. apple is a good example today. blow-out quarter, stock's in the red for the morning and now icahn tweets, apple still undervalued an misunderstood. expect to put out another in-depth report in two weeks. do people out here want to deal with that? >> not really. you build for the long-term, you try to build companies for three to five years, the ten-years, weekly, quarterly, that's the wrong timeframe. >> reid, got to ask you about diversity in venture capital.
there's been a lot of attention to that since the ellen paltra. at greylock, how important do you feel it is? you with your stature and having done as many things as you have, are in a unique position to push this issue forward and to -- how do you look at it? >> we think it's critical. both in investing partners, which we're working on. and also, entrepreneurs. and the pipeline. because the pipeline to vcs comes down to founders, executives. you have to do mentoring there. and you have to work as hard as you can to actually make the industry will benefit from diversity. so how do you make that happen. >> how do you increase the pipeline of diverse applicants to jobs? the one recurring theme we hear from all of these ceos is of course i want a more diverse workforce, it's a matter of actually attracting them to the company and having them be qualified for the job. >> in interviewing you make sure on every key position you interview some diverse candidates for the position before you say okay we've made a
hire. you're committed to the very first interviewing. and then as you go through, you do mentoring on the way up to make sure that the right kind of diversity has the shots at the promotions, at the new jobs, at venture financing, at executive positions, you have to work the entire pipeline. that's the only way you're changing these issues. >> none of greylock's investing partners are women. >> not yet. >> it's your 50th anniversary this year. what are you going to do to change that? how important is that? >> we have engaged for over a year on a massive recruiting effort. we're working on it. >> great. >> apple pay, you've had obviously experience at pay pal. you're an vooor in shop kick. how important are the moves they've been able to make, adding discover, getting best buy to sign on. how much room does it leave for other who is want to make the leap forward in mobile payments, particularly in bricks-and-mortar locations. >> i think there's room for others, because there's more than ios in terms of mobile
ecosystems. i do think that the real impact of how payments is affected by mobile is still tbd. like apple pay is a perfectly interesting product. how do you begin to bring presence and identity and a bunch of other things that are part of making the os layer into it, i think it's still tbd. it's a great step forward, but there's still a lot to come. >> reid, great having you, reid hoffman joining us at one market. when we come back, shares of t-mobile doing okay, in the green after revenue did top estimates, the ceo of t-mobile, john legere will join us
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guest. >> yes in fact we are he doesn't live in san francisco, either. >> no. >> came here just for you guys. >> john legere, ceo of t-mobile. our guest a long way from the new york stock exchange where we last saw you, but nice to have you here. >> we moved our earnings here, we did them this morning so we could be part of cnbc launching itself out here on the west coast. plus i had to come congratulate jim on his wedding. >> thank you very much. you're very sweet, very nice. >> you'll be joining him as well for a little more conversation on "mad money." let's start with earnings, they look good, the market reacting relatively positively. i guess the question starts to become, we look at the market share changes taking place in the industry and clearly you've been quite successful in taking customers, but verizon and at&t are not just standing still. neither is sprint. i mean they are competing and it would seem competing more fiercely perhaps than it originally were when they weren't taking you quite as seriously. can you continue this kind of moment snum. >> yeah, listen, let's put some numbers on it though, we had 1.8
million customer additions. eight quarters in a row, not two, three, eight quarters in a row over a million. 1.1 million post paid nets. and a million post-paid phone net ads, that's all of the growth in the industry. five quarters in a row we've led the industry in post paid phone growth. at&t and verizon, sprint will report next week, they're all negative. with that we are only about sst big four, 16.5% market share so plenty of head room to grow. most importantly this quarter post paid churn was 1.3%, which is an all-time low for our customers, so the uncarrier moves are causing customers to come. churn is low because our network is moving extremely well and frankly, i think at&t and verizon are doing what they do. it's not resonating with customers, think we've got huge head room to grow. competitively. let me give you one stat. post paid porting ratio, they
don't want to talk about any more. the reason they don't want to talk about it is overall with the industry, in q 4, we are 1.7 to 1. pretty good. q 1, we were 1.93. it's april, so far we're running 2.2. with the entire industry. so the trend continues and i think we got tremendous headway to grow. >> i've asked you this question before when you've talked about the growth ahead, which is are you constrained in terms of spectrum and/or capital to be able to continue to grow at this rate? it's a question you always get for fair reason. >> you know right now, we have twice as much capacity per customer than at&t or verizon. so we're in a very good spot. the question is really about low band spectrum. the spectrum that penetrates building and goes to rural areas. we have 275 million pops of lte now. we'll have 300 million by the end of the year. we have 190 million pops available of 700 megahertz of
low-band spectrum that we're deploying and 157 markets of wide-band spectrum, lte, really fast. the big next play of course is the low-band broadcast option scheduled for early '16 in washington. the rules associated with that. and when i think about our economy, i think out three to five years, our company, while we have nationwide low-band spectrum that we won in the auction early next year and what that does to competition and what it does to the footprint between us and -- >> are you sending a message out to the fcc just there, john? make sure the rules are to your advantage? >> you're down in washington, do you like what's going on? where do you think this competition is coming from? i mean do you really think that verizon is investments in their network and xlt came because they just woke up and thought hey -- by the way for five quarters in a row we had the fastest 4g lte, verizon is
close, but we're still the fastest. and nobody is disputing it. now the question is what happens when the footprints are the same? we're the fastest if we have the same footprint. >> fastest because you got fewer people on network. >> are you on the network? you guys on the network? it's smoking fast. it is smoking fast. and by the way, we're adding customers at a rate that is much, much faster than everybody else. how about this one, do you know this quarter, we added three times as many post-paid phone nets as at&t has added in the last two years. i mean these are numbers you can't ignore. and it's eight quarters. so dumb and dumber, are in big trouble. you know. >> dumb and dumber. >> what used to be big and bigger. >> how much of what's happening is because of your marketing? and i say that because i think a lot of people at home are saying you know what, this guy is breaking the paradigm
personally. and are the people you're adding younger? >> yeah, we resonate very well with millennials, i think some of that is obviously because of unlimited data and how they use data and the way we're approaching them. i think overall here's a fun fact. we've done nine uncarrier moves. and an uncarrier move is a move intended to change stupid, broken arrogant industry and it's intended to be permanent and we want everybody to change. no contracts, any time upgrade, international data roaming and this freedom resonates with young folks. my favorite part back to david's question about how much room can we grow is it's stunning, between 10 and 28%. those numbers. low, right? those are the awareness levels in the united states amongst wireless subscribers of the changes we've made. so when somebody goes overseas and all of a sudden realizes that international data roaming is free, they're still going, you're kidding me? i didn't know that.
we've got tremendous head room to grow, especially with young people. that you know like the young, cool, hip, well okay. >> i get it. >> your marketing needs to be even more aggressive than it is? if they're not getting that message? >> listen, i am, my behavior is indicative of a maverick challenger company. and i and the brands of the company are exactly the same. from a standpoint of being more aggressive, more advertising will be aggressive. it's going to be right back in the face of verizon. about us versus them on network. uncarrier moves. uncarrier 10, absolutely. coming so fast that i'm sure over there in big and bigger land, that they're sitting together right now wondering what to do. and right behind it. we're going to keep putting it to it. #wewon'tstop. >> dumb and dumber, big and bigger. i watch an ad, the sprint cut your bill in half. i think i want my bill cut in
half. why doesn't that worry you? >> did you notice it doesn't add t-mobile to it. it says we will cut your at&t or verizon bill in half. let's give credit where credit is due. i think marcello claret is doing great things. said this before, he's swinging the bat. i don't know if these things will work, they're innovative and he's trying them. but on the other hand as it relates to t-mobile, the porting ratios with sprint q 4, 2.1 to 1. q 1, 2.45 to 1. so far in april, 2.75 to 1. so they're not coming from me. and if he can take some share from dumb and dumber, i'm all for it. go for it good for the country, good for competition. >> john, there's many people who still believe you have a selling shareholder, namely deutsche telecom which controls the company and there's some speculation now, given our parent company's inability to
buy time warner, that perhaps you'll see talk if not eventual action of a cable company and a wireless company getting together. is that in your opinion, something that could or should happen? or makes some sense? >> listen, i make three points. one is deutsche telecom which i think today is trading at about 17 euros 30 up from about 8 euros previously. think they're very happy shareholders, they're clearly focused on europe. they're very pleased with what's going on. they're certainly open to alternatives, but i wouldn't put them in the fire sale. >> they did spend $50 million for voice stream a while back. >> they'll make it back and then some. second i've always said consolidation in the industry is not a matter of if, but when and how. i want to add a word to it it's when and how and who. and i really believe that the u.s. needs to think of an industry structure that is not just the four wireless players, but start to understand that social and content and
entertainment is going to the internet. and the internet is going mobile. you need to start thinking about adjacent industries in a totally different way. you saw what google is doing in moving into this space. and frankly, cable players, trying to move content, wi-fi adjacent to unlicensed spectrum and mobile. totally makes sense. so i mean yeah, it's not put it right in the boat. could a cable player and a mobile player come together and deliver much better things for customers? absolutely. >> now i see the watch you're wearing. and we know last night apple reported its numbers that are pretty extraordinary. >> he loves mickey mouse. >> i do, too. >> his feet move, it's really cool. >> i do like that when you think about that and you think about google and project 5, is everybody a carrier? >> in some fashion. everybody is trying to get their stuff to people and every part of your body in some fashion is going to have, it's the internet of things.
and importantly, what i see from my company is, i'm very focused on what we do and i'm somewhat neutral at this point, i'm not using my own balance sheet to try to buy my way as dumb and dumber into every piece they want to control. which makes the innovators in those spaces that are trying to get to mobile customers, highly interested in creating partnerships or alliances with people like myself. it's an exciting time. >> i want to get your answer, dish under pressure from the fcc in terms of the way they got the discounts for the auctions. do you think a that there will be an outcome here in terms of them not being able to buy them? or were you upset with the way they went about it? you competed in that same auction. >> i think the designated end of the item needs to be understood bet aernd by the time we go to the next auction, rules need to be adjusted. that's one of them. i saw the quick word this morning about whether there's a discount or not. that doesn't mean they'll be able to acquire the spectrum without the discount.
there's great spectrum there. in the category of things that i think about is what would i do if i woke up tomorrow with that spectrum? i could have a ball. so there's some fascinating possibilities there. >> all right. john, great to see you again. john legere, david faber, jim cramer on the "squawk alley" set. jim you'll have more with john tonight. >> i may adopt a color scene. change my tie at least. apple shares back to the flat line on the back of the icahn tweet. and . . . exhale. .. aflac! and a gentle wavelike motion... ahhh- ahhhhhh. liberate your spine... ahhh-ahhhhhh......aflac! and reach, toes blossoming... not that great at yoga. yeah, but when i slipped a disk he paid my claim in just one day. ahh! so he had your back? yep. in just one day, we approve and pay. one day pay, only from aflac. [duck snoring]
big day? ah, the usual. moved some new cars. hauled a bunch of steel. kept the supermarket shelves stocked. made sure everyone got their latest gadgets. what's up for the next shift? ah, nothing much. just keeping the lights on. (laugh) nice. doing the big things that move an economy. see you tomorrow, mac. see you tomorrow, sam. just another day at norfolk southern.
tomorrow on "squawk alley," dick coslow of twitter and bill gurley of benchmark. now to headquarters and wopner and the half. thanks so much. welcome to the halftime show. today we're following two major stories. apple hitting the record high after its blow-out earnings report and president obama about to meet the press. with japanese prime minister shinzo abe at the white house. we'll take you live to the rose garden when that event begins. there's plenty of focus on japan. you have the