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tv   Squawk Alley  CNBC  April 11, 2019 11:00am-12:00pm EDT

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good morning. it is 8:00 a.m. at uber headquarters in san francisco and "squawk alley" is live. ♪ ♪ >> good thursday morning.
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i'm carl quintanilla, with morgan brennan and jon fortt. morgan's hanging in there. we'll begin with the ride hailing giants today. lyft shares are higher today but continue to trade well below the ipo price. down nearly 15% in the last week alone as we await uber's debut now. investors expecting an s 1 later on this afternoon. with us to break it all down, jason calicanos. welcome back. good to see you, again. >> good to be home, carl. how are you? >> good. i've been wondering what jason thinks about lyft having worked it's way down from the mid-80s in just a few days. what are your thoughts >> everybody gets a little obsessed about ipo pricing and it's super exciting. what we see here in silicon valley, these stocks are now trading in the private market for a couple of years before they go public. it's not that big of a deal for us. i get offers every day for my
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shares in uber or thumbtack. there's a whole secondary market going on -- >> i'm glad you're okay. i'm glad you're good. i'm wondering what you tell people who bought at 80. >> if you're buying stocks to flip them and you get burned, you're a gambler, and you get what you deserve. let's be clear, you're gambling. i think you should be looking at these stocks and trying to hold them for five or ten years because we always overestimate what these companies can do in the short-term and we underestimate what they can accomplish in a decade. don't worry about 10% or 15% in the first couple of weeks or days. it's meaningless. take a alonger outlook. >> which begs the question, there's a lot of focus on whether lyft shares have been falling recently because there's this expectation going uber next month -- going public next month. what should folks who maybe want
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to buy these and hold them for long-term do do you invest in both? do you focus on one? we talk about them both because they're ride sharing but they are essentially two very different companies. >> i made my bet over ten years ago when i was the third or fourth investor in uber when it was a $5 million company. i have a horse inthis race. i always bet the leader, i think. we have a google, yahoo, facebook, twitter sort of situation here. one of them is going to be the leader of the dual opoly. the person who's in the lead is going to have more data, more pricing power and more network effects. the fact that you can get off an airplane anywhere in the world almost today and take out your phone and get a cab at a great price with a great service just like starbucks went across the globe, ubers gone across the
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globe. obviously i'm bias. i have a horse in the race. >> a fast horse at this point. >> yeah. >> how long do you keep that horse once it wins the race for you? a lot of speculation around who exactly was selling lyft, probably some people who had been holding the stock for a long time. you've been holding uber for a long time, how obligated do you feel to keep holding all of those shares that you've had all this time? >> well, you know, i always take jim cramer's advice, you want to be diversified. i gave massa a little bit of my uber shares. i'm not suggest that massa ipo is what we should be doing here in america. we should be boycotting saudi arabia until they solve the human rights issues candidly. what i've learned from my friends at sequoia capital is, a lot of times the growth that we see after the ipo, specifically google, amazon, netflix, apple,
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you want to hold those companies and i believe the uber story's just getting started. >> all right. we'll watch it obviously closely. hopefully our viewers take your advice. we'll turn to disney unveiling it's challenge to netflix today and add free monthly subscriptions to disney plus expected to launch later this year. bob iger making headlines with harsh criticisms of social media saying, hitler would have loved social media. it's the most powerful marketing tool an extremist could ever hope for. to help us dig through this today, julia boorstin's here in los angeles. "the los angeles times" says november. do we believe that >> they'll make it the kind of thing where you get a free trial period and really trying to get people to subscribe and start paying around christmas. i think this is the kind of thing where people go to the
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theme parks a lot around the holiday season. >> any sense on what pricing could be >> iger has said it's going to cost less than netflix. the most popular netflix service is $13. the cheapest netflix service is $9. so i think it'll be in the $6 to $8 range. >> is disney doing this right you think, jason i know we talked months and months ago about your grand revision, kind of like a membership, rap in the parks not just the movies. where do you think this should head >> service to hit 250 million subscribers, double what they have today, but i think disney will be the first to hit 500 million subscribers and i think there's no doubt that disney will become the leading candidate a decade from now. it's a horse race, but what this is going to do for disney and bob iger is amazing for being so
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candid about social media and he's right, but what's really amazing i think is what bob iger has done in managing this transition. it's a classic innovator's dilemma. now they have to lose that revenue in the short-term, but what they'll gain is not just the revenue of the disney plus service, they'll get all that data and then they're going to have hundreds of millions of credit cards online and netflix -- netflix doesn't have a theme park. netflix doesn't have an advertising business. netflix doesn't have a merchandising business. what's going to happen over the next decade, you'll see disney buy every piece of laup at a price that netflix could never pay. apple is going to be a complete disaster. they'll fail that service in the coming years. they'll be a nonplayer. disney will exceed netflix in the next ten years. >> maybe jason's talking about
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espn and disney plus, because disney's got a lot of irons in the fire. >> it does. disney owns a majority of hulu, it could buy even more of hulu, it also owns espn plus which has been pretty strong and i'd like to point out, hulu plus has been growing faster than netflix in the u.s. this year. that's pretty remarkable. how big disney gets really depends not just on how much it cost but also on how much content they put on there and iger's been very clear that they're going to charge an amount that's fair for the amount of content. to go back to what jason was talking about with iger's comments about social media, in a lot of ways here iger's really positioning disney plus as the antiyoutube as well as the antifacebook and as facebook moves more into content -- >> apple, facebook, disney, youtube. >> yeah. remember, facebook is investing more in content. facebook is about this open platform and sharing of content.
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disney plus is all about premium safe content. you know exactly what the brands mean. you know what you're getting and there's no ads. two different worlds here and it's going to be real interesting to see, jason mentioned disney will have all this data for advertising. this is not about ad targeting. this is about subscription and premium content. >> jason, i remember when the knock on disney was that they were not tech savvy? do you remember that >> absolutely. >> you've got magic bands in the park and they're about to leverage this streaming opportunity. >> yeah. the big players move slowing and when they take a step it can have a big thunderous impact on the street. it was scary for them to lose these existing revenue streams, the data -- the ability to have 100 million credit cards on file is really powerful. we've seen this with amazon
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prime and apple pay and apple icloud and the app store. this is just going to put massive wind in disney sales and they'll get closer to the customer and really the companies that excel in this new century are the ones that are closest to the customers and the closest way to get to your customers is to be on their phone and have data about them and this solves all those problems for disney. >> jason, i think owning that direct to consumer relationship is very valuable for disney and the real thing to watch here is whether disney can use this streaming service to continue to drive people to go by tickets to its movies and continue to drive people to the theme parks and not potentially cannibalize it. people are going to go and buy tickets to the next "star wars" movie in december and say i got this great service on streaming.
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>> bottom line, in light of this entire conversation, should disney be trading at a higher multiple >> i'm not a day-to-day trader. i will say if i had only five stocks that i ever could buy in my life, disney would be one of them. i would buy it and hold it for a lifetime. your kids, my kids, your kids' kids. they're all going to be watching this incredible marvel industrial complex they built over the last decade. they're all going to watch the "star wars" films and the velocity in which they're creating this content has gone up. we got three "star wars" films over 20 years when we were kids. now there are dozen a year and six of them are from marvel and disney. i think this is the company that wins it all in terms of entertainment candidly and i think netflix is in trouble. i think this is very, very hard. if your kids come to you and say, can i have pixar, marvel and "star wars" or orange is the
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new black or whatever's on netflix, it's a very easy choice. >> not a fair comparison but we get your point. >> thanks. finally let's talk a little amazon. the company confirms a report this morning that a team of its employees listen in on alexa recordings taken from users echo speakers transcribing and an-tating those conversations in an effort to improve the software. in a statement to cnbc, amazon said we only an-tate an extremely small number of interactions from a random set of customers in order to improve the customer experience. we got the shareholder letter out as well. where bezos talks about echo being always on. is this an opportunity or liability? >> i own six of these devices and none of them are plugged in. i can assure you that these systems are hackable and i can assure you that employees are abusing their access to them. the reason i can assure you of this, we only need to look at
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the history of facebook, irs and google where employees have been caught over and over looking at their ex-spouses or boyfriends or girlfriends or celebrities instant messages, tax returns, whatever it is. if there's a system that can be abused, it will be abused. >> why do you have them then >> it was a mistake. i bought them, i played with them. i'm a technologist. i don't think you should have these in your houses, and i would say i'm 70% sure that the alexa devices have already been hacked by putin and the nsa, julian assange or china, maybe not julian assange any more because they picked him up today but thankfully because he's a hacker. he's not a journalist. and i they these alexa devices are too dangerous. >> of course, there are human beings listening to the recordings on echo devices. that's how you train a.i. there has to be a human involved validating what the a.i. thinks it's hearing. i think fundamentally and part of what we try to do on cnbc,
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certainly on "squawk alley" is bring people a sense of how this technology works. that's fundamental right now to how this is working. it's humans plus machines and the only way you can be sure that the machines are getting better is by testing them against humans. jason, do people get this? should there be some warning label that comes with these devices even perhaps letting people know, here's how the technology actually works? >> i would say the defaults matter and that what -- if i was jeff bezos right now i would default all alexas to have this feature off, the training data feature off and then i would allow people to opt in to it and give them something in exchange for opting in for training it. we're all being opted in to a great security and privacy experiment but we didn't actually sign up for it explicitly. it's buried some where in the terms of service. you'd have to be pretty naive to think that this couldn't be hacked or it hasn't been hacked
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and, you know, the more important you are and the more important the information you have, whether you're a celebrity or a politician or a ceo or an investor, you know, the more of a target you are and it sounds crazy to think that, you know, investors or ceos might be targeted or celebrities, but look, everybody's iphones got hacked and corporate espionage is just at an all-time high and the chinese and the russians, they have real reasons to get into this data and -- i know i sound like a ludite, the idea of having everything you say always recorded is probably the mistake that we're going to make as a society. we're basically building our own police state. i would not buy these devices and i would unplug them if you have them until such time as you decide that your privacy's not important and what you're saying is not really that important and you're fine with it being
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exposed or they take an apple-like approach where nothing is stored and it's all processed on your local device. apple's long-term privacy plan is the winner. it's just that the other data companies haven't been called out on their b.s. yet and their nonsense. >> the googles and facebooks and amazons are being called out now and they should be. >> yeah, yeah. that was a good few minutes with you. didn't get a yum yum but i assume that would have been for disney. >> yum yum on disney, yum yum on disney and yum yum for uber. >> thank you. after the break why amazon could be the big winner amid the tech ipo rush and speaking of which, we do have another ipo here this morning, pager duty. we'll talk to the ceo in just a few minutes. the ipo priced at $24 last night. right now it's poised to begin trading some whe bwe 3reeten8 and 40. we'll bring you all those details.
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those images, lyft says it's going to spend at least 300 million between this year and 2021. uber is also an aws customer. so when that ride hailing giant files that s 1 today investors will be very interested to see how big a check it's writing to jeff bezos. i did catch up with byron dee r deeter. he lifts aws strengths. first mover advantage, aws pioneered infrastructure as a service he says capturing many early tech innovators as customers, including the unicorns we see today, a strong platform meaning aws started with the basics, storage and compute and launched many services on top of that such as analytics and finally, competitive pricing. don't sleep on other cloud giants either. deeter says microsoft is making big strides, especially when it comes to hooking in those
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enterprise focused start-ups with a compelling product and aggressive pricing. don't count out google either. spotify when it went public did detail how it relies on google's cloud and google's new cloud chief, said this week he's ramping up his sales force so he can be harder with his rivals. there's a ton of money up for grabs here and the cloud giants are fighting hard for it. garton says the public cloud market will grow nearly 20% this year to $214 billion. morgan, back to you. >> josh, thank you. speaking of the cloud, government contract work it's done at two companies and the battle for a major contract. amazon and microsoft for its winner take all so-called jedi cloud contract. this is a program that could be worth as much as $10 billion over ten years. it's been seen as controversial. there have been protests in terms of the bidding process
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from oracle and ibm which have been dropped. we should confirm a resolve. we've confirmed with the pentagon earlier that the winner may be announced as early as july of 2019 but there have been investigations in terms of this entire process. i think the big takeaway here right now at this point in time, guys is that it really is going to be a dog fight between amazon and microsoft for one of the biggest next security focused defense focused contracts for the government which does really represent a new opportunity in terms of modernization. >> yeah. seattle wins either way. that's cloud central. good stuff. another ipo to get to this morning, pager duty. the ceo is going to join us next after the open, but before the break, let's take a look at the top performing stocks in the dow so far in today's session, boeing, walmart, jpmorgan chase among th. lomo "squawk alley" still
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welcome back. shares of lyft are higher this morning, up about 2.5%, but trading well below the ipo price. down nearly 15% alone in the last week. of course, investors also waiting another big ride hailing ipo soon, uber, expected to file its details later this afternoon. joining us now is paul holland of financial capital as well as mike isaac who's book on the company is now available for preorder. super pumped, the battle for uber which will be out this september. gentlemen, good morning to you both. paul, i'll start with you in terms of this filing that we're expecting from uber later today, given the fact that the company is not profitable and i think there's an expectation that that will continue to be the case for some time, what will be the key metrics for investors to watch especially in light of how we've seen lyft play out publicly?
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>> well, i first have the disclaimer that we invest in the company about four years ago, so i have no new knowledge or nonpublic information or anything like that. i read the same thing you guys do or i read the things that mike writes. that said, you know, the company is an extraordinary company, just in terms of where they've come from, what they've done in the time frames they've done it and they've blazed a path that hasn't been done here before in the silicon valley in terms of raising the kind of money they've raised, staying private as long as they've done it and going after such a large market opportunity. it's very exciting for everybody to see the outcome here. >> and, mike, i know you're chronicling this in your new book but it's pretty incredible to think about uber going public with a valuation of as much as $100 billion, yes i realize that could be lower than expectations based on reports we've seen in recent weeks, but it speaks to a rise for a company just two years ago was incredibly scandal
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plagued, let's talk about i guess that reversal and the fact that it just seems to be firing on all cylinders coming into this ipo >> it's really -- it's really incredible. i think it really speaks to, honestly, something that investors and executives at the company have been saying since the beginning which is uber works even despite itself sometimes and the product market fit really was there from the beginning. in the early days in san francisco when it started, the founder and later travis would want to get around the city and just couldn't and, you know, despite the rumors of the culture and this bro mentality that a lot of the executives have had over the years, people love using the product and it's a product that really works. uber has been able to overcome a lot of the baggage that it's had and soar back into this huge valuation.
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>> mike, two years ago a lot of people probably would have said hubris is the biggest threat to uber. what's the biggest threat now? >> a lot of investors or a lot of wall street at this point is going to start looking at the growth trajectory of this company and for a long time uber was hailed as silicon valley's fastest growing tech company in history. everyone just started using this product from the very beginning and uber has been doing this thing where they're semi-private, semi-public company. they've been reporting quarterly results for the past few quarters over the past year and we're starting to see that growth slow just compared to the mediocre rise from before. the street is going to look at what are those additional lines of business. we're looking at uber eats, the food delivery business and uber
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freight, the trucking management company that uber now offers which is a large area of growth and the thing that the ceo is really positioning uber as, as this amazon of transportation. it's not a ride hailing company, it's more a ride hailing platform and that means there's tons of different markets they can enter from here beyond just the core ride hailing business. >> that's interesting. paul, i wonder, if you are trying to evaluate this as a new stock to buy, this and lyft, would you be most interested in those supplemental business lines or is this really in the end about autonomy and trying to remove the uncertainty, the expensive nature of the driver >> i think -- those are both very good points to look at. i think i'd step back and look overall at a very simple metric which is market size. this is a thing we discuss with you guys over and over again when we look at a company like a netflix going out and disrupting a trillion dollars media
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marketplace. if we look at what facebook did which is created hundreds of billions of dollars marketplace within social media and then now you're in a company now that's going after a multi-trillion dollars transportation market. one of the things that excited investors about getting involved with uber so early was exactly what mike indicated, incredible product market fit. the san francisco market kind of grew at this rate and as soon as they went to other markets they grew like this if that makes sense. they grew vertically and that was fascinating. this is one of these extraordinary companies that was potentially going to blow up four or five or six multi-billion dollars businesses or disable those businesses, disrupt those businesses. businesses like taxi, rental car, freight, delivery, ultimately the car industry itself. there are people now that are looking at the car industry and saying because of ride sharing we may have met peak car ownership at least among this demographic. this is changing the entire way
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that people move things around and the only thing you need to know or remind yourself of that is if you're an uber user as i've been lucky, i've been to 63 countries around the world, you go around and go to place that's don't have it and you see how much you miss it. >> yeah. gentlemen, we'll leave it there today. we'll talk about this much more in the weeks to come. >> thank you. european markets just closing. sima modi is back with us and joins us now with a look at today's action. >> higher across the major averages after talks overnight between eu leaders and british prime minister theresa may culminated in a flexible brexit extension. this means that the uk now has until october 31st to depart from the bloc. that deal boosting a number of beaten down european travel stocks. travelers can now book for the key holiday season without fear of being stranded with a no deal. budget airline easy jet which has 40% of exposure is on pace for its best day pacing the
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gains for european stock. this is a stock last month that hit a two year low amid fears of a no-deal brexit and then take a look at ryan air rally more than 5%. travel agency company tui one of the best performers. while the brexit threat was kicked down the world, today the italian budget watch dog warned of strong downside risks ahead echoing the comments yesterday when the ecb chief said recent figures confirmed slowing growth momentum. that certainly seems tonight narrative for now in europe. carl, sending it back to you. >> thank you very much. let's get to sue herera and get a news update as well. >> good morning, everyone. here's what's happening at this hour. federal prosecutors say attorney michael avenatti has been charged in a 36 count federal indictment on fraud and tax evasion. charges in southern california,
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michael avenatti tweeting he will plead not guilty to those charges saying he looks forward to the truth being known. new zealand's governor general formerly signing into effect sweeping gun laws outlawing the military style weapons. this as a buy back program will be announced the now banned weapon. >> this will last for at least six months. there's time for people to notify us of the intent to hand in a prohibit the firearm. details of the buyback compensation scheme are still being developed. when that finalized, we will announce those details in conjunction with government. north korean leader kim jong-un appearing on state tv heading a meeting of the country's top officials urging them to stay strong in the face of sanctions. the meeting was with the central committee of the ruling workers party. you are up to date. back downtown to "squawk alley," carl, back to you. >> sue, thanks. tomorrow do not miss bob
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iger. it begins tomorrow at 9:00 a.m. eastern time on "squawk on the re." we're back in a moment. california phones offers free specialized phones... like cordless phones,
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and accessoriesphones for your mobile phone. like this device to increase volume on your cell phone. - ( phone ringing ) - get details on this state program call or visit rick santelli has got the santelli exchange. >> good morning. thank you. wow it sounds loud there.
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it was a wonderful interview that joe had vice president pence for quantitative easing or interest rates was once again highlight highlighted, larry kudlow many have been calling for 50 basis point cut. after they just complete sentences regarding 3% growth for a while with regard to the u.s. economy. what do we see today we saw today that jobless claims breached 200. it goes back to i believe october of 1969. we saw the fifth largest month over month change in ppi in ten years, up .6. granted ppi doesn't have the same impact as cpi but the point of it is, if you look at jobless claims, you think about job creation, yes, we've had a couple of months that were rather light, the surprise openings was all the way down for a 7 million handle which not that many years ago was unheard of when we were in the 5 million camp.
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the best way to explain this is, that markets in the economy can only be understood fully backwards, but they must be studied and lived and traded forwards. okay hindsight, foresight and incite because the big calls today are trying to really pin down what the fed is going to do especially with regard to inflation, but you can't pin something down that is being studied in present realtime. the data today does call questions with regard to inflation and jim grant brought up how even actions and reactions were unaware could have large unattended consequences. it may sound silly. he brought up chicken nuggets. if interest rates are low and you overbill the restaurants or you overbill the warehouses or factories, the products coming out for a time are underpriced but sooner or later reality hits. and finally, the trade deal hasn't influenced markets. look at them. think about it.
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counter fac chalz. how do you we know that if there was no trade negotiations the dow might have been at 35,000. we don't know. but one thing we do know is that it definitely seems to get more buoyant every time we hear about a possible trade deal being completed. carl, back to you. >> rick, thank you very much. rick santelli. you might have heard some of the enthusiastic cheers here on the floor of the exchange. pager duduty has opened for tra just behind us on the floor. the ceo will join us in a few moments. cloud computing raised their range from 21 to 23, up to 24 and, of course, currently trading 37 and change. nice gain as the ipo market gets another notch in its belt. >> it took a while to open but it is open and up, of course. it's just been a few minutes but it shows how the enthusiasm around these ipos ebbs and flows. this one getting quite a nice reception. >> yeah. for anybody that's been noticing the bouncing green man behind us, that's the mascot.
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this speaks to in general, the ipos and the companies we have seen go public over the past year or so that have been focused on the cloud that have been focused on tech from an enterprise standpoint have tended to be the ones that come out of the gate the strongest. >> page is actually right behind you. >> pagey. >> for those of you in gen z pagers existed in the early '90s before cell phones. >> it takes me back to candy crush and grubhub and some others. by the way, if you saw jeff bezos's shareholder letter today, he essentially dares his competitors to pay employees as much as amazon does and now, head of corporate affairs at walmart has responded by saying, hey, retail competitors out there, you know who you are, how about paying your taxes as the war of words between these two rivals gets hotter. >> it's a timely burn as we approach april 15th.
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>> i like the use of emojis, too. dow is taken a tumble lower. for a while there boeing was holding us in the green but we're down a quick 55. back to 2883. back in a moment. of course co.
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i'm brian sullivan. here's what's coming up on the halftime report. the recent round of ipoers creating a big opportunity for you, but maybe not in the ipos
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themselves, we'll explain. and the metal in mining stock that just got slammed by an analyst. the rare double downgrade. that's your call of the day and it all starts at the top of the hour on the "the halftime report." john, back to you. >> see you then, thanks. another unicorn going public this morning, pager duduty openg for trading just moments ago right behind us at post 8 right now trading about 38 bucks a share. up more than 60%. the software developer provides support to a long list of clients including box, netflix, spotify and yelp. joining us now is the ceo, jennifer, congratulations. >> thank you for having me, jon. >> the way i think of pager dduy is you're looking ought all of the digital operations in a company and analyzing it, contacting the right team to come and fix it before it blows up. how do you explain it and who the competitors are? you mentioned splunk in your s1.
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>> if you think about the world's day, we as consumers expect every experience to be perfect every time. you wake up in the morning, you order your coffee online, you check slack to communicate with your team, maybe you take a lyft into work. sitting behind all of that is a lot of complexity. many digital and infrastructure based platform that's don't always work together the way you'd expect them to. as that complexity has proliferated over the years because developers can deploy what they like, it's gotten harder for human beings to really manage the entire week system even as your demands increase. you want it perfect, right now and you want it the way you'd like it to be. pager duduty is the platform th brings the right problem to the right person at the right time. we use machine learning sitting on ten year's of data, data on people, humans behavior, all these signals that are happening through the system and it really helps the developers that sit behind these great experiences deliver the right experience all
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the time. >> your revenues were up 48% in the recent nine month period, losses just grew 21%, so that's good, i guess from an investor perspective. also, you're a pretty small company still. we don't see a lot of companies this size going public. >> going public is right time for us right now because, one, there's an opportunity for us to deliver the power of our platform to users all over the world. we are a small company and we weren't as well-known as we could be and this is a great opportunity to extend our brand and help developers and employees across teams in i.t. security, customer support to deliver better experiences for their end customers all the time. >> it's a little bit off topic, i have to get your thoughts on it because pager duduty was stad by former amazon employees and you are talking about that intersection between a.i. machine learning and humans. i realize your more focused on the enterprise side of this, when you get a report out there
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about, you know, echo devices that are listening in, employees listening in, how do you think about that and the guidelines that are there and maybe not there and need to be where a.i. is concerned as we move forward in this world? >> we take customer trust and user trust very seriously. we publish our data policy. we will not use data in a way other than what we describe online. we care deeply about the relationship between our users and our platform and our belief is that machine learning and data should be used in service of making people better, helping people do their jobs more effectively and delivering those great brand experiences every time. >> you're getting photo bombed fiercely there, you know that right? who is pagey really quick just so we know >> so pagey has long been a mascot of pager dudutpagerduty. the person behind pagey is someone who won a contest and earned the right to be in new york with us to celebrate.
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it's about making sure that our users understand that this could be a good thing, being woken up in the middle of the night if it's for a right problem and it's a way to deliver a much better experience for your customers is okay. >> big morning pager duduty trag 39 bucks a share. jennifer, thanks for being with us. >> thank you, appreciate it. and silicon valley legend will join us right after the break. be right back. what if something bad happens? we just move to the next town. just ok is not ok. especially when it comes to your network. at&t is america's best wireless network according to america's biggest test. plus, buy one of our most popular smartphones and get one free. more for your thing. that's our thing.
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welcome back
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as trade talks continue between china and the u.s., chinese negotiators reportedly offering to open up some access to its cloud sector joining us with that and a lot more, tom siegel, chairman and ceo of ctio3 good to have you. >> good morning. >> we talked a lot in the past and you mentioned you're not doing business in china, or you weren't at the time because of concerns of ip protection. as we look at the trade talks, is it going in a positive drikts >> i think it's definitely going in the positive direction. i think the president has a lot of leverage over china if they don't grow more than 6%, the government gets overthrown and we don't face that problem so the president has leverage, he's using it and that's a good thing. >> what's the concession that you need and guarantees to feel
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comfortable bringing c3iot >> we will not do business in chienia. we have a massive scale, industrial defense, ai and we're more with china on the ai front. china is in massive state sanctioning intellectual property theft and we're not playing that game. >> in the military and on the heels of that president trump comes out and basically pits china against the u.s. and called focus google of ai and tech and you agree >> i'm not sure i understand the question. >> a couple of weeks ago you had testimony on the hill, the chairman of the joint chiefs called out google in terms of their ai in places like china, the fact they're indirectly helping the chinese military and it caused quite a stir
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but when i hear you talk about the fact you're never going to the market, you think it will be the same way >> i think we have a u.s. silicon valley built by the u.s. defense and that is unwilling to cooperate with the u.s. department of defense and at the same time is willing to cooperate with china on their defense intelligence initiatives. i find that unconscionable >> so we had on our air this agreed on some enforcement mechanism, which would be interesting to get details on, and then the headlines opening up the cloud sector. does this feel like headway? >> i think opening akous to the alibaba cloud make it's that much easier for the chinese to walk off and basically steal intellectual property. >> so you don't like that headline >> i'm not sure it's a bad thing but i am certain it makes it
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easier to steal intellectual property. >> you're not trust and verify, you're at distrust and verify? >> i believe it is a war and this is a war you do not want to lose. >> what happened to the mindset of the silicone valley tech wch, where we see these movements inside companies, certainly in google, move up north to seat l, talk about microsoft, pockets of employees, not all employees, who have issues with doing work that benefits the u.s. government to what degree and should companies push back against that or define their standards so that it's clear how the companies and the government work together? >> i think many of the leaders and the technology, jeff bezos, satya, have stood up and said we're not going to deprive the united states government of our technology and certainly most of the leaders have stood up, looked in the eye and said we're
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supporting governments and support of individual liberty, hard stop. >> is there a line because post revelations around the nsa and kind of what they did with technology, there was a lot of distrust that rose up around silicone valley. is there companies that need to say where they draw the line >> i think distrust of government is a very healthy thing. i'm all for it. >> is it your view in five years, you see where it's going to turn into a real war, not that we're military analysts here. >> well, vladimir putin said in sochi that whoever wins the -- basically the battle in ai dominates the world. i think it's true, and it's not going to be russia and it's going to be china or the united states. i think we have a classic case here of this random free enterprise system being pit against the commands and control
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economy, and let's hope we don't lose this. losing it will go to a bad place. >> stakes extraordinarily high in ai and 5g tom, thank you for being with us, tom siegel, founder of ct 103. we will see the rebounds and if we recovered this afternoon welcome to the halftime report i'm brian sullivan in for scott wapner we're right there on the eve of another earnings season. the question is it time to buy into a sector that bragged at the broader market, the financials j.p., pnc all report tomorrow s this the financials lagged over the one month, three month and six-month time period, second worst only to energy. this as the s&p is back within


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