Rules. And bazooka, remember the company that makes gum . It is looking to stay fresh in the candy business. All that and more over the next hour. But first, carol massar. The push to the cloud seems to be paying off. The thirdquarter net income was . 68 a share. The average estimate was . 63 in profit sales. 20. 4 million. Missing analyst estimates roughly for the Second Quarter will be breaking even the three cents a share. Analysts predicted a nickel a share. Amazon rose during its first quarter, limiting profit to . 23 a share on sales of 20 billion in line with analyst estimates. Back over to you. Lets learn more about amazon. Com. Jon erlichman is in los angeles. We also have the cofounder and chairman of media morph. And with details on the amazon tax, we have a researcher who is finance professor at ohio state university. He joins us from columbus, ohio. Jon erlichman, what went on in terms of the details of amazons business . We know that they have been willing to sacrifice shortterm profit for the growth of the business and have so much dominance in the world that is the amazon supermarket today. No change today. The company that generated 19 billion in revenue and suggests in the coming quarter, they will take a loss because they are spending so much. On all different fronts. They are battling netflix and content deals in hollywood. And expanding their offerings in grocery. For a set price for people that use their prime service, you can a boxful of dry goods and get those coming. They know they are the shopping choice for many these days. They want to be that choice handsdown. You have worked with some of the biggest Television Companies in the world. I know youre an expert in terms of how companies can leverage all of these new technologies to make even more money. Talk about the platforms that amazon has. What about Cloud Services . I hear this is a big moneymaker for amazon but it flies under the radar . Is not just a big moneymaker, its a high margin of business for them. If you take a step back and try to define what Business Amazon is in, its not just a retailer or a device company. Its not just a company that provides entertainment. Amazon is in the business of captioning shares of the consumers. Everything it does allows it to go get more and more money from your wallet whether it is gross fees, pantry service, amazon fresh. The new fire tv or kindle devices everything is trying to capture a larger share of the wallet. A lot of the pieces would go to taxes. But not necessarily when it goes to amazon. Com. David, you have looked at taxes and amazons business. What have you found . A state that transitions to forcing amazon to collect taxes forces a decline in amazon sales. They all show the decline of about 10 . Jon erlichman, does it seem as though amazon has not been playing fair . We know you have to have a physical location to collect sales tax but governments are not happy about this. Some have said that you are paying the sales tax. That is true and amazon has been doing their part to battle on certain fronts and try to get the best service they can with workarounds. Even if it means shipping stuff from outofstate. This company is driven. They are at a point where they have such scale for their various warehouses that allow you to get you stuff really fast and they like that. They sure serve the customer well. They keep spending so that they dont have to worry as much about those battles in washington. Sales up more than 20 for the quarter . A 20 billion a quarter run rate for amazon right now. Come in this idea of what they are trying to do. They really want to really level the Playing Field by running over everybody. I mentioned that they are looking for world domination. This issue about taxes, take the time value of money. The amount of money it saves you by not going to a grocery store, looking for parking and the avenues you can go to and click. 45 pounds worth of items. It saves you a lot of time and money. Amazon has not been able to be profitable doing that. It is not measured on profitability, it is measured on revenue growth. At some point in time, they will have to be measured differently. But that is not the case right now. Do you know when that would be . Do the investors have patients . If you are invested in domination, you invest a lot more. The next thing is going to be the amazon phone. It will require a lot of investment. They are really changing the game on how they are viewing the government. And ideas to compete with apple. Amazon is a smart company. They will come up with a unique device. And with the fire device, they control your living room. The definition of mobile phones have changed. They are remote controls for your life. Could that be the kind of thing where you talk about the wallet . It takes a chunk out of communications that you have on a monthly basis and curving revenue. David, you mentioned taxes. Does amazon enjoy an unfair advantage measured against local businesses . Not only local businesses but other online retailers. Walmart. Com and target. Com, they collect sales taxes. They are at a competitive disadvantage against amazon. Is there any monopoly law amazon runs afoul of . We need to ask the lawmakers. This is a decline in sales. We see a larger decline of 300 or more. It seems that this is a big competitive advantage for amazon against brickandmortar retailers and online retailers. I want to thank you gentlemen very much. A researcher at ohio state university, from media morph, and Jon Erlichman our senior west coast correspondent. Amazon could also be taking a hit from the sec over internet rules. The commission is proposing to allow broadband providers to charge Companies Access to the fastest lanes in the internet superhighway. The idea is already causing a lot of consternation among consumer groups. Peter cook has more details. What is this all about . We use the term Net Neutrality but nothing is neutral in life anymore. There is debate on consumer groups and open advocates. They say what the fcc is doing is a complete abandonment. Treating all web content and all web traffic the same way the fcc chairman has a different take. The sec has tried twice to put Net Neutrality rules in place. The federal courts effectively tossed those out. They are trying a different approach. Once again saying Internet Service providers will not be able to block access to any legal web content. But they are raising the idea that providers could charge a premium to companies that want their content delivered at the fastest possible speed. Think of netflix. It will decide on a casebycase basis if each deal is commercially responsible. The broadband providers, it is not what consumer groups have wanted. Including one from public knowledge, they say that they are asking them to pick winners and losers. The essence is discrimination and the core Net Neutrality is nondiscrimination. They have been promising to challenge this proposal. This is headed back to court. Tom wheeler is already defending this plan. It is pretty clear the sec did not anticipate the push back right away. He made a statement in response to some of the first reporting. He insisted he is not surrendering on Net Neutrality. There are reports that they are flat out wrong. There is no turnaround in policy. Again, it will be the sec that decides on a casebycase basis. Not just with consumer groups but democrats on capitol hill who feel strongly about this issue. He may have trouble convincing fellow democrats where he stands and this was a Campaign Pledge in 2008. No doubt you will be following this for us. Coming up, microsoft released its results on the chief executive a first time look. We will figure out what went right and what went wrong. That is next on taking stock. Microsoft Company Releases its results, the fiscal third quarter. The first earnings are released under the chief executive. Microsoft topped estimates as it pushed in the Cloud Services, Cloud Computing appears to be paying off. Joining me now for more insight on microsoft is the Senior Analyst with bloomberg industries. Lets start off talking about what is a cloud service. If you go out and start a new business today, you by servers, you will have an army of computers. He put software on them and you do stuff. Yes. Suppose all you had to do is call microsoft and say, can i rent this Computing Power from you so that my computer when i login, the local drive i have is on the cloud. That is also running on someone elses server. They go up and down based on your needs so that you dont have to go buy new stuff. If you are a television station or Radio Station and you are supplying content, it is viewed in the home or anywhere people want it. But it resides at the place of broadcast, the place of origination. Why is this such a high margin business . Once to get to a point of scale, it is a highly scalable business. A media size company, you by a number of servers and you store the content. Multiply that by 200 or 100. And that particular entity can do it at a much lower cost per unit of whatever that Processing Power is. A lot of the things you dont even need actual servers. You just need software to create the server when you need it. And you just turn it off when you dont need it. A company when it goes dark at night, you can use that particular capacity which is what amazon does. Or microsoft. And when they are serving this to someone else, they make sure that it would never go off on that and. It is a Good Business for everyone that has the scale and the ability to penetrate clients and say you have been doing business with us for a long time. We have the legacy Client Server and all the tools that you need to manage the cloud, manage the servers, manage these things for you. Thank you for helping us understand what is going on. Coming up, there could be gold in your old computer. We will find out why the market for vintage computers is heating up. That means money. This is taking stock on bloomberg. Im pimm fox. There was a time before amazon. Com, even before microsoft. If you never throw anything away, if you are one of those people, there could be treasure in your basement or attic. Old computers are valuable collectibles. Joining me is the owner of the website vintagecomputer. Com. Great to have you with us. Tell us how you got into the world of vintage computers. It goes back to a purchase you made of an ibm pc. Absolutely. It goes back to when i was a kid and was saving up for a computer. I wanted an early apple ii. They wanted an ibm pc. In 1981, we got one of the first ibm pcs available. That machine started me on my professional journey and my collecting journey. There is nothing like combining a hoarder and a geek. What propelled you into collecting this . I know your heart is embedded in a lot of other Circuit Boards as well. It is all about nostalgia. Even before then, i was constantly browsing through the really old magazines. And in a geeky way, kind of lusting after those machines that i cannot get my hands on. Fast forward and this little website called ebay comes out. These machines i couldnt afford that i really wanted are available to me. I want to go through some of the specifics. 1971. I dont think there will be a viewer that recognizes them, but in 1971, they wanted a computer like i did. He did not have the option of going down to the store so they decided to sell one in the back pages of scientific american. 750 dollars would have gotten you a machine with 256 bytes. It is a really crude machine by todays standards. Lets bring this up to the late 1970s. The altair 8800 was the first really popular computer. It was announced on the front cover of Popular Electronics in january of 75. It prompted bill gates and paul allen to write for that machine because i know that the apple ii is a favorite of yours, too. It is a whole different genre. I got a signature of mine and i heard him say couple of times that that was his favorite of the Apple Computers and he did not have to compromise. The commodore pet. 2001. Contemporary of the apple ii. The first computer i ever wrote a program for. A bunch of geeks you still have the computer. Well done. The owner of vintagecomputer. Com. This is taking stock on bloomberg. This is taking stock on bloomberg. Im pimm fox. For a look at todays market moving headlines, i want to go right to my radio cohost carol massar. We start with starbucks, raising the profit forecast this year. Sweet, x images, and the rewards program with 8 million u. S. Members roosting domestic scales sales. The shares higher than the previous forecast. In the meantime, topping. 6 in the meantime, topping estimates to one point 6 billion. Las vegas sands also reporting results. The Casino Company beat analyst estimates as they continue to soar. In the Garment Industry and around the world, it was one year ago that an eight story factory building collapsed in bangladesh in the heart of the 20 billion Garment Manufacturing industry. Over 1100 people died. Today, there was a protest calling for punishment of those responsible for this disaster. The origins transformed by the ethical clothing startups having taken out fullpage ads. We have the cofounder of zady. Maxine beta. And scott, executive director at the Workers Rights Consortium that recently returned from bangladesh. Scott, what is the situation in bangladesh repairing the damage and making sure this kind of catastrophe doesnt happen again . While the collapse itself was an accident, the conditions were no accident. For years, retailers demand and prices so low from their contract factories that the only way they could meet the prices was to ignore worker safety. That is why hundreds of factories what we need is for brands and retailers to invest in programs. Retailers like h m and calvin klein obligates them to upgrade their factories in bangladesh. They have refused to make those binding commitments. Tell people about zady and what you trying to accomplish. We are wanting an alternative from that lifestyle. We were excited when the companies entered the u. S. And started buying. We ended up having closets full of stuff with nothing to wear. As you get into these stories and these heartwrenching stories of what is repeating throughout bangladesh and china and other nations, we got tired of that. We want quality we want the workers treated fairly. We created an alternative. We want to know how products are made so we can feel good about every purchase. Whose responsibility does this ultimately become . As scott was saying, is it the brand, gap, walmart, the factory owners, officials in a place like bangladesh . It is all of us. Every time we purchase something, we make a vote for something that we believe in. Will we vote for something that has people treated fairly for their hard work . Scott nova, what about the financial repercussions of the collapse . There was a fund that was set up. Can you tell us about the money . It was set up to provide compensation for the families of the workers that died. It has been a year and the families have not received significant Financial Support because of a great deal of foot dragging. Jcpenney, both of which produced in the building that collapsed have yet to contribute anything to the families. A minimal level of compensation for these families. What about the challenge that makes sure the sourcing goes to the guidelines you have laid out, and they lose business . We look where the design is happening. You know who is making your product. The idea is to provide a better product. Scott, why are there these absences on the part of these big retailers . Why are they not participating to ensure worker safety . It is the rockbottom cheapest place in the world to make clothing. Retailers have an obligation to protect workers. It will cost some money. Is it taking advantage of poor people . Whether it is good or bad or inappropriate, the practical consequences of it are if you have 4 million workers working in grossly unsafe buildings and some retailers wont make the modest investment necessary to compensate the families whose lives have already been damaged so we dont have more disasters going forward. What is the update in terms of inspections . Professional independent Structural Engineers are going into each of these buildings. Just in the last month, they have forced the emergency evacuation of eight buildings where those engineers found that the columns were too weak to hold up the structure. That is the same defect that brought down the building a year ago. We have 15,000 workers that have been evacuated from grossly unsafe buildings. They are required to still get their wages until the building is made safe. That is a significant progress but a great deal more to do. Recall the triangle shirt factory. Thank you for joining us, scott nova, maxine beta. Coming up next, i will speak with one of the president s of the largest Electronic Cigarette companies. Find out his reaction to new proposals by the fda to regulate the ecigarette business. Have you got a bit of a sweet tooth . From bazooka candy brands and how they are growing the bubblegum company. The u. S. Fda is proposing new rules that would extend Regulatory Authority to the 3 billiondollar Electronic Cigarette industry. It would limit sales to minors, ban free samples, and also require nicotine addiction warnings. Joining me now from Fort Lauderdale florida is the president of vapor, Electronic Cigarette company. Lets talk about what the fda is proposing. We certainly applaud the fda for making the regulations as fair as they are, and also there was pressure for them to act quickly. They took their time and put together a very good sense of it. You have the ban of sales to minors. You have to have the id. The nicotine addiction warnings. And you have to submit whatever youre selling to the fda in order to show how it is made and how it goes into this stuff. One of the cofounders of the company, we are telling them that if we ever catch you selling to minors, we will not sell to you again. Several Industry Leaders feel the same way. We applaud this regulation because we believe it would raise the bar and key products out of the hands of minors. We are happy that the fda did that. Something we discussed on many occasions, i discussed at various events and conferences and things of that nature, its another major concern to the Industry Leaders because there are so many new companies out there, primarily internetbased and we dont know what they are putting into their products. We want to make sure that the fda is keeping an eye on this thing and we want to make sure people dont get hurt. We are here to help not have people ingesting substandard materials. It goes towards having high levels of ingredients and other ingredients that make up this product. Talk about some of the retailers that carry your products and how they feel about this issue when it comes to the rules that you set for doing business with them. Who are some of the retailers that follow your rules . We are in over 5000 right aid drug stores and family dollar. And over heb in texas. None of them have ever had a problem with harding and making sure that minors dont get their hands on these products. There are other products by hide besides ecigarettes. We have a very proactive stance and we came out with the Patent Pending technology for a fingerprint locking technology that would prevent anyone but the purchaser from turning the unit on. Kids cant go take a couple of puffs and put it back. Is that available on the we are hoping to have it ready for sale by the end of this year but we do have a prototype at ces in las vegas earlier this year. Give me an idea of the cost of the paraphernalia. The cost of Electronic Cigarette or the components that go into it. The economics are far superior to cigarettes. You can try an initial unit for as little as five dollars or six dollars that would be the equivalent of a pack of cigarettes. If you move to the rechargeable unit where you can replace the cartridges, you can get down to as little as two dollars. And youre looking closer to two packs of cigarettes. Vaporizers is you can pick your own flavors and the juices. That can get you to the equivalent of less than a dollar a pack. What about competition . Vapor is one company but you have a lot of big people that want in on this. The competition is certainly there. When big tobacco came in, we felt that they legitimized the category. What they did next was go on an Advertising Campaign that educated the public in a way that we could not have done without the budget that big tobacco brings. We are happy to have them involved. There is plenty of room for growth and all of us. Just like in the tobacco market, there are secondtier brands that have a tremendous market share. And youre doing 26 million of business last year . Correct. We dont make projections so i cant estimate where the growth will be. I can tell you we have had organic growth yearoveryear. The landscape has changed and there is a lot of consolidation. We would be remiss not to look at those opportunities as well. What about taxes . One of the area cigarettes are connected to is tax revenue for states. Will that be applicable . At the moment, its just sales tax. It will take time and we will have to see the attitude on that. The base of the taxes, it is based on their weight. 99 of our products, the weight is in the components and not in the nicotine. I think it will be a little bit tricky and if the fda sticks to its philosophy, they took a very methodical approach to this. They got the data and analyzed everything. I am hopeful government will do the same thing. Jeffrey is the president of the vapor corp. Coming up next, meet an executive from bazooka candy. He will tell us how he keeps his products fresh. From a business perspective. Next. This is taking stock on bloomberg. Im pimm fox. Recently, i had the opportunity to speak with the chief executive of just born, the Company Behind the iconic easter candy called peeps. Theyre staying fresh by working with brands like Dunkin Donuts and godiva chocolates. Another American Candy maker is looking to stay fresh. Bazooka goes all the way back to 1947. He does not go back to 1947. Tony jacobs is the Vice President of global confectionery at bazooka candy brands and joins me now. You must have one of the best jobs in the world. I am basically the candy man and i go make people really happy. You started with lifesavers and graduated to gum and candy. Its in my blood. Its fun, exciting, a great way to connect and always new things going on. Lets talk about bazooka joe. How did that get started with comics . Introduced in 1947, 64 years ago, they wanted to do something to differentiate it and brought the comic out. A way to add value and interact with the consumer. In order to get more people to buy candy, you got to refresh the brand and introduce new items. Tell me about the ring. You cant turn around without seeing one. Zach galifianakis is having one in the hangover three. We update with new flavors and new promotions. A Great Program right now going on all about reconnecting with consumers. I dont know r five. A hot new band. The lead singer of the band with a number of his family members and friends, they are on american idol. We are working with them to do a Great Program where they are on a tv commercial where you can be in their video and also helping us draw a new flavor. Can you give us an idea . Three flavors that people can choose from. Now consumers actually get to vote on which one they like the best. I put my money on cherry limeade. It is leading the pack. Lets talk about the gum. Have you changed the flavor or the mix . We refreshed one year ago. We did not change the flavor but we put it in new convenient packages. And we changed how we connected with the consumer. We kept the comic and created an online digital version. Really engaging with the technology to connect with the consumer. I have to mention the owners. Michael eisner is a former chief executive of disney. Does he love gum and candy at co he is very actively involved. The core of our business is edible entertainment. We are leveraging it to bring it to those products. Have you done testing to find out what mixture makes the best bubble . I know we have some of the best out there. They can get up to 18 inches or 20 inches. A crazy size. I think bazooka is one that can drive that large bubble. Juicy drop, what is up with that . We launched in 2003 and is now the number two nonchocolate candy. It is pushing to the extreme. Kids get to squirt sour on top of a lollipop. Candy on top of candy. That must be your dream. Can you give us an idea of what kind of sales youre talking about . A global business. In the u. S. , the number 10 branded player in nonchocolate candy. It is in the couple hundred Million Dollars in sales. Everyone will want to chew some gum and blow some bubbles. Thank you very much, tony jacobs from bazooka candy brand. Thanks for taking stock. Im pimm fox. Good night