Daydreams about winning later. For now, make sure everyone signs the contract. You are watching market makers. Im Erik Schatzker. Im stephanie ruhle. Rebecca black, because it is friday. The top business stories from around the world. Qualcomm has a new ceo. The worlds biggest maker of chips for mobile phones announced the change this morning just hours earlier. The microsoft board had been ollenkopf for its ceo job. Sales of the 500 seat monster airbus a 380 have been slowing, but in an interview, the ceo says rising traffic should boost demand. Deny that traffic will grow five percent year on year thanks to asia, china, middle east, so it will double every 15 years. Imagine two times more traffic from heathrow. A record snowstorm in the middle east. It was snowing in cairo for the first time in more than a century. Neard three feet jerusalem, bringing traffic to a standstill. I want to talk about your hair for the next two hours because it is so kooky. In s at the fee suite see suite at qualcomm. This morning, Steve Mollenkopf gets promoted to ceo. Two people who know. West johnson is a bloomberg editor at large. Morningial guest this is steve miller, chairman of , andformer ceo of delphi in his free time, he sits on the boards of United Airlines and symantec. Extraordinaryan 24 hours. Someone emailed me describing this as a coincidence. If you think things are connected, you can understand the world a lot better. I think what we are seeing here is the ball, board saying, hell no, you will not go. You are staying. Used to walk the streets of berkeley saying that. You have seen the situations play out before. If you are paul jacobs and you hear that Steve Mollenkopf might be going to microsoft, what would you do . I would do what i could to keep him on. Giving him the ceo job makes sense. The microsoft story has been fascinating, has been in the papers and television for months now. It is being led by a good friend of mine, John Thompson. I am a director at symantec, i hired john a decade ago, and then lamentably saw him step down. He has the writeup is to be able to do this. Does losing a guy like Steve Mollenkopf make his job that much tougher . There are only two people to ever leave the company and they are both on the board of directors. The new person coming in will have a big challenge. If they are going to change things at all, it will probably be contentious in the board room. What exactly is John Thompson searching for . If you look at the skill set that and Alan Mullally has, he is clearly a corporate leader who knows how to turn around a company. Look at the move out of qualcomm when you look at the names coming up, you have to look at the board and see them struggling with the decision of their future. Johnave people like thompson and Steve Ballmer and bill gates saying, are we going to be a mobile company for the future, or are we going to be a business . D is this or are we going to look outside for a turnaround to fix everything at the company for Alan Mullally . I think you have summarized the problem they are having their. John will hate me saying this, but i think the best candidate for that position is John Thompson himself. ,hat i saw him do at symantec taking it to a 6 billion company, always being ahead of the curve on the vision of where we need to go next. Having the Leadership Qualities you need. At a time when these Companies Need to innovate ibm has no innovation. All they can do is play defense. Do you need a ceo who is technical . Steve mollenkopf knows what is going on with the customers. Guy, for about 30 years, but one of the things that you do not think about with most of what Steve Ballmer spent his time doing was meeting with customers, going to companies and convincing them to build their products around microsoft software. The Technology Business changes so fast. Companies that were two years ago doing well are not so much anymore. Hand, what must terrify them is the example of jcpenney. They brought in ron johnson, did a radical shift in their strategy, and it was a complete failure. Then why is Alan Mullallys name in the mix . He did an incredible job at ford. Is microsoft a turnaround job . Combination of things from whoever the new ceo is. One of them is leadership skills. Alan mullally showed he has tremendous leadership skills. Taking an organization that was discouraged, bringing it back and fighting, that is a great skill set. On the other hand, i do not know that he has the technological deal set to figure out what to do next with microsoft. Lets think about microsoft as a turnaround, even if it is not. What would you do if you were there . I would spend a couple of weeks trying to figure out what are the traces, talking to making mythen assessment as to what priorities we should have. Microsoft is not short on technologists. It is short on direction, i think. There is a famous chart of Technology Companies and one of them shows all of the divisions of microsoft. As youthan a pyramid, would normally see, it shows them all pointing guns at each other. Are developing technology that exists in other parts of the building because they do not want to deal with those people. They think in organization will do it, but everyone within does not buy it. People do not desire what microsoft sells. Went to johnson jcpenney, he did not understand what their customer desired. I think he misread the Customer Base or moved too fast to try to shift to a different Customer Base. The board lost patience. Lot more to talk about with you, including aig. Here withon is also us to talk about microsoft and qualcomm. A game changer in the hotel industry. How the recession changed how people travel. Welcome back to market makers. Im Erik Schatzker. Steve miller is here. He is the man the boards turn to when they have a problem. Aig turned to him, that is why he is the chairman of the company. Aig was clearly a turnaround case. Rest of theand the aig board want to see bob and ben moshe a do next . We continue to work on the our divestiture, ilfc, Aircraft Leasing business. We had a deal with the chinese to sell it to them. Neither side has terminated, we have been looking at other alternatives. Even though they are a great company, it is not a good fit with an Insurance CompanyBalance Sheet, particularly with all of their new regulations. A capitalintensive business like that does not belong in an insurance portfolio. We will get on with selling that. Before we move onto the next phase, what are some of the options . Fundamentally the three options ahead of us would be to complete a deal with the chinese. The second option would be to sell to someone else. The third option would be to do an ipo. See the Airline Business doing so well, is the ipo looking more attractive . It has always been attractive. T has been a matter of choice if we were unable to sell all at once, it would still be a Balance Sheet problem. Optionsonsidering all and expecting to get this done in the nottoodistant future. What are your concerns with aig and regulation . It is about providing health care to individuals but it is also about regulating the Health Insurance market. Does it keep you up at night for what the market can look like . Two things bother me about the regulatory landscape. We operate in 100 Different Companies countries, and each has their own regulator. We think it is appropriate to be regulated, but most important is that deregulation is consistent in their approach. The likelihood that you will get that . We are working on it. With the failure of aig five years ago, insurance was at the top of regulators piles. Proved Insurance Companies wrongly handled could be dangerous. So for the first time we now have the Federal Reserve regulating us as a systemically important that financial institution, which is fine, but we also have 50 states and these foreign regulators. Want toimportant, we make sure, as insurance is regulated, it is in a different regime from banks. We are a different Balance Sheet. We have a different purpose in our economies, and so we need consistency across the globe and Insurance Companies treated for what they are, not as banks. Are you concerned about how you will be treated by regulators . Popularook at the opinion, the disdain coming out against banks, some people think that they are a punching bag. What does that mean for you in the Insurance Business . The company that was most hated five years ago was aig. We even took the brand off of everything and renamed parts of the company. Everybody wanted to run away from the aig name. But we have brought it back so strongly and rapidly that we have now rebranded everything to be aig. On the regulatory front, instead of resisting regulation, we have welcomed the fed as our premier regulator and we are working closely with them to respond to all of their concerns. What did you do right that the banks did wrong . Partly, they are resisting regulation. Trust us, we will be fine, we will not run off the rails again. There is this reaction of overregulation on banks. Capital ratios to far, they will not be able to lend money to people who need it, and that will be a drag on the economy. Where will the capital come from his Financial Institutions are regulated to the point where they cannot take any risks . Can we connect the dots to the sale of potential sale of ilfc . The sale could go to another company. Is already so big in that business, could they get a deal . Would that pass muster with regulators . I believe so. There is no particular secret sauce. It is a hugely competitive business. Ilfc does have orders on future boeing. Rom airbus and if you look at the resurgence of airlines around the world, those slots are incredibly important. That aigu concerned could be a target for activism . The government is out at this point. You are out on your own. We have run the victory lap for coming out of the ditch, repaying the government. We now have people paying about 50 a share now to come into aig. I feel a terrific responsibility to them to make sure they have a responsible investment that grows over time. To ourtrying to respond shareholders, we talk to them about their concerns, Capital Management they want us to run, what businesses they want us to be in or not. As long as you are communicating with shareholders and responding, you are relatively insulated from attacks by activists. Maybe you are insulated by activists, you understand the regulators, you are about to finish ilfc. What comes next . You look at aig, it is the Largest Global propertycasualty company. On the other hand, the life and retirement business is a Good Business but largely domestic. Is obvious thing to consider how to grow globally on the life and retirement side. The population is growing in asia, africa, every other place. Is that organic or is m a the only way . You can do it organically but we would not turn down m a opportunities. We will be looking at opportunities to grow our business on the life and retirement side. I want to get an understanding of where people are on the airplane. Have you figured out cup and take compensation this year, what should we be expecting for Bob Benmosche . We gave him a lot of stock in the company, stock and options. At the lowest point, the stock was worth less than 10 a share. Now it is around 50. He has done extremely well from that standpoint. A lot of the reported earnings benefitsm the stock that he gets from being the leader of our company. Do you want to continue to pay him with stock . Look at the value he has created. The u. S. Government put 182 billion into aig. To see if we could pay it back, we paid it back with a profit of 22 billion, and that is due to the fact that he is an extraordinary leader. What is that worth . It is worth an awful lot to me. Bob, if you are watching, steve just gave you a you go girl. When we come back, talking about the Retail Business. We are talking about aig with steve miller. Just saying Bob Benmosche deserves what he gets paid. The man is about to turn 70. How much longer will he be ceo . Of a 30s the energy year old, so it is hard to say. He works 24 seven. It is unbelievable. I could never hope to keep up with the pace he has. What the board keep him as long as he wants to be ceo . It is the boards choice when it is time for a change. We have had what i call succession planning discussions that have been increasing over the past few years, particularly we started when bob announced he was battling cancer. He has been successful with that. How much longer he wants to work, not sure. We are doing a lot of discussions about how you would find a successor for Bob Benmosche. , we wille come back talk about the lottery. Many of you think you can beat the odds. Welcome back to market makers. We have breaking news. John malone is getting pretty busy. Isrter communications preparing an offer letter to purchase Time Warner Cable. This is according to two familiar with the matter. You can see the movement in charter shares, a lot of people hoping that they will step over the big offer, even if it was 1. 39, that would be six percent above the current price. Was apremium to where it 115,e of weeks ago, in the 120 range. Isnot forget, time warner also sniffing around comcast. They were talking about a possible joint bid. From what we understand, this does not involve comcast. It would be a charteronly offer. Get back to our exclusive interview with aig nonexecutive chairman steve miller. We were talking about turnarounds. You think we will see more over the next couple of years. I really do. There have not been that many restructures recently because Interest Rates have been so low, money is cheap, you can borrow more to keep going. Banks, with all the pressure on their Balance Sheets, have been reluctant to force restructuring where they would have to take writedowns. Going forward is a Interest Rates inevitably will go back up. We cannot live in this zero forever. Era second, banks have gotten stronger. They will force restructuring swear they are called for. A retails broken in story, whether we talk about j. C. Penney or sears, what cant they seem to get right . What is happening in the Retail Sector is Enormous Growth of internet transactions. In my house every day there is the ups guy dumping a ton of boxes that we used to have to go to the store for. Those that are not strong on the internet side and are dependent on customers coming to the store are suffering with loss of traffic. Lossdly, along with that of traffic is the implication that you have too much real estate. Jcpenney has 1100 stores. These are huge stores. If there are not many people coming through the store, your rent will kill you on top of it. The board of jcpenney came to you and said, would you consider running this company . What would you say . Texas is beautiful this time of year. Right now, they have michael running it. He is a very experienced retailer. His time will come. That is a definite maybe. What would you be thinking about . I have never said no to any particular turnaround, as long as i thought i could be helpful. I have been in the steel industry, garbage industry, insurance, auto parts with the board sat down you now and said they wanted you to be the new ceo, what do we need to do today . I do not know what i would do today. This is what happened at ibm. They wanted to think about things before Going Forward, but it turned out to be the best thing. The first thing is to be thoughtful, but the second thing is to be decisive. Between jcpenney and sears, which one is easier or harder to turn around . Both are in a world of hurt. Both have lost the brand cache. Jcpenney had it with a Certain Group of customers. They have really lost it by saying we will not do discounting anymore. They lost all those people and it is now harder for mike to bring them back. We are sorry we did that. We are now going to do discounting again. I wish him well. November,lts in jcpenney was one percent above was year, and last november Hurricane Sandy and the depths of the plummeting of sales. Their recovery is slow and hard, and even the sales do not have the final answer. Has Eddie Lampert underestimated how hard it is to run a Retail Business . Theis biggest concern is real estate, even more than the department stores. Recovery ineen a real estate. If the economy accelerates in 2014, do you think he will be proved right . That is a tough call. Retail is highly competitive and you have this title wave coming through of internet sales. That is not going to slow down, it will be tougher and tougher for those retailers that have enormous investment in the real estate of big stores. Even if the market picks up, who will be there to pick up those spaces . It is a real box they are in and i do not know what the answer should be. I want to ask you about gm. They are about to find out what it is like not to be under government ownership. Barra will be succeeding dan ackerman. How