Well over the next two hours. Welcome, everybody. Im Tyler Mathisen with brian and melissa here and michelle in havana. But we begin this hour with john fortt in cupertino. This phone here might look old. The iphone 5s. We expect Something Like it to be the star of todays event. Perhaps called the iphone se. Apple is expected to resurrect this four inch iphone form factor in a newer phone with upgraded internals, better camera on the back, and upgraded chip inside, perhaps the a9, recently been in other phones. Now, part of the question is how much this will cost. Rumor has it could cost as low as 450, comparing to 650 for the iphone 6s. The latest out the gate. That could be important if this is part of apples move to get deeper into Growth Markets like india and china, which have had the strongest growth from apple thus far. It is not just about the iphone. We also expect new watch bands for the apple watch. Now the new watch itself, but new bands and also the ipad expected to get an update. This is the full size ipad. It is expected to get some of the features from the ipad pro, which we saw arrive at the end of last year. That does not seem to have changed the trajectory of the ipad at all. Sales are still declining. But perhaps adding some features, maybe a keyboard, pennsylvania capability, two of the full size ipad will at least improve the ecosystem there. Also, the possibility that we could hear tim cook Say Something about this apple versus fbi case. We expect to have a hearing yesterday sorry, tomorrow in Southern California on that case. Security and privacy an important part of apples product story. So all of that coming into play from cupertino today. Well be covering that throughout this hour and the next. Back to you. Jon, thank you very much. We just hear that mr. Cook has taken the stage out there in cupertino. Well be watching to see what if anything he says that is newsworthy or otherwise of note. Lets bring in Collin Gillis who covers apple for bgc financial. Welcome. From what john just said, it sounds like these announcements that we expect today are extremely incremental. A smaller phone, more watch bands for goodness sakes. Were covering watch band announcements now. And some enhancements to the ipad, which has been a little bit sort of stuck in a calm. What do you say in. I say it is a borg event. It is going to be a boring event. Thats great. It might move the needle incrementally, but it does not solve apples fundamental problem of being too reliant on sales of the iphone and not being aggressive enough and building up services, recurring revenue layer. Thats where you think they ought to go. What would that look like if they did it. Eye beacon. We havent heard much about eye beacon, home kit, home automation, another big area where i think they could be more aggressive instead of rolling out a four inch phone that will satisfy a lower price point. Fine, but we have beaten the iphone pretty much to death. Completely dependent the company is dependent on that margin and on that colin, i have a important question colin i have a question but we got to go back to jon fortt now, maybe breaking news. Actually, tyler, tim cook is on stage right now, talking about this controversy apple versus the fbi. He said that apple just in recent weeks said to the nation that we need to start this conversation, we need to decide as a nation how much power the government should have, he said, over our privacy and security. It is an issue that touches all of us. He said that apple does not expect to find itself at odds with the government over this, but that apple feels strongly that customers, that individuals, that citizens should have control over their data. So this event opened up with apple having a product story, 40 years in 40 seconds, talking about the products that apple has come out with. As soon as tim cook took the stage, he addressed the security issue and this battle, this court battle, this legal battle with the federal government straight on, guys. Back to you. Jon, thank you very much. Very important hearing tomorrow on that. Brian, you had a question. I just gave it to john, my question was tongue in cheek. You said ibeacon could be bigger. My question is what is ibeacon. It will allow them to build up an advertising revenue stream, some people walk into stores, it will signal, you know, hey, youre here, you got an iphone, perhaps you may be interested in seeing this product that is a few steps away, uses gps to build up an also related to privacy. So the privacy discussion apple is trying to drive is a big one. I dont think there is a winner or loser here for apple. It is not positive for them to be drawn so heavily into this case. In terms of the lower cost phone, is there a risk that it is going to pressure margins, pressure asps and you might actually get cannibalization, somebody who might be looking to upgrade a phone might say i dont want to pay 600 plus dollars for a phone if im only surfing the internet using it for itunes and sending emails. I want the lower cost one. Of course. But those risks are already happening in the Broader Marketplace. So at least apple is going to serve it with one of their own phones. I would imagine the margin profile will likely be about the same. Apple likes to sell high margin products. But the revenue impact will be there. And apple is going to have a tough few years ahead of it. And right now it is performing in line with the broader index. This is a name that is really well suited for Institutional Investors to use listed equity options to play. What is your writing on the stock . Hold and 110 target. So 42 diebuys, 7 holds. Well end on that note, tough couple of years ahead of it. Colin, thank you very much, with bgc financial. More apple coverage, second by second, throughout power lunch today. Were following a developing story on drugmaker valeant. The stock popping following news that its ceo is out. Bill ackman joins the board. It is interesting what is going on with Howard Shiller as well. Very much so. There is a big shuffle at the top of valeant. Mike pierson is out. Hell be in the role of ceo until they find a successor. Bill ackman joining the board immediately. Now the story is focusing on former cfo Howard Shiller who is on the board. He filled in as interim ceo when mike pierson was on his medical leave of absence. In the companys statements today, talking about all of the Financial Institutions they have run into, theyre talking about Improper Conduct from the former cfo schiller and the controller, the corporate controller. And schiller coming back in a Statement Today saying there was no Improper Conduct and hes not going to leave the board despite valeant asking him to leave. This is the real controversy going on at valeant now. The company and the board talking about the tone set by the top of the company, being one that is problematic and leading to all of these things. Another piece of news that came out today is the company saying they plan to file their 10k by april 29th and showing you some deadlines there. Thats very important for the 30 billion in debt. If they dont file their 10k for 2015 by that time, they can trip some covenants on the debt. They say they do plan to file, theyre still trying to negotiate with creditors just in case. What else is left for valeant at this point . Theyre looking for ceo successors. Theyre continuing that investigation, that board investigation into the accounting there and thats why people are still kind of concerned because what else could pop up there . The company even says in its 8k, they havent finished that investigation, could be more misstatements, more information to come. Folks will be closely looking at the outcome of that. And then finally, asset sales. Thats what a lot of people are talking about. Valeant has great relationships with banks as they were buying all of those things and banks are eager to start selling all those things for them too. A lot of news coming up. Well be talking closing bell more about this and potential successors. Is pierson also the chairman of the board or just the ceo . He was the chairman of the board, but they removed him from that and now bob ingraham is the chairman. Do we know more about this Improper Conduct from schiller. The Southern Investigative Reporting Foundation did great reporting about a month ago where they highlighted schillers propensity to take one of three valeant private jets, g 4, g 5 and g 6, costs 65 million, and they highlighted some trips to and from conferences, to ski house in colorado. Interesting you mention that. That is not what theyre focusing on here. All about fill door, but you mentioned the jets, i was looking at the compensation for the main executives at valeant and actually pearson had a much higher number for use of the corporate jets than schiller did. So it is interesting you mentioned that. You got to wonder if schiller is going to sue the company if that will entangle them further down the road and be a distraction as they try to get their house in order. If there is some sort of a lawsuit, what sorts of records might be part of this case. What might be exposed. Certainly. I think everybody would like more information here. If they were to come out through that route, would be interesting to follow. We have to see. But it is getting very heated with the statement from schillers law firm today. Meg, thank you very much. President Obama Meeting with cuban president raul castro in havana today. Some of the pomp and circumstance already has taken place. The two leaders are expected to make a statement within the hour and we will carry that live the moment it begins. In the meantime, Michelle Carusocabrera is live in havana for us. Michelle. Hi there, tyler. There is a large number of Corporate Executives traveling with president obama as part of the delegation. We have seen hotel executives, Telecom Executives as well, ursula burns on earlier, the ceo of xerox, the white house very much wants this to be a commercial event, not just a political event. There has been a major deal announced, starwood signed a deal to manage three hotels for the cuban government here, two of them part of their luxury collection, one will be sheridan. So a midgrade hotel. And also Arnie Sorenson is here. The ceo of marriott. He happened to be here at the same time, that he announced this morning that he and marriott and starwood have once again renewed their vow, so to speak, they are going to merge. Youll recall that just last week Chinese Insurance Company anbang had had disrupted a previous deal between marriott and starwood by upping the bid to 76 a share in cash. This morning, marriott upped its bid, increased cash, put cash into the deal, and also said that when all was said and done, when you included all the stock, it would come out to 79. 53. Higher bid compared to anbang. Starwood and marriott are once again on the table, merging, well see if anbang comes back again, with perhaps a counteroffer. Arnie sorenson spoke with us this morning about why he thinks his deal is more compelling even though the anbang deal has more cash. I think the offer we put on the table is compelling. And i think it is quite different because of the future Growth Prospects it offers. Is there any frustration bidding against a chinese company, which by its nature seems to have implicit government backing by the nature of the people involved, by what is from the outside appears to be an incredible desire if not desperateness by Chinese Companies to get exposure outside of china, their incentives are so much higher in a way that seemed to push you to places or to a price you didnt want to go to before and could push you higher. Is that frustrating . Were in havana, part of the council. And i do believe both personally and as a matter of business that we compete in a global platform. He says if anbang comes back with a higher offer, he wouldnt tell us what the answer to the question whether, whether or not he would counter higher. Well see. Hes potentially still in a bidding war. Guys, back to you. High stake game of poker it seems going on down there. And around the globe. Thank you very much, michelle. Well be back with you later during the two hours. Straight ahead, well drill down on energy with one of the biggest players in the oil patch. The ceo of apache joins us exclusively ahead. We expect more news out of the big apple event currently under way in cupertino. Well bring you the latest when power lunch returns after this. Here at td ameritrade, they work hard. Wow, that was random. Random . No. Its all about understanding patterns. Like the mail guy at 3 12pm every day or jerry getting dumped every third tuesday. Jerry every third tuesday. We have Pattern Recognition Technology on any chart plus over 300 customizable studies to help you anticipate potential price movement. Theres no way to predict that. Td ameritrade. Whyour boss . Ork for . Yourself . Your family . Our Financial Advisors are free to realize a plan to fit your familys unique needs. Well listen. Well talk. Well plan. Baird. With extraordinary offersmance on the stylish, allnew rx. And the dynamic nx. This is the pursuit of perfection. Welcome back to power lunch. Im jon fortt. An apple event is ongoing, some news from inside. After tim cook gave that Opening Statement involving apple, fbi and apples stance on privacy, lisa jackson took the stage, a Top Executive at apple in charge of policy. This is interesting because her job before that was chief of the Environmental Protection agency with the federal government. Lisa jackson talking about how 93 of apple facilities right now run on renewable energy. 100 renewable in 23 countries. Also talked about how apple is moving toward paper packaging and introduced a robot that apple now has, developed internally, but calling it is a machine that takes apart eye phones and recovers materials from the phones to be able to to be used in other projects Going Forward. Not just phones, but solar panels and the like. Right now, Jeff Williams is on stage, another apple executive in charge of the apple watch and other projects at apple including the overall supply chain. Hes talking about research kit and apples work in health right now. So no product news yet, but apple making big policy statements, perhaps a bit of a pr and marketing push as well, arguing theyre good for the world and not just the privacy of its customers. Back to you. Jon fortt in cupertino. Now let us dig more into the recent oil rally. Crude oil up 30 over the past 30 days. Some of the biggest players in energy are gathered in new orleans for the energy conference, among them, the ceo of apache oil and gas, and we welcome in exclusively the ceo john crispen of apache. Thank you for joining us on power lunch and cnbc. We have seen a nice run for crude oil, we have seen a nice run for your stock. But how much more does 39 or 40 a barrel matter to apaches Balance Sheet than say 30 bucks. Does it make that much of a difference . Well, actually every 5 move in oil price means 450 million of cash flow to us. It absolutely makes a difference. We budgeted the year at 35. So anything with a four handle in front of it is very welcome. You know, thats an interesting comment. 35 is where you budgeted this year. What is that down from last year, john . You know, we budgeted 50 last year, brian. And, you know, obviously in the 53 price. Thats a huge cut. There has been a lot of optimistic bullish comments about the price of oil Going Forward to the back end of the year. I know youre cautiously optimistic, john. Why did you budget 35 . Is it just an overabundance of caution or is that really where you see the fundamentals taking oil. Well, i mean, what we have done, if you go back to last year, we took a conservative approach. And budgeted at 50. We had really geared our business to be flexible going into the end of the year, and we felt like 35 would be the appropriate level to balance, you know, our budget at this point in time. And clearly were optimistic in the future that price will improve. The thing we wanted to focus is our control. Thats our cost structure, overhead and our activity levels and gear them more toward s the 35 price environment and we can be in the position to benefit when things improve. Production will be what, compared to last year, john . Were going to be down seven to 11 at the corporate level. What is amazing about that is, a, youre one of the few companies we heard that is going to reduce production. A lot of people are ramping it up. But you have gone, i want our audience to hear this clearly it a pretty stunning number, youve gone from 93 rigs, drilling rigs, down to just four. 93 to four. Why isnt output expected to drop even further . Well, i mean it goes to the strength of our asset base. We have a lot of conventional assets. We have got a Strong International portfolio with egypt and assets that contribute nicely. If you look at our north american position, we have got large portion of our permanent is conventional oil. We have lower decline rates than a lot of our competitors. And quite frankly a very high production base, high Quality Production base. It sounds like youre profitable at 35 a barrel. Fair to say . Absolutely. And the key is were going to be cash flow neutral in 2016 at 35 a barrel. But much of the industry is not, as you yourself pointed out, the overall industry is expected to spend 150 of cash flow, a lot of companies are not profitable. If oil does not turn around further from here, john, what is your industry going to look like by the end of this year . Do you expect bankruptcies . Well, a lot of background noise there, but, you know, clearly if prices dont go up, spending lev