Welcome to squawk alley for a wednesday. John fort, kayla, and myself at post nine. Founder, editor, and ceo henry do we have a lot to talk about today . A half hour from yellen, but well start with yahoo. Shares rallying after hearing that the wrau hue board is considering selling off the Internet Business. Theyre meeting today to discuss the idea and also meeting with jeff smith, ceo of star lord. Marissa myer, yahoos board reportedly still has her back. According to kara swisher, not considering a change in leadership at this time. She says if marissa myer leaves, it will happen on her terms. What do you think . I thought star word is right. It will be tied up for years. Where would you do this . Maybe consider selling the core business. Yahoo either needs to say to all the activists swirling around, shut up, were not selling anything, back off, goodbye, or get something done quickly and get past it because its just so distracting. Whats hard about this for me, though, is how do you know how much yahoo is worth . Theyre going to be numbers all over the map probably. People are likely to use the aol sale to verizon as a benchmark, but right now with the asian assets in there, depending on what the tax treatment of those is, even arriving at any kind of value for yahoo will be hard. You know, its worth something. People talk, oh, the business is so challenged. It is challenged. It is still generating almost a billion dollars of cash per year. Its worth something, and the argument is the market is not valuing it at anything. Thats a reasonable strategy. Although who would eventually buy it, and who would be the best steward for this type of Company Given that the question we often ask is what is the core business, what is the fate of the core business . Yahoo is still a tremendously valuable platform. They reach a billion people around the world every month. They have still a huge email business. They have a huge news business, sports, finance. There is a lot there to work with. You would have to think about what you want to do with it. You could say telecom companies. You could say media companies. Theres a Media Distribution platform. We have all the Traditional Networks saying whats going to be the future of television . Maybe yahoo could be used in the future of television. Somebody is going to have to make a bet. Nothing is a sure thing, but theres still value there. Hiring marissa myer was a bet on the technology camp. Well come up with technology that will fix this. That has been a slow process. Meanwhile, the business traditional business has been under assault because youve had direct advertising, the people wrum stuff is getting replaced with program attic, video, all these others things. Its been very hard to grow revenue in that environment. I dont know if its going to hold her interest that long. Right . How often do you want to go to work and get punched in the face every morning that things arent going well. She doesnt have to do that, and thats another position she can take. She can be very aggressive here and say, look, careful what you wish for. Keep talking about how you might want to make a change. You may have to make a change, and who are you going to bring in . Why would a company even listen to somebody like starboard who is basically just backtracking on advice that it very sharply worded to the company just a few months ago . Lots of investors will do anything to make a quick buck, and that is the opportunity here. If starboard with suddenly manufacture cash through Financial Engineering quickly, or a sale, lots of folks will want to jump on board for that. Far fewer investors will say, okay, lets look ahead three to five years into what this can become. Especially given the struggles theyve been going through. Are you surprised on the tax front . The degree to which its wagging the dog here. Or is this par for the course here . The fact that tax laws are so open to argument and all the best we can do here is the two camps thing. Yes, it probably is. The other side said, well, im not going to fwarn tee it. The one that you can say here is theres a huge amount of money at stake. A huge amount of money. If they can find a way for alibaba to buy back its own stock and eliminate the tax gain in some way, that would be very helpful. Its perfectly reasonable. If theyve got a guarantee from the irs saying its not taxable, it would be a different conversation. We need to be careful about the myth making around executives. Turnarounds are very difficult. Often, it takes a founder because of cultural reasons. There are all kinds of moving parts you dont think about beneath the seniurface. If you are looking at diane Green Running the cloud business, yes, she has experience, she could to it, but its not like superman flying in every time. Have you to wonder one reason Marissa Meyer might not be going anywhere is because if she cant turn around this company, who can . Bob peck has some ideas. Its the media root they have not embraced. Thats a possibility. Other than that Marissa Meyer has the chops. Meantime, we turn to facebook this morning. Ceo Mark Zuckerberg announcing the birth of his daughter, max via Facebook Post yesterday. He and his wife, priscilla, will give away 99 of their shares during their lives. Thats currently worth more than 45 billion. A facebook spokeswoman says it will go to an initiative structured as an llc. Not a charitable trust. Joining the conversation on the phone, Roger Mcnamee, who holds a significant stake in facebook. Roger, youve called the initiative admirable. What are you saying about it beyond that . I think the key thing to keep in mind here is that this is something that is going to take place over the rest of Mark Zuckerbergs lifetime. If you are an investor and say he owns the largest part of the stake, that is not going to happen. Theyre limiting the sales over the first three wreerz to 1 billion a were. This is not going to be an interim stock. We can simply look at it as an act of tremendous swren roft, from somebody who i think has a very steep learning curve. He is not the first person to commit to giving away money this way. You know, he has a model in the Gates Foundation. I think a thing we should expect, there are going to be success and failures. Mark has already had a failure in his attempt to help the School System in newark. You know, he learned from that. He is doing a much smarter thing in the bay area. Im really optimistic about what they can do here. I believe that priscillas expertise as a physician is going to give them things in Public Health that will be incredibly valuable, but i think we should also remember that while its a really cool idea to see billionaires giving this kind of money away, its also a bit of an indictment of Society Today because the reason that they have to do this is the government institutions around the world are failing us. Henry, he is not giving this away. Right . Unless im missing something here, this is kind of like when i transfer money from my Checking Account to my savings account because im planning to spend on something. He is planning to spend on these initiatives that are important to him, but this isnt a foundation that he is setting up. Its an llc. He has broad discretion. He is not selling the shares. He is gifting them into this llc. That is great, and we should totally celebrate it. Its different from saying he is giving away he is committing to taking 99 of the shares. As you would in a foundation. I think what he is pointing out is that there is a role for nonprofit foundations, absolutely, giving money can do a lot. Theres a role for the government. There is also absolutely a role for investment that is focused on companies that are helping the world. Private enterprise is a huge role to play here. You cant solve it with government and nonprofits, and i think this is just an incredible step toward where we need to evolve capitalism toward, which is its not just about the bottom line. Its what companies are doing to help the whole world. But, roger, we saw nick woodman, the founder of gopro, do something simpler. Albeit, on a much smaller scale. That marked the top of gopros stock. Just shy of 100 per share. Is there anything symbolic in this headline number, anything we should read about mark zuckbergs take on where facebooks stock is right now to get that number . In reality the stock sales that are driven by this will take place over a couple of decades, so i dont think you should take any message out. I think it is the right question, but im with henry on this. This is a new experiment. We dont know how its going to turn out. Mark and priscilla are really smart people. I think they are committed toing the world a better place. I cant wait to see what they do with it. Its not a silver bullet, i dont think, but its way better than having them not do this. Its millions of miles better. I think theyre very capable. I think its interesting. The whole story is such a comment on the degree of cynicism in our culture today. People dont want to believe short of knowing exactly where these dollars are going that its actually true or meaningful. Does that say anything to you . It does, but i also think that people are not crazy to be skeptical. I mean, the Gates Foundations failures in education Mark Zuckerbergs own failures in education show that the notion this new concept of hacker philanthropy, this idea that you can approach big problems in the world the way you can approach creating software is not without pitfalls. There are going to be problems. Not all problems are success 1e79ible to the techniques of the software companies. What is clear, though, is that the Gates Foundation has shown that they can do unbelievable things against Communicable Diseases and other things around the world, with immunization and a variety of other Public Health things, so im super confident that theyre going to find good things to do. I just dont think its going to be its not going to happen overnight, and its not always going to be easy. I do think to henrys point, one of the things that these guys are going to really make progress on are alternative energies. If they do some of this as a business, i really do believe that Renewable Energies is susceptible to highly focused investor approaches, and im really hopeful that they that someone, Mark Zuckerberg, bill gates, someone will take that problem and really make progress. Its going to be fascinating to watch over the next literally, years, decades. Henry, roger, great to have you here. Thank you. Lets go over to dominik. A busy market day. He has a market flash. Carl, were watching tech and wreed giants like google, amazon, netflix because were all hitting theyve all hit a record on allteam high, and microsoft shares also hitting a 14were high. Amazon, remember, up 120 already this year. Keeping an eye on facebook shares, as we talk about Mark Zuckerberg, they are near a new high, but are still a few bucks away. 110 and change is that level to watch for facebook. Still, a lot of tech and media giants, carl, making big waves today. Back to you. Thank you very much. When we come back, mossberg says an encryption back door for the government is a bad idea. He will join us live. Plus nadella hosting a second Shareholder Meeting today. And drones expected to be a top gift this Holiday Season, but are regulators Still Holding the industry back . One of the top drone makers in the world will tell us where things stand when squawk alley continues in a moment. Tucson. Blew an amp. But good nights. Sure,musics why we do this,but its still our business. We spend days booking gigs, then weve gotta put in the miles to get there. But its not without its perks. Like seeing our album sales go through the roof enough to finally start paying megs little brother i mean,our new tour managerwith real,actual money. We run on quickbooks. Thats how we own it. Walt mossberg weighing in on the back door for encryption saying its then available for lots of bad guys. Walt mossberg, executive editor at the verge and editor at large at re code. Were talking a lot about back doors and encryption and why that might be a bad idea. Somebody is going to make encryption that doesnt have a back door even if the u. S. And other western governments require it. Isnt there a way to allow Something Like wiretapping in Electronic Communications short of creating an encryption back door . Well, john, you know, i hope so. As i said in the piece, i spent part of my career before covering tech as the wall street journals chief defense correspondent. I covered National Security and the intelligence agencies, and i certainly have an appreciation for how important it is and how hard it is to protect the security of the country, but i hope theres a way to do this without breaking encryption, but right now what the fbi director and the other security chiefs are asking for is exactly that. A full back door to encryption that google has introduced into their smartphones, and in which the fbi says is making it go dark for them to be able to get into these phones and learn things. I just i just think that would be a big mistake. When we hear about things like whats app, kick, and those things being impossible for the government to decode, is in a inaccurate . I dont know whats you know, the nsa is so secretive, i mean, really the nsa, the old joke in washington was that it stood for no such agency. I mean, its unbelievably secretive, so i dont know what they can decrypt or break into, but lets assume youre right, that you cant descript it, that is those services and there are, like, eight or nine of them, telegram, that arent even american, those services arent under the control of apple or google, and, yet, the government is really leaning on apple and google because they control the smartphone platforms, but even if you could break in if the fbi had a back door and could break into your iphone, which i repeat would be a bad idea, which i think is plain, even if they could, it doesnt mean they could decrypt telegram, which is a russian developed Service Based somewhere in europe and has nothing google and apple have nothing to do with it. Walt, can you do a little tech review or diplomacy . Is there some middle ground here between the governments who want a back door and encryption position and silicon valleys no way position . Where is the space where they can perhaps begin a conversation about how one can be helpful to the other and technology doesnt get seen as this blockage toward finding terrorists and others who would do harm to society . Well, you know, according to fbi director, they are having conversations, those conversations are already underway to try to see if there is some way around this, but theyre holding firm on the back door because it breaches encryption. Once you open a pathway for the government, which is, itself, by the way, insecure as we know from the massive breach of the office of personnel management, which contains Social Security numbers, fingerprints, and all kinds of things once you open a breach for the government, two things will happen. Bad guys, hackers, criminals will find a way to exploit that breach. We know this kind of thing is just a certainty, but more importantly, i think, maybe is that china and russia and other countries will simply say you want to sell your galaxy phone or iphone in our country, youre going to have to give us exactly the same back door as you give the american government, and that is the problem with this particular approach. I would love to see an approach that is a middle ground. I just dont know what that would be. Suddenly in that case all the doors and windows are open at night and nobody feels sure then. Walt mossberg, great column. Thanks so much for joining us. Thank you. Up next, Mark Zuckerberg says he will take two months of paternity leave after the birth of his daughter, max, but people in most workplaces arent that lucky. Well have more on that story when squawk alley returns. For every family. Mage and this year, look at what he put in our driveway. The lexus december to remember sales event is here. Lease the 2016 es350 for 349 a month for 36 months and well make your first months payment. See your lexus dealer. Facebooks Mark Zuckerberg says he will take two months of paternity leave as a new dad, and he is offering four months paternity leave the first born boy specifically. Subsequent children or girls actually reduce the amount of paternity leave that fathers take. For mothers this isnt true. Theyre likely to stay at home more if they have a girl, but having a first born or younger baby doesnt impact that decision. Another big factor, look around the office. When men work in a field thats dominated by women, theyll take more time off. When they work in a heavily male field, theyll keep coming to work. Theres also research to suggest that having a brother or male coworkers take time off will increase a new fathers chance of doing the same thing. Thats actually why zuckerberg has a real hands to change the culture you might be able to see the trends shift and full paternity leave become more acceptable, but theres clearly a long way to go. Interesting, issuing. A lot of viewers probably nodding their heads at that date wra. Thank you very much. Doubling down on its efforts to force feed cash into the euro zone economy to better invigorate it. Basically qe, the buying of bonds, delivering a greater scope and intensity and duration of that process tomorrow, thats the expectation. The inflation figures today, the headline i object flags figure is a disappointment. More importantly, the core inflation level in europe, when you strip out oil and so on, is actually falling. Thats very important potentially for many people. Greater action, greater qe, greater inten