On wall street. Squawk alley is live. Good morning, and welcome to squawk alley on this new years eve. Im kayla. With me simon hobbs. Good morning. Joining us from one market in San Francisco, founder and editor in chief at the information, also a cnbc contributor, jessica lessin. Good friday to you. Or good thursday to you, rather. Its not quite new years yet, but soon. Its a short week, so its easy to get a little bit confused. First, jessica, microsoft says it will now inform customers if Government Agencies are trying to hack into their accounts. It comes after a reuters report that the company chose not to tell thousands of hot mail users that their accounts were hacked by the chinese government. Reports say microsoft found evidence of these attacks back in 2011, but, rather than informing users, it simply asked them to change their password. It was reuters that reported this originally and reached out to the company for comment. Is there precedent for Something Like this . How do Tech Companies normally approach this . One of the first times this happened with a company identifying a statesponsored actor was google back in china several years ago which actually precipitated them pulling out of this market. 6. Obviously i think signals and political posturing as well. These are always tricky topics. I think its very Interesting Companies are going to blame other governments more, and i think it probably reveals there are some tennings behind the scenes in terms of negotiation. Weve already got this those within social media are not beholden to Big Government contracts in the same way as a microsoft or which will be absolutely, simon. I think theres a different set of issues and less about the contracts and more about filtering or blocking or sensorship or some of these other issues. I think thats probably only part of the calculus. I do think signalling to customers whats going on is very top of mind as well. People are antsy about their privacy and security and no Company Wants to look like they fall for that. The incident that reuters first said happened in 2011, and at that time privacy and security will still be utmost of importance. It really wasnt in the public conversation the way it is now. Im wonder if anything you think theres a statute of limitations they wont necessarily feel the need to address it. Is that fair . Definitely, and so i think we can assume ions in tech time, so i would suspect theres more to the story. Microsoft also up 20 for the year, jessica. Nodella has been able to notch gains year after year. What do you see for the companys turnaround continuing into 2016 because were expecting them to make a big play into Virtual Reality with hollow lens and even a bigger push into the enterprise. What does that look like . I think its too soon to say. I mean, the hollow lens looks awesome. Fun demo. Im not sure if that is a great Consumer Product yet, so that is a big question hanging over the company. I think the mobile strategy will also be interesting. Nadella moved just from microsofts old suite of products to getting more of those Microsoft Apps on the iphone, caring more about the overall user base than lockin. I think thats a really interesting trend. I think theyve done a great job on that. Whether it needs to growth and helping the bottom line i think. Theyve been criticize it for major performance issues, and that might be because twitter didnt actually build it. According to the Verge Development of the app was its not a big deal in and of itself, but it does highlight potentially some continued struggles at the company. The stock is down about 38 in 2015. Jessica, we first learned about the app being out sourced by an employee tweet that was very harshly worded, so there was a long and sorded tale behind this. What do you gleen from the fact that they chose not to build this in house . I say good for triter. Focus. This company has bigger problems than, you know, one app for the mac. Not that the app isnt important, but it had weaker than expected guidance. Its got an anemic user growth. Jack dorsey wants to focus on the company, and i think thats a good thing. These days the Development Process is changing. I think lots of Companies Use contractors. I think this tweet was blown out of proportion, if will you. Jessica, theres also obviously an issue about the new head of diversity twitter and whether he is going to be able to redress2 of the work force actually africanamerican. Where to you think dorsey will be this year coming . Do you think he will have turned around twitter . I didnt realize its more than two years now since the ipo. This has been on the market for a long time and clearly trading below the 26 which it was priced. I think its an uphill battle. I think jack has done a nice job in rallying some of the team internally. A lot of people that we talked to there at the company the execution is tough. I mean, luckily the monotization seems to be working well, and Revenue Growth is good. That doesnt seem to be appeasing investors. 2016 and it needs a different owner and a different distribution. Its one of the big wez. I mean, my belief is its just not a massive one. You know, i think the expectations are a bit out of whack. I think theres a question of is there a sort of smaller more streamlined profitable but not hugely valuable twitter . Then what would it be worth to someone else . You know, i think the ship has sailed for Companies Like google and facebook being interested. It may be at a far lower price, but not now. I think the path for twitter is to be a great twitter. It still has a 15 billion market cap. At the rate in which you could reinvent technology or streamline your own into an existing platform, i mean, would anybody pay 15 billion for twitter . Right now i dont think so, but actually, you know, anybody is a broad word. There could be lots of fires beyond the ones we sort of are thinking about. Maybe in the mobile space and the telecom space, but i think its clear. Sometimes our expectations for it are just out of whack. This is a company that has 300 million plus monthly users and, you know, meaningful revenue. I think some of its getting the expectations back, but thats hard to do when you are in the public spotlight, and dorsey is going to continue to learn that lesson. Certainly we in the media get a lot of value from it, but well continue to see whether it can gain that mainstream traction. Finally, jessica, as we look at the year that was, think about some of the big tech headlines. The apple watch, mobile payments, the space race that really came to a head in december. What do you think some of the top stories were and will continue to be in the new year . With information were really focused on some of the late stage private financings, and i think that was a big story. Not just are valuations out of whack, but looking at the deal and how they came together and the markdown that is mutual funds have made on Companies Like snap chat, zenefits, drop box. I think its something worth following very closely. Were also very excited about new areas like hardware space is heating up again. I think we made our up and comer of 2016, frank wong, the founder of dji. I think weve been hearing a lot about drones and think of them as nice little gizmos, but i think next year is the year when were going to see more of them in the enterprise or see go pro battle dji headtohead. Were very excited about dji. Thats the ipo market, of course. I think snapchat is maybe closer to an ipo than some people realize. I dont think its any time imminent. Obviously, the company has some ways to go on the wisconsin fro Business Front still. Thats another thing were watching for in particular. How quickly can they get their business growing so that they can be public. We start the year in vegas at the Consumer Electronics show which has a lot of news. I know you and the information will be keeping busy. Loved having you, and we want you to have the happiest new year. Happy new year, kayla. I dont want to depress you, but lets have a look at where we are at the markets. Positive for the s p for the year. Up just over four points. Weve now lost that, which means that the s p, the broad market is negative. Dow jones is negative. The nasdaq is the only major index thats up for the year so far. Up 6 . Lets have a look at the nasdaqs leaders, the nasdaq 100 leaders. There you can take victory laps clearly, and the nasdaq losers are like an awards ceremony. It is. Micron fairing the worst. Big china exposure. Chipmakers have not faired well. Coming up, despite lower volume, it actually was a big year for ipos. Big names like shake shack, square, fitbit all going public. Well take a look at the year in ipos and what to expect going forward. Plus, netflix was the top gainer in 2015, but amazon and hulu continue to make strides in streaming video. Well look at some of the new offerings from all three in the new year. And shocking comments about star wars from creator george lucas. What he said and why its causing such an uproar. Squawk alley will be right back. Its hard to find time to keep up on my shows. Thats why i switched from uverse to xfinity. Now i can download my dvr recordings and take them anywhere. Ready or not, here i come whispers now hideandseek time can also be catchuponmyshows time. Here i come cant find you anywhere dont settle for uverse. X1 from xfinity will change the way you experience tv. 2015 say big year for ipos. Bob pasani has a look back. There have been a lot of winners and losers. There have been an unusual amount of losers, and well focus on 2016. Fit bit had a great close to the year. I put shack page in there as well. That was up about 90 . Big name winners. There were a lot of particular segmented losers that were out there this year. Univision. Neiman marcus was floating out there. Never happened. Well see if that happens in 2016. The big trend is 2016. I think its going to be tech stocks. We did already get some filgsz. Business storage companies. This was a big cnbc disruptor in 2015. If they make it to the finish line, they would be the third. Pure storage is on the list as well. Secure works. Thats a dell subsidiary. They also filed about two weeks ago. We mentioned equity stage bats. Thats already filed. Nutanics and secure works could go public in the first two weeks of 2016. They may be the first alumni of the new year. Others that have not filed, but are floating out there. Adaira and student loan refinancer, social finance, also a potential ipo. If the conditions are right, you know, if the markets lift in the first half of the were, a lot of those unicorns are waiting out there, and this is going to depend on the market conditions. Drop box, snapchat, and uber and air bnb and pinterest, spotify out there, and a lot depends on things like your burn rate. Drop box, for example, burning through cash very fast. There may be certain pressure to go public. Others may not have that particular problem. Its going to be a very interesting year, and tech is going to be the ipo sector to watch. Guys, back to you. Lets bring in david menlo, president of ipo financial. Com. I would like to be around danny myers dinner table. I would like to hear how he sees the world after the shake shack ipo, which really was the star. It clearly was the star. It opened up 123 from its ipo price, and it is the best performers as far as the ipo openings. I dont want to say anything poor about the stock, but if you take that universe of, i guess, food stocks and shake shack at the top, theres no way to look at anything else other than purity of what that deal was about, the strength from, virtually every compass pointed. I would not say that is going to typify what were going to see. Because of the performance of shake shake in particular, the investors, the insiders were able to cash out so much of their holdings in this company. They continually came back to market. Many of private equity sponsored ipos that are coming into the marketplace, are doing that very thing, and everybody seems to look past it. Its almost like, i guess, Donald Trumps hair. Everybody sees it for the first time and its, like, what is that, and then after a while they get used to it, and they just figure thats the way things are going to be. Theres no question about it. Thats the best conclusion that you could bring to this particular topic. Weve got basically three different sets of investing that are going on. You have the insiders and the people that are getting these ipo price shares. They are having a ball with that at the opening when they get into the right ones. I guess 123 on shack shack and many others. Thats great. Then you get the Retail Investors that got shut out, and theyre buying the dregs from way at the top. You see a stock like etsy. It drops, and then everybody waits for the institutions to say, well, its a good value here. Down 60 . So it is a very mixed bag. Bomb also mentioned the leftovers. Albertsons, neiman marcus, soul cycle. They filed for an ipo and werent able to to it. Whether it was concerns of laboring concerns by the sec or a stubbornness of the price the market was willing to pay. Does 2016 pave a way or do they get sold . The last example is what this is about. You have insider that is are saying fair market value via accounting standards is x number of dollars, and that is what were going to do. When a market is very clearly saying, as we saw with square, extent matter what the funding rounds are bringing in. Its what the Public Market is going to dictate. They are saying lower. And its an balancings. Insiders, management team, investors saying not on my watch. That certainly leads to us a discussion or comment as were out of time on uber, which i think recently raised funtsdz that valued it at 64 billion. The highest valuation in the private markets. Looking to raise 12 billion in debt. Can they come to market . They can, and i would say the only parallel you can make with that company with any other situation, its not the 800 pound gorilla, the 800 ton gorl wra, it is the Aircraft Carrier in the bathtub. It is going to push people to do stupid things, and one of those is going to be valuations. I dont know that all the analysts are going to have sufficient enough information to really come up with something that is do we have a six to nine, 12 month good investment here, or are we going to see the pop and then the drop . Just to cut to the chase, are you suggesting they can risk coming to market and kicking the tires on that 64 billion valuation . Management could do that at uber or no way it could do that . They can do it. The problem is at what value . I dont believe its going to be at the other ball or whatever their last funding round is. It is going to be lower, and its going to be a small percentage just so they get their foot in the door. Well leave it there. Have a great new year. Always good to talk to you. David menlo from ipo financial. Up next, much of europe on alert ahead of the new Year Celebrations there over the next few hours. Well look at the preparations. Plus, shocking remarks from george lucas on the new Star Wars Franchise that he sold for 1 billion. When we come back. Zirchlg the war of words between t mobile and youtube heating up. Julia borstein live in los angeles with that story. Julia. Kayla, youtube and t mobile are facing off over the way that t mobile is handling youtube traffic. A wlikt which raises some questions about the secs mandate for net neutrality, which means treating all internet traffic equally. Now, heres the thing. T mobile has a new service for binge on for all of its customers paying for at least three gigs of data. It does count youtube, which is not participating. The company caps the walt of all video streams, both those participating and those that dont. Last week youtube accused t mobile of throttling its video stream without user consent, telling the wall street journal that reducing data charges can be good for users, but it doesnt justify throttling all video services, especially without explicit user consent. T mobile ceo john ledger responding to youtube criticism in a tweet saying, our customers heart bingeon streaming video who hitting their data bucket and complete turning it on and off at will. The word throttling, they say, is misleading, and that youtube videos are mobile optimized or downgraded, which doesnt sound quite as bad. The fcc explicitly banned throttling of content. Well have to see if google decides to file a complaint. Google would prefer this would be opt in rather than opt out. Back over to you. Okay. Thank you very much. In the meantime, wrurp is on high alert ahead of its new years celebrations. Russell brussels cancelling fireworks and other festivities as six people are arrested there in connection with an alleged terrorist floth plot. Nbcs chapman bell is live in london with more details. Over to you, chapman. Simon, well, as the clock ticks closer to midnight here, its a high security along the river thames where the fireworks will be this evening. Police are arriving by the busload. We are seeing sniffer dogs checking everything. Its very mythed methodical search here. Police even taking the covers off of lamp posts and checking inside of those, and police going through the trash cans as well. High security here as the threat of terror is high on everyones mind. As you said in brussels, the fireworks have been canceled. Six people detained there related to a possible terror plot on new years eve in the belgium capital. This is in addition to two other people arrested earlier in the week related to this as well. Also, no fireworks this evening in paris. A very muted new years eve celebration there. Heavy police presence. 11,000 police, military, and other personnel keeping the area in paris where the festivities will be under close surveillance, so high security all around as People Get Ready to ring in the new year here in europe. Simon. Hope its a safe one. Thank you very much. The london celebrations, or preparations there. Normally at this time we bring you the European Market close, but markets on the continent for today began their new years Holiday Hours ago. London, paris, and madrid all falling in their respective abelievated sections. Germany and