Galaxy note 7 phone amid all those reports. This is samsungs worstever recall and could cost the company as much as 17 billion. Not coincidentally, apple shares rallying, relatively speaking, top gainer on the dow. John, we sort of set this up in the last hour. Now were starting to put this in context of giant recalls and corporate crises in history. Its difficult to gauge. Smart phone is this unprecedented consumer product, and millions of units, highly profitable. Only a couple of companies in the industry have been able to consistently make profits at it. Apple and samsung. Now youve got samsung stumbling. Equity that could be lost. Google pushing in, competitors at the lower end trying to push up. And its q4. If youve got a premium phone, you can sell it. If you dont, you just cant sell it. How many people shift to a lower profit Samsung Phone . How many people abandon android or how many switch to another android provider . Well have to see. Fte is comparing this to j j and tylenol. That situation took about three months to rectify, to actually get that tamper resistant seal on the medicine bottles. If you had to guess how long its going to take samsung to come up with a new product that doesnt have these problems, how long do you think it would take . Thats a great question. The problem for samsung is unlike Johnson Johnson in the tylenol case, they resisted doing the right thing. They initially tried to downplay the problems. I think that has made this Consumer Problem much worse. The second big difference here is that smart phones have just reached maturity. So youre in a category in which Consumer Behavior is pretty deeply set and people are not upgrading at anything like the rate they did before. And i would not underestimate f youre a customer youre saying to yourself, gosh, do i get the one with the beautiful camera or the one that explodes . Its easy for competitors who want samsungs market share to look at this. Do you think this could happen to anybody . I think it absolutely could happen to anybody. I think what people forget is that smart phones just came on the market in 2008. Weve gone from pcs and lap tops to essentially having a computer in your pocket. That innovation has been very, very fast, faster than any other computing platform. As a result, its a very complex product and anybody who is building such a complex product could have multiple points of failur failure. If thats the case, roger, do we start to worry about other supply chains . To be clear, the note is essentially a battery with a little bit of display and other electronics wrapped around it and lithium ion is notoriously volatile material, subject to this kind of fire and explosion risk. Every smart phone is basically a lithium ion battery. Every tesla car, every electric car is subject to this exact same issue. People have known about the issue from the beginning. There are ways you can handle it. Obviously tens of millions of these smart phones are out there and most of them do not blow up. But if you cut corners and its clear that samsung cut corners the risk goes up. The temptation to cut corners increase, the risk is rising that youll see things like this from other people because of corner cutting. At the same time people have a lot of experience working with this material. So theres really no excuse for it if youre doing a good job running your company. This is a bad sign for samsung. Cheryl, where is the Investment Opportunity here . Qualcomm seeing the note 7 wasnt carrying the application processor from samsung, from qualcomm if people switch with other android phones they might use a premium phone that has a qualcomm chip. Do you think there are other areas where companies will benefit if people shift away from samsungs note 7 . I think the immediate shift is just from one smart phone provider to another. As you mentioned, folks like google who are now getting into the hardware game more seriously. Beyond that, though, there is a brand and platform issue that samsung needs to address. They have other brands outside the samsung line that they need to protect. The smart phone is just the beginning of that. That is the device that almost all consumers carry around with them. And is the first point of entry for people moving into this category. All right. Well move on to twitter, guys of the david faber reporting the Company Still in talks with sales force, a day after twitter fell about 12 as buyers appeared to be losing interest. Bloomberg got a copy of a message from jack dorsey to employees. He says, quote, life is short. Every day matters. Roger, were here again, tossing this one around, trying to see what the companys future is with very little visibility. What do you think right now . Theyre playing in the same game at the same level. The fundamentals have not delivered the results those investors expected. The stock has a premium that, for an acquirer is just way too high relative to the earnings theyre likely to get. The deal would be, i suspect, massively diluted. Its unlikely to be bridged. I can imagine a vanity deal being done here. Its hard for me to see anybody being able to make a great case that twitter is additive to their earnings. I see people who can build other businesses. Google can leverage it. Facebook could leverage it. Not at an earnings sense. That makes this a super tough deal. Is that true at 17 or also at nine . The market cap today is, what, 14 or 15 . Its way off where i think a deal is easy to do. It doesnt mean they cant get it done. These deals are sold, not bought. A lot of smart m a bankers and with enough wine they can get somebody to buy this thing. If im a share holder of the buyer, im not excited to be the sales force has tried to wrap their head around. Cheryl, it might make more sense from a product perspective to have this company go into the hands of a content company. It doesnt sound like any of those companies are around the hoop. Even though jack dorsey is trying to des till the purpose of the platform as a peoples news network. What does a sales force need the peoples news network for . Theres a lot of date value still in the data that they provide. Is it going to be dilutive to a buyer, thats definitely a concern. There is value in the data, in the twitter stream. That definitely is a problem. I think on top of that, if you look at the fact that twitter hasnt really grown in terms of users or engagement or even revenue for the past five quarters, thats also a problem. Thats difficult for Different Companies to parse out. Also have to say, carl, never a good sign when the ceo of the company starts writing notes like they belong at the end of a yearbook. What a long, strange trip its been. Uhoh. I dont know whats coming next. Have a great summer data stream at twitter has always offered, in my opinion, huge potential value, particularly if a company treated it like bloomberg, making products designed for analyzing the markets, politics and news based on changes in longterm behavior on twitter. That potential has always been there. The fact that dorsey and prior managements of twitter have never been able to do anything with that should give huge pause to any buyer. Interesting day. Cheryl cheng and roger mcnamie. The worst day of the month in october for the major averages. Currently the dow is down 153 points. Alcoa shares taking a hit after missing on both earnings and revenue. Shares falling by 6. 5 year over year. The company says thats still on track about a month from now that shares are off, carl, about 11 . When we come back, live interview with barry diller, with us in a cnbc exclusive. Samsungs massive problems with galaxy note 7. How much damage could it do to the companys bottom line . And heath terry will tell us what hes watching when squawk alley comes back in a moment. There are many things you dont want in industrial strength like cologne. Morning but theres one thing you do. gags its called predix from ge. The cloudbased Development Platform thats industrialstrength strength this is my new alert system for whenever anything happens in the market. But thinkorswim already lets you create custom alerts for all the things that are important to you. I guess we dont need the kid anymore. Custom alerts on thinkorswim. Only at td ameritrade. Did on your prescriptions . To save up to 95 introducing, blink health. The new app and website that makes it easy for you to get your same medication, at your same pharmacy, for a lower price. Blink has negotiated some of the lowest prices on over 15,000 medications, and passes these savings on to you. Many of the most common medications are under ten bucks. Thats even lower than many insurance and medicare copays. Just go to blinkhealth. Com, search for your prescription, and pay for it online before you pick up at your regular pharmacy. Youll pay nothing at check out. Blink is accepted at all major chains and most independent pharmacies nationwide. Its free to use, it works for everyone, and purchases are always refundable. Check the blink price of your prescription now, and get 10 off your first purchase at blinkhealth. Com, promo code tv. On top of news that twitter and salesforce remain in talks, what can we expect . Joining us now Goldman Sachs heath terry. Lets talk twitter first. Sure. People love to speculate what they think a company like this would go for. Roger mcnamie just said it wouldnt make sense above 25. Whats enterprise value for this . It would imply about 16 billion. Who could pay that . Could salesforce convince its investors to pay that . Sure. You know, i will start by saying we get all our news on this from you guys, from the rest of the press out there. So we dont have any real inside information on that. That said, i think in terms of who can pay for it, weve always said its big media platforms, advertising platforms, anybody who is looking at it and saying we can do better with that asset than the company has been able to do on its own. Over 300 million users that are highly engaged on that platform. Thats got a lot of value to somebody. Heath, weve seen linkedin basically go already. Microsoft is in the process of trying to acquire it. Yahoo similarly. Why is twitter so difficult . Is it just because management has been ambivalent about doing some kind of deal . Is it the history of volatility in managements, do you think . Ta is it b grade compared to the others . A lot has been written about that volatility piece. Why we are where we are right now. Asset like this is even in play. But its also why the company has had such a tough time getting to the vision that theyve put out there, for what twitter is supposed to be. Getting to the financial numbers for what twitter is supposed to be. Until you get some sort of stability with this Management Team or another owner, thats probably still going to be a problem. Is that code for saying you need a fulltime ceo or is there something beyond that . Honestly, i dont know that thats necessarily the issue. You need a product person thats been in the job for more than 12 months, a ceo thats been in the job for more than 12 months. You need this constant carousel of heads of engineering, product and marketing to stop. If you cant hit targets in an election year, what does that mean for your platform . Youre absolutely right. This is an election year. Its an olympics year. Theyve got a lot of tail winds behind their back, new nfl deal that theyve been doing. It all should be making this a lot easier for them to do. It just has to happen. Theres often this assumption that theres room for a third player or fourth player in any given market. Some people are making that about social media here. Im not sure where twitter would stand in the pecking order. In the case of blackberry, there wasnt really room for a third operating system. Might that be the case with twitter . Might the value actually be considerably less than people think . Yeah, theres data in there but theres data in linkedin, facebook, google. You can get daty a lot of different places. Absolutely. For most of us people around here are probably exceptions. We all only have one smart phone, right, but have multiple apps on our phones, multiple different network. There are reasons were on twitter, facebook and snapchat. As long as that distinction exists for each one of these, that keeps a third place person in a pretty choice spot. You want to switch to netflix really quick . Sure. Heck of a week. Does goldman take any of that seriously . We dont have netflix rated. We have a fourpoint scale we use. Theyre not in our top two. Its largely because netflix is so valuable. The ability to pull from multiple places for content, the ability to distribute everywhere. I think that value will be hard for another owner to recognize. If were talking about a potential laundry list of acquisitions, we cant end talking about pan dora. Right. Do you think that happens in the near future . We do have that one rated as the number two on our list, 15 to 30 chance of it getting taken out. I dont think the Company Wants that to happen. They have this big goal of getting to 4 billion the next five years and revenue from these subscription products. If they cant get there, they cant execute, theres value. That real estate on your phone has a lot of value. Having that beach front that twitter, pan dora, facebook has, has a lot of value. To be continued. Up next, donald trump turning his fire on paul ryan and the republican leadership. Details when we come right back. There are many things you dont want in industrial strength smash like an administrative assistant. Your 3 oclock is here. But theres one thing you do. Its called predix from ge. The cloudbased Development Platform thats industrialstrength strength worst day for the nasdaq, down more than a full percent. Yeah and donald trump lashing out on twitter at paul ryan and republicans who Wont Campaign for him, saying, quote, the shackles are off. John harwood is in washington with the latest. John . Its just getting more intense. Anyone who had the illusion, perhaps earlier in the campaign, that donald trump was going to get to the end of the fall and see himself as a player on the Republican Team as opposed to a player on the donald trump team, that illusion has been shattered now. Look at these tweets. He said the shackles are off. Now i can campaign the way ive wanted to. He said that paul ryan was weak and ineffective. He said that disloyal republicans were showing their stripes and that he was going to teach them how to win. This is relevant because i was talking yesterday to newt ging dls rich. He said we are looking at an historic split within the republican party, republicans loyal to trump and Establishment Republicans who are wedded to the traditional way of doing things. We saw that yesterday when we asked republicans around the country, do you want your member of congress to stick with donald trump, about twothirds said yes. But the rest said no, they should either members of congress should either repudiate donald trump or ask him to leave the race. The problem is you need a high level of cohesion to win a president ial election and high level of partisan cohesion to win senate seats and some house seats in competitive places. This is a big challenge for republicans. Last four weeks of the campaign, i was talking to longtime trump adviser, friend, confidante, roger stone. He said it is going to be brutal. We are bracing for that. Apple and sang samsung at the Supreme Court. For that well go to hampton pearson. Reporter hi, carl. Oral arguments just ended. Apple versus samsung patent battle thats been going on several years now. Essentially samsung asking the high court to overturn a damages battle for patent infringement, roughly 399 million. The money is the least of the issue. Instead the high court is being asked for the first time in a very long time to take a look at a centuryold statute that says, in essence, when it comes to the design of a product, its the design and the manufacturer of the product, its the total profit that matters. Samsung is taking the other view. They basically were found guilty of violating three patents related to smart phones many years ago and, again, not the total patent thats at issue here. So, samsung lost in the lower court. Very sympathetic Supreme Court seems to be bothered by this notion that when you start looking at Design Patents, especially for todays complex Technology Products like smart phones, the kind of all or nothing rule is a real problem. Seemingly looking for a middle ground. How do you keep the basically language but perhaps get some new tests that come up short of this all or nothing approach when it comes to Design Patents . Back to you. Hampton pearson outside the Supreme Court. Hampton, thank you. Up next, plus, barry diller join s us in a live cnbc exclusive interview. Dont go away. Were drowning in. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. The conference call. The ultimate arena for business. Hour after hour of diving deep, touching base, and putting ducks in rows. The only problem with Conference Calls eventually they have to end. Unless you have the comcast business voiceedge mobile app. It lets you switch seamlessly from your desk phone to your mobile with no interruptions. Ive never felt so alive. Get the future of phone and the phones are free. Comcast business. Built for business. Good morning once again, everybody. Im sue herrera. The Supreme Court let stand Lower Court Rulings allowing pennsylvania and maryland to keep tens of millions of dollars in a dispute with tobacco companies, the massive 998 settlement in deceptive advertising of cigarettes. Turkey Prime Minister criticizing Hillary Clinton for comments during the debate, suggesting she would consider giving arms. Turkey considers kurds terror t terrorists. Drone footage purportedly showing widespread destruction of eastern neighborhood in aleppo. Blocks of landscape have been reduced to skeletal structures and bombedout buildings. And Sloan Kettering sa