Good friday morning. Welcome to squawk alley. Im kaylee towshe. Rick santelli joins us as well. Carl quintanilla has the morning off. Executive editor kara swisher. Good morning to you too. How you doing . Im in d. C. , actually. All right. Lets get to our top story today. I think well work on karas audio there. Shares of microsoft at alltime highs this morning for the First Time Since 1999, the company beating the street on the top and bottom lines and showing Significant Growth if the cloud. Former microsoft ceo Steve Ballmer joining our friend op squawk box talking about the stellar quarter and a potential acquisition of twitter. I have never, ever, ever wanted to buy twitter myself. I mean, come on. Ive got a good life right now. I dont need to do that. Of course, mike, they asked the question because he is a large twitter shareholder, not just an outside tech observer. Interestingly on microsoft this morning, people are joking that it only took 17 years to get yours. If you were holding it since 1999, youre doing pretty well. Doing pretty well. People are saying they initiated a dividend over that time, total return, youve been ahead of the game at least a little bit. I thought ballmers comments said we put things on the right track before i left and this is the logical place we got to as a company after that. Its true. Ballmer gets the blame, at least so for a lot of missteps, for missing mobile, for maybe not being aggressive enough in social, for losing to google. But microsoft did under ballmer transition from being more of a consumer play to more of an enterprise play, buildup window server to a lot of things that were absolutely essential. Sateen worked under him to build up the cloud to what it is now. A mixed legacy, certainly not all bad. Kara, are you there . Yes. Your take on the quarter and ballmers comments this morning . It was interesting about the twitter. The twitter issue because he is a big shareholder and there were those rumors. You know, i think microsoft is doing great under theyve taken this company and changed it. Steve had a very good run for a while and then missed a lot of turns, very critical turns around mobile, you know, moved into advertising, they tried to get in the consume area. I think sacha has focussed the company on cloud computing. Hes not a flashy ceo but hes doing things effectively do exactly what microsoft is good at. At cloud, who is doing well . Is this an industry there can be multiple winners . Amazon had the field to itself for a long time. Google is trying to get into the space too so it will be a competitive area now. Google was very late and i think they were busy doing other things just like microsoft was doing. These are things right in their wheelhouse, both of these companies. So it should be interesting Going Forward. A. M. Son will see a lot more competition but amazon was way ahead of the pack on this and others are catching up. Mike, some people sold microsoft shares after the linkedin deal got founsed because they said its expensive, will take time to adjust, theyll get distracted. Not the case. And it came after a tough quarter so that was a direction microsoft felt compelled to go. Definitely confusing but i think the cloud momentum is coloring the entire story at the moment and people arent talking that much about linkedin as a key input. I think linkedin is important because you have these megascale cloud players now trying to place bets that extend their advantage. You see microsoft teaming up with linkedin. Thats going to be difficult to make work, but if it does it enhances, you know, the benefits they have in share point and outlook, a lot of the things theyre trying to do communicationwise within the enterprise. You also see amazon doing this deal with vmware which potentially gets them into microsofts wheelhouse. Amazon has not had those enterprise chops in the past. Kayla, you raised a question about whose ebs penxpense this to large extent the hardware players you used to have to go through if you wanted to build up a data center. Now that microsoft and amazon and oracle and others are doing that themselves, you dont have to deal with those folks. Lets turn the conversation now to another megamedia deal that may be in the works. Dow jones now reporting that at t is in advanced talks to acquire time warner. The deal could be announced as early as this weekend. Our own david faber confirming that the two companies have held talks. Take a look at the crowd gathering around the time warner post. The stock had been halted for volatility earlier this morning on the back of that dow jones news. Kara, does this deal make sense to you for at t . First directv and now this . Yeah. Theyre still digesting directv. Thats interesting. It still hasnt completely been complete the way they probably should be focusing. But, you know, at t has been mentioned in a lot of these purchases of yahoo and all the other stuff. Its similar to me to a comcast nbc kind of deal and, you know, at t has needed to get into the Digital Content space or they felt theyve needed to so it makes sense there. Other people are wondering if they will help time warner, if not, but i think there might be some other buyers that might enter the picture. You can imagine news corp. Coming back in and looking at it. That seems to be to me a fit that makes more sense. But a lot of these Pipe Companies like at t and comcast and verizon, obviously, are getting into the content business or feel they need to Going Forward so they have digital unique Digital Content offerings. If youre 21st century fox, john, whats going through your mind . Well, i dont know, but i did talk to Peter Chernin at barry diller yesterday and raised this because headlines were coming out. They had different reactions. Chernin was like yeah it could make sense, diller said no, not really. Teaming up with at t doesnt help you to figure things out. You basically do that if you ear giving up. Who nose what these guys motives are for taking the positions they do . Without question, content is hard and not every distribution player is going to be good at shepherding that kind of a business. One thing youre thinking about if you ear 21st century fox is time warner is much bigger than you are. 21st century fox is less than 50 billion right now, time warner is above 60 billion with this advance. It got away. When you think about the approach made last year, jeff bu kis was on the defensive, said there was more value in the company then to be taken over. Was he right . I think they may not have wanted to get acquired by news corp. That was one issue. The cultural issues there. You want to hold out for the best price, but no question hi business is under siege and pressure. Peters got to be part of this whole thing. He has a relationship with at t. So theyre probably consulting with him quite a bit because of the expertise in this. Id be shocked if he wasnt deeply involved in this. There are only so many choices you can buy and if youre pipe company like at t you have to look beyond your current business. Like john said, content is hard and its under pressure and its a question of whether they can do anything more with it, if its additive or not at all and theyre just buying it and its a big, splashy headline. I dont know. Mike, cbs and viacom both shooting higher on this news, up sharply about 2 apiece. They have their own issues to sort out. Their own issues, considered to be an inside job. And yet there continues to be lots of talk and has been for a long time that cbs and time warner make a lot of logical sense to put together. Theyre partners in the w cnet work, i believe, and just in general you have the broadcast network plus the cable player, showtime and hbo, whether that works or not. Im not saying what thats why the stocks are up, but it sort of touches off all this activity. Even discovery and amc are seeing stocks go up because nobody seeing how theyll go. Buyer be bought. Seems to be that time of year. Kara, what about a potential cbs time warner tie snup. I that idea. That makes a lot more sense than these eres. I think the difficulty these phone companies or Cable Companies have are very apparent is whether they add to the situation. A cbs and a time warner to me, youre exactly right, fit together beautifully. Both in the same business yeah. One of the reasons that time warner didnt want to sell to fox that they gave was it has the family control, dual share class situation, which, of course, cbs has as well. Cbs market cap right now 26 billion so, that would be a time warner takeover of cbs. Interesting, though. Quite a land grab going on in this space, kara. Well have a lot to discuss Going Forward. Kara swisher, our thanks to you. We want to check on the markets this morning. Wear little off the lows. The Dow Jones Industrial average down 80, in that range far while, ge weighing on s p in particular. Lets check out shares of Reynolds American, shares of the tobacco maker soaring on news that British American tobacco is offering to buy the remaining stake in the company they do not own yet for 47 billion. Numberone winner the s p 500 today. Reynolds america. Ge posting better than expected Third Quarter operating profit of 32 cents a share, revenue shy of consensus, and ge narrowed its fullyear earnings guide and increased stock buyback by 4 billion. When we come back, immigration and focus as were just 18 days away from the general election. Cesar conde joins us next. And well continue breaking down the microsoft earnings. The stock trading at an alltime high it hasnt seen in nearly two decades. And cnbc exclusive with paypals ceo john rainy. More squawk alley next. Theres a lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity where smarter investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. Immigration, racial profiling, and opportunity for all have become hotbutton issues on the campaign trail. With more than 55 million hispanics living in u. S. , roughly 17 of the population, hispanic voters are poised to have an unprecedented influence on this election and, indeed, on the economys ongoing recovery. Joining us now at post 9 with some insight, caesar conde is chairman of Nbcuniversal International group and Nbcuniversal Telemundo enterprises. Welcome. Thanks for having me this morning. Great to have you here. As so offen the case with issues in this election cycle and the hispanic community, it often becomes about immigration and, you know, criminality and things like that that dont represent 17 of the u. S. Population. How is this playing and what do you think will be the ongoing effects of some of the rhetoric that weve stirred up in this Campaign Cycle . Look, i think its safe to say weve never seen an election like this. Theres a tremendous amount of interest by the Latino Community in this election. To give you a little context, as you pointed out, the u. S. Latino Community Today is over 57 Million People here in the United States, 17 of the population. And besides the raw numbers, i think whats really interesting is not only are the numbers growing exponentially and the demographic, the influence in the United States is growing exponentially, influence on a virt of fronts cultural, social, xhishgs and of course political. You know, on the cultural front, great examples like today in the United States salsa outsells ketchup, which is incredible. On the political front, yes, theres a lot of interest, but every 30 seconds in the United States a la tino turns 18, an eligible voter. This demographic has exploded in the last 15, 20 years. Today the u. S. Hispanic population has 1. 5 trillion in Consumer Spending power. If we, the lahtino community, were our own stand alone market, we would be the 14th or 15th Largest Consumer market in the world. So tremendous opportunity right here in our backyard for any company and any industry. Has the economic and cultural awareness of the growth in this group kept up with its actual growth . It seems like to me, maybe im wrong, around 15 years ago, a lot of people discovered this market. But i dont know that the nuance of how latino millennials, you know, their preferences, their tastes might be different from, you know, what their parents were. If thats sunk in for a lot of the marketers and companies trying to capture the attention of this group. I think that there is clearly still a gap in the understanding or the opportunity that this presents for marketers, companies, any industry of this Growth Opportunity right here in the United States. And we are certainly focused on ensuring that people understand that opportunity. Kayla . I was going to ask about the election itself and how heavy a hand you would envision telemundo playing, because your competitor, univision, the chief at the top of that company has donated 10 million to Hillary Clinton and has actively played a role in trying to get her elected. Do you think its appropriate to go that far as a Media Network . Our philosophy at Telemundo Enterprises is very straightforward we believe we need to cover all sides of the issue, all candidates to ensure our community is properly educate sod they can make an informed decision when they go to the polls in this cycle. In this cycle, yes, we have a president ial cycle but we have very important federal election, state and local elections. The Latino Community will have incredible impact on all of those. Today to give you some context we all have about 13 million to 14 million latinos that will place their votes in this election cycle and their impact will be outsized because they have such high percents of the population. In key swing states, florida, colorado, nevada, arizona, theyll decide that election and latinos are a large percentage of those populations. Finally, original content has been a big push from telemundo. What do you think when you see netflix doing narcos and trying to export that into other markets, your competitor picking it up . Is that interesting . Is that succeeding for them . Sit ip influencing you at all . Were seeing a tremendous amount of interest in this demographic not just in the United States but throughout the world. For us, this is wonderful news. Telemundo has had a tremendous growth trajectory over the last year, particularly the last few months. We became the number one Spanish Language network in the prits yooits in prime time and that is focused on developing original content thats made by latinos for latinos right here in the u. S. With story lines that resonate with that. What we love about seeing other companies, its raising the bar, raising the options for our consumers. In this particular case, weve had competitors from netflix and our original content has been able to double or triple that type of content. But the fact that high quality premium come tent is coming to this is great for our industry and great for marketers trying to reach them. Great to have you and that unique perspective on an increasingly important demographic in the u. S. Caesar conde, Telemundo Enterprises. Still to come, the big winner of the morning, microsoft. The company surging on growth in the cloud up almost 5 at the moment. Well hear what former ceo Steve Ballmer has to say about that. And on a programming note, be sure to tune in to power lunch today with facebook cofounder dustin moscow vits. Audi pilotless vehicles have conquered highways, mountains, and racetracks. And now much of that same advanced technology is found in the audi a4. With one notable difference. The highly advanced audi a4, with available traffic jam assist. Were drowning in information. 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. Microsofts Ceo Satya Nadella has been pushing a focus on cloud and computing rather than pcs. Commercial cloud annual run rate exceeds 13 billion and we remain on track to achieve our goal of 20 billion in 2018. Whenever our customer chooses one of our Cloud Services they continue to adopt more services. Joining us Battery Ventures general partner and a cloud investor and keith weiss, microsoft analyst at morgan stanley. Thanks for being here. Put in perspective the opportunity for microsoft with regard to the cloud base. Its now the new focus. Theyre quoting nadella is quoting the annual run rate of revenue. Where can that get to and is that the driver for whole company . Cloud is a once in a Generation Technology transformation thats happening. You look at 300 billion of cloud spent and thats 3 billion of onpremise spend migrating to the cloud. If you look at their 13 billion revenue run rate, which by the way at 58 Revenue Growth year over year, very impressive. I think theres a lot more to go from here. How much of that 300 billion is cloud so far . Where are we in that process . My estimate is roughly between 10 and 15 is the penetration rate ofloud computing. And the other thing thats important to note is its not a one for one transformation. 1 of on premise can easily equal 2 or 3 of cloud