Transcripts For CNBC Squawk Box 20160127 : vimarsana.com

CNBC Squawk Box January 27, 2016

Are among the Companies Reporting results before the opening bell today. After the close, well be hearing from ebay, facebook, and qualcomm. Take a look at the futures. After a strong day yesterday with the dow up 282 points, you can see theres some giveback today. Dow futures down by about 76 points. The nasdaq down by 35. Oil prices are coming under some pressure too. A lot of people are going to be paying attention to apple this morning. Earnings coming in at 3. 28 a share. That was 5 cents ahead of estimates. Thats sort of the good news. The bad news, revenue came in at 79. 9 billion. Apple sold 74. 8 million iphones, below estimates. Mac and ipad sales also weaker than expected. Apple sitting on a mountain of cash, 216 billion, up 21 from last year. Ceo tim cook spoke about all this on the Conference Call. Our financial position has never been stronger. We have the mother of all Balance Sheets with almost 216 in cash, which translates to nearly 39 per i did lutded share of apple stock. We continue to invest confidently in our future, and we also continue to return capital to our shareholders at a rapid pace. Apple now forecasts Current Quarter revenues below wall street estimates. Cook seeing softness in the critical chinese market. Frankly, if i were to shut off my web and shut off the tv and just look at how many customers are coming in our stores regardless of whether theyre buying, how many people are coming online, and in addition looking at our sales trends, i wouldnt know there was any economic issue at all in china. Apple shares dipping after that may have been what he said months ago. This time around he did say if hes looking at whats happening, he does see weakness n china. I think that was the comments he had made back in october of last year. At that point, not seeing any weakness. The story has changed some since then. Now hes blaming currency, blaming all sorts of different markets. The weakness of the yuan happened since then. The question is i mean, thats a piece of it, but how big a piece . Is that relative to the product issue and relative to the cycle . Anybody who used to be saying that apple was doing very well in china and therefore china was n not as bad as expected is maybe rethinking their macro view. We get alibaba later this week, which will be one of the great signs as to whether china is working or not. The 75 billion was sharply lower than people had thought before too. Estimates had been coming down, down, down, down. It became clearer and clearer. Speaking of the yuan, i love the this is. Why cant we write things like this . I love the way they do it. Cannot possibly succeed about this. There can be no doubt. Then they say, declaring war on chinas currency, haha. I love that. Why cant we ever write things . We do. Donald trump says stuff like this. When he tweets. Is it the translation . Is it lost in translation . I dont think so. This is their view of the markets. But the way they phrase things. We hear from iran, too, when iran says things. I dont think the stuff is lost in translation. I think thats the way they talk. Different cultures. All right. At ts Fourth Quarter revenue grew less than expected. It added fewer wireless customers. Weve been hearing about that. One of the reasons it may have been a good idea to do that big acquisition. Strong competition from rivals, adjusted earnings matched analyst forecasts, at t shares down about 2 late why ed. Well see where they are this morning. U. S. Steel swinging to a Fourth Quarter loss. Revenue falling more than 37 . That was more than the company expected, as it faces significant head wind and uncertainty in 2016. U. S. Steel and its domestic rivals have been hurt by a global glut in supply and competition from less expensive imports. The shares were down 8 . Forde ceo mark fields is going blue. Fields is joining ibms board of directors as technology continues to drive innovation. He takes the position as of march 1st. Remember, this is happening after mark fields already opened a bureau in Silicon Valley to make sure his engineers are kind of cooperating with the technology and bringing it into the cars designs. Also, toyota retaining the number one spot for global sales. The japanese automaker selling 10. 1 million vehicles in 2015. That outpaced both volkswagen and gm. And bill ackman says sorry to investors after it suffered its worst year. Saying, failing to sell shares of valiant pharmaceuticals was a costly mistake. Things arent looking much better this year. Portfolios already down about 14 . Theres a section of that letter with the heading humbled. A word that doesnt often come from bill ackman. Down 14 is rough. If you have the time, its a remarkable letter. I know its floating around. Does false proceed humble . I think its real. I dont guys with billions of dollars he wasnt humbled from target. I think this is different. There are some people when they lo lose, it gets inside their head. They feel it. Thats where bill is at this point. He would be a better person if youre right. Let me tell you about some other news. The heads of some other wellknown firms are expressing bearish views. The comments coming at a closed investme m investment conference. Joe in. Back to the apple story. Joining us now is the managing director in tech, media, and Telecom Research group at fbr Capital Markets. Our own john fort is also with us. Whats your price target now, dan . 130. When did you lower that . What were the highest prices . The high was 185, down to 130. I think part of it you know, a lot of analysts are in the bull camp. A lot . All. You got to take off the rosecolored glasses. This was definitely finally. And this was definitely a bit of a gut punch for the bulls because of that china piece. That was the game changer here. That china commentary is what i think spooked investors. Dan, to finally take off the rosecolored glasses now, what would you tell investors that listen to the analysts as they wore the rosecolored glasses all the way until it was so clear to everyone in the world now so they finally take them off now. An analyst is supposed to be able to sort of anticipate things, not just follow the fundamentals of the company, right . They dont have any culpability in having these poor investors hang on to the bag as the smart money gets out . I think its a great question. I think as anyone thats covered technology for almost 20 years, we view this as more of a nearterm situation for apple from a Growth Perspective because i think ultimately it comes down to iphone 7. Thats really what youre hanging your hat on in terms of you know, we have a 240million unit that could be in the horizon. You look at apple trending seven times x cash. This is one as an analyst its a handholding period. You dont put up the white flag. We view it as similar to two years ago from 5s to 6. Its a turbulent period, but i think brighter days ahead with the iphone 7, as well as what cook does with 200 billion in cash. We were talking, just a couple guys getting makeup together. Right, john . Thats where we have some of our best conversations. We really open up. Its our locker room. It is. Kind of like our locker room. The big question is, you know, maybe they get a car some day. I dont know. A lot of competition. Maybe they get a tv some day. I dont like the watch. I mean, i dont have one. But i dont know if thats going to do it. Is iphone 7 enough to get this to a trilliondollar market cap . Im going to give you the two ends of it and tell you where i think i fall. On the one end, some people are saying this is blackberry all over again. Look, their growth has stalled out. Yes, theyre saying their services and accessories revenue is growing 23 , 24 , but thats got to slow down once that catches up to the slowing hardware sales. So thats sort of the negative take. The china story isnt what it used to be. Its probably going to get worse because tim cook said that china actually Greater China started to look bad this month. So not just in the quarter they reported but in the quarter they about to report. So we dont know how rough thats going to look in the march quarter. But the other side of it is maybe this is just a couple years ago all over again. Maybe when we move into the iphone 7 cycle, you start to see the trends reversing. The Dollar Strength isnt affecting them as much. Some of these emerging markets doing poorly actually start to do better. They grew 8 versus 2 with their current outlook. And you also have to factor in samsung, things that were supposed to slay apple actually didnt this cycle. Those are two extreme stories. The apple is blackberry seems crazy to me. I still have a blackberry. I buy a new one every three years. To joes point, right now were going into this bipolar situation with apple. Youre either core bear, like john is on the blackberry side, which i believe is almost an embarrassing three thesis, or you believe this is similar to 5s to 6. It went from a market cap of maybe 400 billion down to 300. Just ignore big numbers and say its the same. Theres two extremes. Theres a far cry between where now and a trilliondollar market cap. The reason im in between on this one is apple has not been great at services. Theyve already cut off a big potential business for them because theyve said were not going to make a market on user data. Thats why iad didnt work. Thats why they cant move into direct competition with google and facebook. They say, were not going to sell user data. There are a lot of doors you cant open then. Theyre relying still on hardware hits. The thing is, their track record with hardware hits is pretty good. Is this the end of apple in is this the end of the line . I think the question is, what are people going to buy instead . Doesnt look like theyre buying anything else yet. So they still have time to come up with something. Theres a difference between calling it apple and apple stock. Its not going to be the end. This company made 18 billion in a quarter. Thats unreal. The question i keep asking is, okay, assume its not a hyper growth stock anymore. I think thats clear. Where is it fairly valued . About 40 of it is cash. The chart looks like theres people that say its headed to the 70s. But its not valued like a growth stock now. Im looking for a valuation expert to tell me you cant guarantee 18 billion a quarter. If you assume relatively flat hardware growth and 30 to 40 margins Going Forward, how much are those billions of dollars . You said theyve had a lot of hits over the years. This is not a conversation about tim cook, but are we when you think about hits, do you really look did you think theres a steve jobs era and Everything Else era in terms of the hits . I think the time for that, to argue that, has passed. Steve jobs did come up with the ipad, but it did not evolve into a big, longlasting hit, just like the ipod was not a big, longlasting hit as the iphone was. They come up with what by anybody elses standard would be a hit. I think the iphone is like a once in a lifetime effect wheve you corner the profitable part of the market on a product that changes everybodys life. Thats not optimistic. How many lifetimes do they have . Its kind of like microsoft had a once in a lifetime event with the pc, and theyre still trading on it. Never got to a trillion either. True. I think now its really the big question that i was getting last night and this morning is, does cook and apple do they do the 200 billion. Right now, the street is not going to give them credit for that cash unless they do something, whether its a gamechanging acquisition. But to your point, its a proveme situation here. A lot of it was baked into shares. You saw that last night. Now its really iphone 7. If youre bullish on that, thats the opportunity here Going Forward. So the ipad is already passed . Should i not trade in any newton and try this ipad out . You have an ipad. He always pretends he knows nothing about technology, then he puts a little zinger for there with the newton. You know what i mean . What, theres Something Better than a newton . Theres a pager with a keyboard on it. Huh . Rims got a pager with a keyboard on it thatll get your email out faster than anything. So i should trade in any walkman. But i have the big foamy earphones that are great. Youll have to bring back your mustache wearing those things around. John, what i spend on hair spray, you save that, but on powder we spend a lot of money. Does it offset it exactly . I think it does. I like the view. Whats more expensive, powder or hair spray . Were like yin and yang. Powder is much more expensive. Looks bad ass though. Liesman needs to do that. Have you talked to liesman, why he just doesnt do it . We talk about this all the time. Scared. All right. We got to move on. Thank you. Its the shoptalk, the makeup room. Couple of girls. Lets get a check on the markets this morning. Take a look at the futures. Again, the futures are weaker this morning with the dow down by 71 points below fair value. Yesterday the index was up by 1. 7 . That was its biggest gain since december 4th of last year. Despite all those gains we saw yesterday, the dow is still down by about 7. 2 for the month to date. Take a look at whats been happening in the early trade in europe. Youll see l right now that it looks like there are some red arrows there as well. Looks like the dax is one of the biggest decliners of the major markets. Its down by 0. 6 . The cac is almost down by 0. 6 . The ftse down by 0. 4 . Overnight in asia, the nikkei was up by 2. 7 . The cospi up by 1. 4 . The china shares closed, im guessing, since were not showing them here. Also, look at what happened with wti. Yesterday it was up by 3. 66 . Just since the 21st of this month, wti up about 11 . You can see this morning its giving back some of those gains once again. Its down a dollar. Thats a decline of over 3 . As crude oil goes, that has really dictated which direction equities will head. If you take a look at what happened with the tenyear note, right now it is yielding just at 2 , 2. 005 . Gop front runerer donald trump says hes skipping tomorrows Republican Debate. Mr. Trump is boycotting this final debate ahead of the Iowa Caucuses because of a fight with fox news. Trumps chief rival ted cruz is now challenging him to a oneonone showdown. Here to help us break down this latest development in the race for the white house is politicos ben white. He joins us this morning from naples, florida. So he doesnt get to present his case like a couple days before the iowa caucus, but he was going to be everybody was going to go after him again. If he does something with wounded warriors, here we are talking about him again. Were going to be talking about him until thursday. Is this just another cue dee that . Another brilliant move to keep mr. Trumps name in the news again . Can it backfire, do you think . It can definitely backfire. I go back and forth on whether this is genius or a form of political suicide. You know, its not going to hurt him nationally. Hes said himself he could go shoot one on fifth avenue and not see his numbers go down. I think he could go on stage and slaughter goats and bathe in their blood, and his numbers wouldnt go down. But this is iowa, where its very close between him and ted cruz. A couple points separates them. Iowa decides late. They take this thing very seriously. You basically telling iowa voters, im knot goinot going t you one more chance to listen to me on issues, to talk about positions, to go head to head with cruz. Theres going to be an empty podium there. He risks latedeciding, undecided iowa voters. Ben, i even take shots at politico and the media, as you know. I know you do. Have you merged with huff post yet . Get it over with. You have all the same content. Were working on that. Just put it together. Synergies and overlap. We couldnt be any further from huff post, not that i dont love huff post. Please, the hill makes you look you make the hill look conservative. Heres the question. The media is always ripe for criticism. It plays to voters. Look at the history of the debates weve seen. Dont want to go there. In this case, if you saw that note roger is really crafty. Maybe he finally got fed up, but that was a pretty snarky piece about the ayatollah and get your twitter thats weird for a News Organization unless they really do want to pick a fight. The fox news press release. Kind of taunting him. And megyn kelly couldnt back down this debate. You knew there was going to be a cur fufl there, probably. I think theres a method to all of trumps madness. I think there is a method to a degree. I agree with you, that press release, it was a little funny, but it was a bit over the top and clearly was taunting him. He said himself that thats the straw that broke the camels back and made him decide not to do the debate. Maybe they wanted that to happen. I cant imagine that because hes right when he says the debate ratings will plunge without him in there. And beating up on the media always plays well, but megyn kelly is viewed very positively by a lot of republicans. She was perfectly fair. She asked him about various comments about women that were negative and derogatory. Going into a race where shes likely to be facing the possible first female president , perfectly legitimate question. Hes been whining about it ever since then, which is ridiculous. You just dont skip the last debate before iowa when youre tried in the polls. Its not going to hurt him in New Hampshire. Hell still win there. Its not going to knock him out of the race. Could it cost him iowa . Its conceivable it could. Ben, it was interesting. I think your piece was the one that laid out the history for this. The last time weve seen debates skipped. I didnt remember any. You pointed out that Ronald Reagan chose not to debate in 1980 before the iowa caucus. Yeah, there was that and the reagan moment where he said he paid for this microphone. Its not unprecedented for this to be this jockeying over debates. You remember in 1992 there was a guy in a chicken costume who went around following george bush, saying is chicken george wont debate because the Clinton Campaign wanted more debates. This is a tradition in politics but hasnt happened in a while. Hasnt happened this close to a vote in iowa that is on a knifes edge. With all things donald trump, we all have absolutely no idea how its actually going to play out. Were clueless. I think its not a real smart move for him when its this close in iowa. It could cost him some independents who arent going to be happy about an empty podi

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