Chinas. The roadmap begins with netflix shares up 17 premarket and applesed to poised to open at new highs and subgrowth jumped. And mcdonalds beating expectations but revenue in december same store sales missing in what the Company Calls a challenging year. And ebay completing an earnings trifecta beating by a penny as carl icahn announces a stake in the Company Calls for a paypal spinoff. First up, netflix is poised to open at alltime highs. The company adding more than 2. 3 million new u. S. Subscribers to its streaming service in the Fourth Quarter. Netflix says its projecting an additional 2. 2 million domestic streaming subs. And handily beating estimates, 79 cents a share. Talked about new pricing tests that theyre doing when they did the google hangout of a call, you said look for 33 million, jim. They gave it to us. This is a remarkable Conference Call. A confluence of things occurring, first things can understand how can a stock go up that much. There were many people coming in with a sell or hold ratings. And second the Conference Call is masterful. Its well orkes straighted play be that we have all this competition, how great is that. We have all these worries that you have about money, forget it. We dont need to raise any cash. Weve got new programming. We are to quote our old friend this is my own extrapolation, howard schultz, the third way to entertain, you can watch tv or movies. A charming call so to speak and a charmed company. A charmed company. And putting out their growth targets that would seem to meet even the best of cases for the bulls in terms of continued subscriber additions. Yes. There are so many. The letter itself which is just remember, theres a letter. They do things very differently. This is kind of like when you were growing up you always felt there will be this Company One Day and send me a nice letter about how im doing and have a folksy Conference Call, kind of an fdr fireside chat here and every single metric is better than expected. And they do things like i absolutely love this. Its kind of a tv guide, they got turbo fast. Horseman epic series based on the adventures of marco polo. Im probably going to want to watch it. They are exciting in the way that i bet the big screen was when they went from talkie or when we had tv. I mean, they they have a sense of greatness about them that isnt arrogance. Yeah. Because they screwed up and they came out and said it. I like it. And the journal today suggesting they probably learned from those lessons when they made missteps on pricing. This move today as we said, what, 17 plus. Yeah. We know its the most volatile of s p names after earnings and an average swing of 14 versus most components around 5 . Even though this looks dramatic, this is sort of what they do. Theres a great headline in terms of stubborn. Stubborn. Yeah. Okay, so, lets just say that hes been incredibly and ridiculously wrong. Not to pick on anyone in tick but to pick on him completely. The Company Continues to delight and entertain investors as q4 results exceed expectations maintain underperform, raise price target to 175. Wow. It was 60 for a long time. I remember that. Only around 200 down. Actually have a 500 target today out of jpmorgan. Wow. The first ever. That will top the google 1,400. Remember the apple people said, wait a second, apple had a target in 1999 and all i can tell you theres not a lot of shares here so it is still not a Gigantic Company and it would have been a great way for apple to put its cash to work rather than now face the anxiety of twitter. One part of the call real quickly. The idea of Net Neutrality. Did you love that . Weve seen no giveup in netflix stock price since the Supreme Court ruled that we had a court ruling that essentially your Internet Provider conceivably can charge you more for getting the Big Broadband hog in there. Netflix, of course, as much as 34 of all the net traffic in prime time. Right. And yet he seems completely unconcerned if i could call it that. Hes got a great line in here, reminds me how good amazon is basically saying, listen, we have a lot of places that dont have Net Neutrality and we still do quite well or when jeff bezos said we did very well when theres sales tax. And the jpmorgan analyst said and hastings comes back and said you dont need to worry about this because its a legitimate fear, were doing quite well. Its just a rebuttal this is, like, when i say that they rebut things, they bring up the negatives and rebut them. Yeah. Its not like theyre hiding. Theyll say, listen, i know you are all worried about apple and itunes, you are worried about amazon, do you know what, they are terrific worries and you are absolutely right, but we continue to execute. It was a federal Appeals Court when i said supreme. I tried to cover it you. Mcdonalds did beat estimates. Revenues a little shy wrapping up what the km called a challenging 2013. December global comps fell more than expected dragged lower by the u. S. Down 3. 8 and asia 2. 1. Comps rose but the problem is the United States. I know many people will say, isnt this the sum total of the food chain, that people have turned on mcdonalds or Unemployment Benefits have been allowed to expire or perhaps the consumer is a little bit more strapped . I come back to no one seems to care if its bad, if we get a good moment, its a rocket ship. No one is selling off that europes a little positive. Mcdonalds is teflon. Its teflon. I mean, it doesnt taste like teflon. I happen to like it was a 100 stock last year. Its underperformed but people waiting. You would think when you see this, why doesnt it drop on the 80s . Its always been returning capital. People always want to be theyre always one step from saying, okay, this is the turn. Not a consequential number for mcdonalds, just not. The second quarterly drop in comes for 2013. They do see january relatively flat. And theyre going to continue to renovate stores, open some new stores talked about 5 billion in return to shareholders in 2014. Where is wheres the spark, right . Where is the spark . Its in wendys, where they reported an excellent quarter. I like wendys. Does it give you concern about starbucks tonight . I will have to tell you that i think perhaps the most important quarter of this period is goes to be starbucks because weve written the consumer off with the essxception of brinker. You mean hear me out. You like that . Yeah, i do. Were a Consumer Spending society and weve all felt that the consumer is tapped out, so when we find out how many people are still buying the triple v vente cappuccino, i think it will be true that the consumer has slowed. Except they may not have and we made the point while retail has been particularly weak especially mallbased retailers it doesnt necessarily translate that the consumer is weak. Look at amazon or many other ways to look at what judges the health of consumers. And starbucks the mall traffic. But, look, am i given to hyperbole . Never, never. Ive never known you given to hyperbole. Such a wallflower. Indeed. Never overstate anything. Weve been bifurcated since the year began, the stocks connected to the consumer, ala coach, it was 5 below this morning, its not helping the change. But thats been the weakness. If starbucks reports a good number youll see a short squeeze of magnificent proportions in retail. All right. Well look for that tonight. Before that, though, we had an exclusive interview with eba. Well hear about his proposal for a paypal spinoff and a lot more. Futures are down triple digits. A lot more squawk on the street in just a minute. Ebay shares are up this morning after the Company Announced its Earnings Release last night and, of course, also included the fact that activist investor carl icahn has taken what were reporting as roughly a 1 stake in the company. Icahn has nominated two directors to ebays board and hes filed a nonbinding proposal urging a spinoff of paypal from the company. However, ebay says not interested in breaking up its company. Joining us now in an exclusive interview is the ceo of ebay john donahoe. Thank you for coming across country to talk to us. Nice to be here. You may have a fight ahead for you. Youve come out blazing already. In fact, you were the ones who disclosed mr. Icahns position, his nominations to the board and have said pointedly we are not breaking up this company. Why . Well, i think the proofs in the pudding, david. Our companys better off together. Theres an enormous change going on in the commerce and ecommerce market. And ebay and paypal together has delivered very strong results over the last three years. 20 Revenue Growth. 15 earnings growth. 100 shareholder appreciation. And we believe that paypals Competitive Position will be stronger as part of ebay over the next period of time as well. Many would agree that paypal is a strong part of your company and they would argue and mr. Icahn perhaps leading the charge amongst your Investor Base, if you were to spin it out, it would get a higher multiple. It would programs not endanger ebays core marketplace business because you could still use paypal and eventually paypal might get sold delivering even more returns to your shareholders. Why not entertain that notion . The first thing ill say is that our board and i routinely assess all of our alternatives. But what that arguments missing is the very strong synergies between the two businesses. You know, its noteworthy there has not been anyone else who has created another paypal since paypal was created and thats because commerce and payments are converging into one thing. A Payments Network needs a Commerce Network like ebay. Its noteworthy that most of the large Commerce Companies are getting into payments and some of the Payments Companies are getting into commerce. So, ebay makes paypal better. Ebay helps accelerate paypals growth. Let me give you a specific example. Mobile is the most important platform shift that has happened in the last decade. Paypal today is the clear leader in mobile payments volume. 100 of paypals start in mobile started with ebay mobile. 600 million of mobile payments volume three years ago, 80 of which came from ebay. Ebay customer. Ebay volume. Thats enabled paypal to get going in mobile payments where today 27 billion of mobile payments, 45 times increase. Clear leadership position. Started on ebay. And then expanded off ebay and thats been the repeated pattern with paypal in across border and Global Expansion, start on ebay and expand on ebay, we think paypals Competitive Position is enhanced being part of ebay. Why will that continue to be the case when we consider this was the early days, the incubation if you will of this new way of payment but now its more mature . Consumers are certainly well aware of it, they are using ecommerce in so many different ways and mobile has been its own huge growth area. Why is that going to continue to be the case and will it continue to be the case . See, whats interesting we see stronger synergies in the new battlefields. Mobile, thats a phenomenon that is still alive. Going Global Expansion when paypal enters to market like russia or brazil, they start with a large number of ebay customers which then they build on top of to build a strong domestic business. Moving offline, were moving offline together, ebay and paypal, thats a more powerful position. So, in the key areas of innovation, we actually see strong synergies and ive said all the way along, if and when synergies run their course, well be objective just like we were with skype. There may not have been any synergies with skype to begin with. What im saying when we see paths that will knock shareholder value, well pursue them, but for now we think the best value is keeping the businesses together because of the strong synergies. Jim . Lets talk about that. Because theres a lot of companies that have done quite well of late breaking up and i look at your paypal business and frankly i covet it. I want it. Mastercard 96 billion company and 1. 2 billion users and visa, 148 billion, 6. 5 growth and 6. 5 billion users, i would prefer to own paypal to those because of your tremendous growth. Unfortunately ive got to own this gross merchandise business, but ive got a third business that i like, the lucrative middleman business that amazon has to be worried about losing because theyre competing directly. You dont in your web service business. I see three companies here that are easily worth more than 70 billion and i want them. John, i want all three because i think they could be worth 150 billion. You know, jim, i agree, its a very valuable set of assets, but theyre stronger together. We see that day in and day out. Lets take payments. You know the key part of paypal secret sauce is risk, right . Our ability to underwrite both sides of the transaction to make consumers completely safe wherever they use paypal around the world. Risk is data. Big data. And ebay, paypal together gives us 200 billion of closed transaction data which makes paypals risk model stronger. Day in and day out we see the strong synergies and were capitalizing on those that make both the Company Stronger and paypal stronger. To jims point i just wonder about, first of all, hes arguing, making that argument that youll hear from any number of your shareholders who dont agree with the strategy. But specifically to the paypal business, adoption by other users, man would argue it would benefit from being independent because there are those ecommercerelated businesses that dont do paypal because its owned by ebay. Im not sure i agree with the characterization. I think theres only one company that wont integrate paypal, one ecommerce provider. Paypal has 70 of the top 100. Theres not been any hesitation of retailers and american chants integrating paypal because its part of ebay. Why, john, i was out to visit you thank you for your forthcoming interview. Most people wouldnt be sitting here. And thank you for getting john and having the great relationship. I look at it, wife has the stock been stuck in the 50s and disappointing guidance . I mean, i could understand a frustrated ebay shareholder, john. An ebay shareholder has had a 300 return over the last five years, 100 return over the last three years and we believe will have strong prospects Going Forward. In fact, yesterday we announced a 5 billion Share Buyback authorization which is evidence of the boards and managements confidence in our future altogether. Some shareholders would say you have 8 8. 8 billion of cash and generating 4 billion in Free Cash Flow this year. 5 billion is nothing you could return a lot more capital to shareholders if you wanted to. If you look underneath the facts of that the benefit of the company is were truly global. 60 of our businesses is outside the United States. That also means a large portion of our cash and cash flow is outside the United States, so i think if you look at our domestic cash 3. 2 billion. Announcing a 5 billion Share Buyback. You may do a billion and a half a year, again, people saying its not enough. Those are the ones who may very well also would say they like to see the company separated but you feel comfortable with their Capital Allocation. Yes. We feel its intelligent and we invest organically within our business and weve been really inquisitive and we believe a 5 billion return to shareholders over time communicates our confidence in our future. What about the core business that being marketplace i should say which is still larger than paypal . Yesterdays guidance was lower than anticipated at least previous guidance. What are you seeing in your business and why did you lower guidance . Well, we think the marketplace business is having a strong momentum. We guided to roughly 10 to 12 growth, double digit growth globally with strong margins in the low 40s. So, this is a strong, Healthy Business that generates strong cash flows which paypal benefits from. And its a business thats expanding globally. Its a different Business Today as you well know than it was three, four years ago. Threequarters fixed price, growing both domestically and international, crossborder trades strong in this Global Economy. The marketplace business is a new ebay, mobile business. 22 billion of mobile volume, so mobile commerce. Ebays a real leader and will continue to expand globally. To put a period on icahn, you said the board has considered this already. Is there a point at which the board would reconsider it . Well, weve got a great board to begin with. A world class board and every year we reassess our strategies. Its just Good Business. And so every year well look at what strategy do we think is the most shareholder value creating and positions the company best for the future. I dont understand why are germany and korea, these are areas germanys the strongest area in europe. They remain challenged. I see that every quarter. Why are they challenged . Heres the funny part about this, jim, the different part of germany germany is our second largest market. We have 25 to 30 of the ecommerce market. Were huge. Whats different is payments. Payments, paypal has less history in germany because the way germans have historically paid on ecommerce and so our ability to drive growth in the ebay business is also tied to paypal penetration on ebay. This is a synergy paypal to ebay and as we drive up paypals penetration, that allows us to offer moneyback guarantee to all ebay users that