Transcripts For CNBC Squawk On The Street 20150423 : vimarsa

CNBC Squawk On The Street April 23, 2015

Citing that as part of the boost. Some of the blue chip peers not getting the same love. Well get to all of it in the premarket. That strong dollar is cutting into pepsicos bottom line. Well speak to the company ceo hugh johnson in a couple of minutes. Facebook has more monthly users than the entire population of china. The mobile ad revenue impressing some on the street. Despite that revenue miss, where will the stock open today . Procter and gamble quarterly profit in line but sales fell for a fifth straight quarter. Currency effects weighing on 3m. Caterpillar beating the street. We saw construction in the u. S. And north america up. Thats the bright spot we have. Its fairly anemic but its growing. Its Getting Better quarter by quarter. We see that. We are happy with that. Everywhere else in the world we are doubledigit decreases in sales year over year regionally. Weve seen a real dichotomy here in the world. They are upping Sales Guidance upping Earnings Guidance as some of these operateing efficiencies kick in. This is a good quarter. Ive been critical. What is important, if you have north america and north america is significant, then you beat numbers. This is whats going on. We are seeing north American Construction make a major turn. Unfortunately, the rest of the world is just stacked against us. But in this case we forget america is a big market. They have cut costs. We are starting to see good inventory numbers. I had no idea how levered they were to north america. Its not a china play. If its not a china play people want to buy it. Too late to stay short . They say oil will start to bite in the Second Quarter. One thing he did say this cant continue. I dont know how long china pmi will be negative like last time below 50. I dont know how the euro zone will stay as bad as it is. We had weaker numbers last night. Caterpillars u. S. Business is trumping everything. Their raw costs better manufacturing better. This is a change. I like twitter where yesterday Fortune Magazine credited me stopping their insider selling. They did. I mean fortune credited you and they stopped the selling. Im now eating crow on caterpillar. Im saying doug delivered. Is he on the wall of shame . No. Too great a manufacturer. Too great. You thought about it. Yes you did. You were close. Oh i was this close. This was the quarter where he may have been voted in unanimously. He avoided the wall of shame. 3m is a miss at 1. 85. Revenue is a miss. They see the dollar impact two times what they saw prior. He still delivered. Youve got to go line by line. He gave you organic growth im looking for. This is no better or worse than the other major industrials. I think the stock has to come in just because no one thought it was this bad. This was like a basket of currencies you had to be short and theyre in them. I did like the organic growth. He did operating margins plus 22. 8, thats up 9 . Still did 3. 3 . This is positive. All the areas, all business groups on geographies. Dont write off 3m. 3m did a good job. The stock had gone up a lot. Facebook First Quarter revenue, growth shy of forecast. Weighed down by the stronger dollar. Mobile ad revenue 73 of the companys total revenue. Earnings did exceed consensus. Higher spending on r d. Last night you said thats the price you pay for opportunity. Ill tell you right now, the people selling this stave off that revenue miss. They were not on the quarter. They did not listen to this Conference Call, which was a thing of beauty. Im saying it right here. Talking about 5 u. S. Consumer we are not close to 5 . They havent thrown out the first pitch yet. This is the story i thought was magnificent. Yes, they spent. Why . They are building an International Cable system. You are know going to have content they are so cognizant they are turning down so much business. They are turning down business. The phone is ringing right now. Its all user content. It is interesting when you look at employee numbers well below that. Yahoo. There are purer plays at facebook than yahoo. Video exploding facebook. People selling the stock. I was on the Conference Call. My wife was saying what are you doing . What are you doing . Two hours you are on the call. How about Texas Instruments . Stop it already. Lets watch a new criminal minds. No. Im going over this quarter. I had to listen to the Conference Call twice because i couldnt believe the stock was down 2 given this is the Great International growth story. Desktop to mobile. This is the story. This works better than mobile. Payments take place typically on desktop have been plummeting. It shows how. Its all mobile. Its all mobile. Thats what the story is. International cable company. The numbers are extraordinary here. There are 2 billion people on this thing when they are finished. The numbers are explosive. 800 million . I thought that was supposed to be a writeoff. We paid a lot. Dont think we are just going to do nothing with it. But its 33 times 16 numbers. Do i want to pay 33 times 16 . You want to pay 24 times some shampoo company . No. Not necessarily. No. It grows at one on a good day. Its 100 better. I like clorox. Well managed company. This is a company with genuine growth. And they are restraining the amount of money they take in because this guy zuckerberg doesnt want to destroy things. Weve seen price targets in the 130 range. When is it too expensive . I think its too expensive when, if we do not see i think we could go to 100. I do think at a certain point if they continue to say, listen we do not need to take the ad revenue because we are worried about the experience too much well be paying too much. Not right now the guys there are these algorithms that sell stocks when they miss by x. They are down to 81. 78 last night at 5 30. That was insane. The growth is amazing. You dont have a problem with that do you . I dont have another growth story like this. I dont have one. Zuckerbergs quite eloquent. They are hard to find Companies Growing revenues at 42 . With 1. 4 billion. Sandberg is just start now getting movie ads and entertainment. Somebody asked a question. When is geico going to start . Dont forget instagram. When do you start doing video on instagram . When zuckerberg says its not a turnoff. Well start thinking about programming that goes through it. This is comcast without nbc. When is the fcc and doj going to shut them down . Facebook . Knowing these guys . That was a joke. Its usually my role to be sarcastics. Married guys arent sarcastic. You lost your edge. It didnt take long. Half the revenues are from overseas. People dont think about it as a potential victim of the dollar. Who notices that . Theres a line Charles Sandberg is talking about Small Business who would never be able to hire a film crew to put videos on. They are saying tv is too expensive. They are saying something im hearing over and over again. Its cheaper to advertise on facebook than on tv. You still need tv. You still need the super bowl ad, no doubt about it. This is the way to reach internationally, inexpensive way to reach a billion people. All right. Im done. Im done. Okay. Actually, no youre not. There is more to come. Ive got to talk at t a little bit. Weve got qualcomm. Thats exciting. Weve got more. A lot more winners and losers this morning. Well get to what is the busiest day of earnings season. Hugh johnston will join us. Facing challenges due to the stronger dollar. Take one more look at the premarket. Pepsico results out the First Quarter with the top and bottom line. For more on this quarter, joining us now first on cnbc Hugh Johnston chief Financial Officer of pepsico. Always good to see you. How are you . Im doing great, jim. Happy to be here this morning and happy to report a terrifically strong start to the year for us. 4. 4 revenue growth. Gross margins up 150 basis points. Strength across the portfolio. Managing cash flow. We feel good about the start of the year. We are up to a solid start. I know you are proud of this quarter. Looks like pricing is holding up well. Advertising in marketing is giving you a bigger bang than previous. Pricing is holding up well both in north america and around the globe. We saw 3 pricing in beverages we feel great about. We are getting good returns on those investments. You recall weve been increasing advertising and percent of sales and seeing top line working right now the Revenue Group numbers look good at this point. I saw improvement in quaker. Youve been personally involved with that. Ive been upset quaker wants a great brand name. Its the turn. We are turning the corner of quaker, without a doubt. We are seeing more innovation out there. In this quarter we launched three minutes steel cut oatmeal so you could have a great bowl in three minutes. Its a terrific product. Youll see more good things coming out of quaker. Weve been gaining market share across all the categories. Snack bars oatmeal, cereals. The business is starting to perform well. Ten consecutive quarters of gross margin improvement after that restructures. How long does that string go . I think we can do it for a long time to come. I think the combination, number one we are getting stronger and stronger productivity. The company hit its stride in terms of driving productivity. Everybody in the company is relentlessly focused on that. We are getting good solid pricing. Therefore, that is a more sustainable pricing. You will continue to see gross margin improvements. We keep getting earnings reports and the dollar is the common thread. We keep hearing about mix and sourcing and all the things you do when youre up against a currency. How hard is that and how hard is it in markets where the currency effect is the most acute . Its a lot of heavy lifting. I think the pepsico people around the world are doing a great job managing. Right now its a head wind. Localize as much as we can. Number two, price what we have to price responsibly. We have to be careful about how we do that. Number three, really focus on labor and nonlabor costs. Its a lot of heavy lifting for a lot of people. Our people are committed to delivering results. We feel great about how its working. Frito lay is a strong quarter. Take a look at the combination of snacks and carbonated. Youve got a new fellow on the board, mr. Johnson. He is a nelson peltz sponsored individual but paid by your regular board. Do you think he will see these combinations make sense and would not make sense to split carbonated from snacks, given the fact you are a Snack Company but that you do get good cash flow from carbonate . I think all of our Board Members are comfortable with the fact we reached the conclusion that the portfolio truly is better together. We see it developing in emerging markets where the Beverage Business serves as a great platform for the snacks business. We see it in markets like north america. Last quarter frito lay was the number one contributor to retails sales growth across the retail channels. This quarter and north america beverages, we are number one and frito lay is number two. There is no reason to make any change to that. Any change we make would be a negative. Isnt there a bit of irony here. Old days i would look at emerging markets of pepsico growth look at china, maybe europe, the rollout. This is a north american story because how strong our country is. It is both. Without a doubt the americas are performing very well right now. In addition to that developing emerging markets grew 10 for us on the quarter. We wouldnt put them in the back seat by any stretch of the imagination. What you are seeing more than anything else is the portfolio is working very well together. Whether its a product portfolio, geographic portfolio. Frankly, a lot of that is powered by great marketing and great innovation, all funded by that relentless focus on productivity. That is making pepsico work. Thats why we are delivering the results we are. Thank you very much. Yes Gross Margins is the story. That is relentless productivity and well received advertising. Thank you for coming on the show, hugh. Thank you. Great to be with you guys. Tomorrow sara eisen will sit down with cocacola ceo muhtar kent and kathy waller. Carbonated is just a small percentage of pepsico versus cocacola. Diet which is down but not down as much as sara pointed out, not a factor in pepsico. These are very Different Companies now. Very Different Companies. Wouldnt put them in the same category. Interesting. People say pepsi coke. Monster beverage and keurig green mountain. Well get to duncan earnings, a countdown to the opening bell. Here at td ameritrade, they work hard. Wow, that was random. Random . No its all about understanding patterns like the mail guy at 3 12 every day or jerry, getting dumped every third tuesday. This happens every third tuesday. We have Pattern Recognition Technology on any chart, plus over 300 customizable studies to help you anticipate potential price movement. Theres no way to predict that. For all the confidence you need. Td ameritrade. You got this. You can call me shallow. But, i have a wandering eye. I mean, come on. National gives me the control to choose any car in the aisle i want. I could choose you. Or i could choose her if i like her more. And i do. Oh, the silent treatment. Real mature. So you wanna get out of here . Go national. Go like a pro. So many things to hit. I spoke to at t cfo about that quarter. Stock is looking up. This is a Good Opportunity for me to ask you something. I looked at the quarter. I know that directv is going to be a gamechanger for them. Frankly, earnings down. I dont understand. This is the most widely asked stock on mad money. Really . Yeah everyone, at t at t. Raised cost synergies. Why now . I did with the cfo. He said we have more time to analyze all the different ways we are going to benefit from the transaction on the cost side. Full analysis during this interim period. You are talking about things like we can do one truck roll single ads, scale on supply chain. They knew all that but now they are being able to quantify a better way. Not that people didnt expect they would raise those numbers, but 2. 5 billion. That may be one of the key reasons. Thank you. It had decent turn. Second lowest of all time. People look at the additions and say most of its tablets. Stevens makes the point, yes, but we are losing feature phones. We are actually gaining smart phones. That is something verizon said 20 are feature phones. 16 of their Subscriber Base 10 to 11 Million People is feature phones. Isnt that incredible . The dumb phone still lives. I like the yield here. I said i didnt think they had that growth. That helps me. That will come down once they do the directv deal. Thats great. Let me give you really oxygenated growth. Dominos. I was looking for 8 growth domestically. They gave me 14. 5 . People are sitting there on facebook eating pizza. There is no other way to explain it. Look at this. Remember, this is where he came here when he started. What did he say . Boy, the pizza tastes bad. Thats social mobile. You stole it from me. Its social and mobile. Its because i listen. Thank you. Paddy doyle, the single beth user of technology when it comes to advertising. There are no mistaken orders because you do it on your cell phone. You dont have to give the guy a tip. You can do it on your cell phone. It has a great app. If you havent had a dominos lately its on me. They can do it with uber. They can do that. Less than four minutes till the opening bell. Female announcer sleep trains interest free for 3 event is ending soon get three years interestfree financing on beautyrest black, Stearns Foster Serta Icomfort even tempurpedic. Plus, get free delivery, free setup, and free removal of your old mattress and sleep trains 100day low price guarantee. But hurry sleep trains interest free for 3 event is ending soon. Guaranteed sleep train your ticket to a better nights sleep you are watching cnbc squawk on the street. Opening bell in 30 seconds on this thursday. Weve got 170 S P Companies under our belt. Weve gotten to cat and Facebook Dominos and 3m. Tonight Amazon Google microsoft and starbucks which after duncan and dominos has to deliver the mail. Duncan was a very big pickup in actual business. Its a better quarter. I did not think it was that much coffee related. What i think you saw duncan do was recover from weak numbers. There is the opening bell. Nobilis health. Over at the nasdaq its live code training young kids with autism how to cope. Baskin up 8. Tun can. Duncan, im worried about how hot my coffee is. The dollar is killing people. Gm is a miss on the top and bottom line. North american gross margin is the best they had anywhere since bankruptcy. My Charitable Trust owns that stock. Soon as i saw latin america, then europe. The u. S. Is so strong. Gm is a mistake. You just dont know when latin america is going to come back. I dont believe in latin america. Its been a mistake for a while now. Why dont you sell it . I was wrong. I thought they would buy some of the stock back. Incredibly cheap. Great cash flow. I should have bought more health care growth. It was a mistake. Did it wrong. He does not think the dollar is significant head wind. There goes money for charity. I would rather give it to charity than to gm. Procter. 92 cents is a beat. Revenue a miss. Organic sales up one. Currency takes away eight. I wasnt that thrilled with procter. This is the best they can do. Give me colgate. Honestly. Procter wasnt exciting to me. I would rather be in unilever. Thats the other side of the trade. Theyve got the beauty care assets. Theyve got a big sale coming up there. I think first round bids were due yesterday on that. Thats moving along. Beauty down four. Theyll get a big number when they sell that thing. Loo

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