The tenyear yield up to 2. 12. Well get ism services in an hour. This is very big day. Well start with disney. Disney shares are rising precip precipitously premarket. Higher revenues at its theme park. Joining us for an exclusive interview the chairman and ceo bob iger. Great to see you. Thanks jim. Good morning. I feel like i have to do a congratulations. I think you are going to hear a lot on your conference call. Marvel franchise, parks and resorts, which were the ones that drove the earnings . Parks and resorts and Consumer Products had great quarters. All our business did. There were numbers that werent comparable. The studio had a great quarter. Last year this quarter we had frozen particularly the video. Media network side we have extra costs on espn because of the college playoffs. All our businesses had a strong quarter. From a percentage increase parks and resorts and Consumer Products led the way. How much is the tech you added, new things you put in during the down turn and how much is gasoline . I think we have a great business in that we offer the consumer a grade product and experience. Its great service, great use of intellectual property and great pricetovalue relationships. I dont think you can look at gas prices or whats going on with the dollar, Currency Exchange issues. I think you just have to look at what is the product we are offering. What is the experience . How much in demand is it . I think clearly over these years, demand for our parks and resorts experience not just in the United States, but globally is increasing. Consumer products i dont think it started here. Ive got star wars coming in q4. What are the merchandise plans there . Can they eclipse the movie . We are not going to make predictions about merchandise. We certainly have grand plans for star wars merchandise. You are talking about the number one franchise in the world in terms of merchandise. There hasnt been a film release since 2005. Weve already seen interest in this film starting to generate increased interest in the merchandise for this film. The film p is seven months away. I think you can expect the number one franchise in the world is only going to strengthen in terms of value, particular lion the Consumer Products front. Right now, what we are mostly focused on is making a great film. I cant wait to show it to the world. Bob, its carl. You spent 15 billion on marvel pixar, lucas film. People snickered a long time ago. You said on our air recently you are fairly confident those were good deals for the company. Is your appetite sated for additional m a on the studio front . We have a great hand on the studio front. And as a company in terms of our intellectual property. Disney was strong and adding pixar added to the strength particularly on the animation front. They turned disney animation around. Marvel a phenomenal brand, a great franchise. The success of marvel in those films since we bought it has been well beyond our expectations when we purchased marvel in 2009. I talked about lucas and star wars. The best is yet to come. We have six star wars films in the works. There will be three released between now and may 2017. I think as a company, weve got a great hand. We dont really need more. We clearly demonstrated interest in intellectual property and ability to leverage it across our businesses over time. Over many territories around the world. I dont want to suggest whether we are sated or not. There are no holes to fill. Bob, its david. During this quarter, verizons fios came out with a new plan to tier various offerings for its video customers. Sports obviously always figures prominently in these bundles, but in this case it appears they may have run afoul in agreements and reports suggest you guys at espn may undertake legal action against them. Can we expect more of these type of different tier offerings when it comes to the bundle . Are you going to get or have to get more litigious when it comes to these companies violating your programming agreements . First of all with regard to verizon, its specific. We believe they violated our agreement, and therefore, we have taken legal action. We are certainly willing to work with various distributors to come up with packages that are of value to their consumers and also continue to provide value for us. I dont think this is the beginning of an era of litigation between the programmers and the distributors. I think theres a lot that needs to be said and considered as it relates to the bundle. I dont want to sound like polyanna but i dont believe the bondle asundle is dead. We believe the bundle basically provides great value to the consumer in terms of choice and price. We are in a new era of great Consumer Choice and Consumer Authority where there has been a shift. Consumers will demand more flexibility and customization. Weve been at the forefront offering that and being willing to offer more. Technology we believe is friend not foe, both to the programmer and to the consumer. I think the key in terms of bundles is how much value is the consumer getting . How much choice and at what price . Is the navigation good . Thats critical. User experience is going to get more important. The last thing i want to bring up because a lot has not been said or considered about skinny packages when you unbundle broadband, broadband costs are going to go up. A lot are buying the expanded basic bundle are getting broadband bundled with that at a bargain rate. When you go to a skinny package, you are going to have to pay for broadband separately. Thats going to be expensive. I havent seen a skinny package that in my opinion creates great value to the consumer yet. We are open to discussion about that. You raised the issue of cost of programming. I didnt. Obviously, this matters a lot for sports. Is there a cap . S is there some way you would be able to pit these leagues against each other . Be able to say we are not going to pay more for nfl . Well say to the bcs, this is all well do and find new sports people watch because we are not going to tolerate endless increases in the price of sports no matter what because we need Live Programming . We bought some things aggressively. The College Football championship is one more recent example of that. We also passed on some packages. We feel at espn weve got a great hand in terms of programming. We dont believe anybody comes close. Thats enabled us to drive ratings and advertising growth. Also to continue to drive sub fee growth which creates huge value and hits the bottom line in dramatic fashion. We did say, by the way, that the cost for espn programming would be higher this first half of the year because of a new nfl deal. The nfl wild card College Football playoffs. You are not going to see costs rise in the second half of the year for espn the way they did in the first. Espn has also extended multiple deals over the next decade. So the next balloon is going to be due to the new nba deal which kicks in in 2017 2018. Beyond that you are not going to see the dramatic Cost Increases weve seen the last few years. Espn costs are going to flatten out. We are not going to buy everything. We cant. Well buy what we believe the viewer wants and we believe will create value for the company. When i talked to investors who are almost uniformly happy if they owned your stock any level any period of time. They talk about disney becoming basically a Consumer Discretionary company a la procter and gamble and say it deserves a higher multiple given that. Do you agree with that . We are Story Tellers first. If you look at whether its espn and their coverage of sports you look at our movies television, we tell a lot of great stories. People like stories. They demand stories. They like to be entertained. They like to be informed. I dont think that we are similar to procter and gamble except in the collection of great Consumer Brands that we have. I think our product is consumed in vastly different ways than people will use tide or crest tooth paste, as a for instance. I think there is some similarities because of the brand value, but i think there are a lot of things that are not like the big Consumer Products companies. Last question. You talk about not necessarily willing to buy all sorts of programming. I saw you were in there buying a huge amount of your stock. Youre in there on the days the stock goes down arent you . We are going to get more specific about that on the call but weve been buyers of our stock over the last number of years. We actually looked at returning capital to shareholders in a variety of different ways. Clearly, we had a great run in terms of our stock price. Weve also managed to continue to increase the dividend over the years. Another big increase this past year. Weve been buying back our stock. On top of all that weve been investing in our businesses and acquiring companies. We think we managed to deliver a great blend in terms of how weve returned capital to investors. I dont know thats necessarily going to continue in the exact fashion that it has. We talked about acquisitions for instance. I think this companys Free Cash Flow is likely to continue to be robust. Decisions how we return capital will have to be made on an annual basis. I guess dividend increases and share buybacks are going to be part of that. Thank you so much. I know its a tough schedule today. Bob iger chairman and ceo of disney. Congratulations on a quarter that really pleases pretty much everybody. Good to see you, sir. Thank you. Iger was named ceo march 05. Stock is up 300 since then. Four times the s p. I like the viewer who wrote in and said bob iger can bench press you with one hand. Probably can. When bob comes on mad money, how many people do you think are in the greenroom when hes there . Nobody. Just sits there. Why . Because hes a humble man, despite the fact he doesnt have to be. Very little drama with him which i think we are accustomed to now you forget the eisner years. You dont forget them where there was a lot of drama. When you see this company, it makes me think, i know we are all supposed to index. No one is supposed to own individual stocks. I listen to the mumbo jumbo from people who say you should be a passive investor. First thing i ever saw was snow white. This is probably one of the most obvious stocks in the world to own as long as this man has franchise after franchise. Star wars comes up next. Shanghai the year after that. There is more marvel in the pipeline. The star wars merchandise, every one of these retailers is claimering to have the right merchandise in it. What can i say . This is why you own stocks. You own stocks because of disney. They have Something Like 80 incremental margins on Consumer Products they put out that come along with the things Like Star Wars or frozen. Its a heck of a business. Interesting i thought his willingness to engage on the bundle and talk about the potential value. That is something we mentioned a number of times as we try to navigate the changing landscape of viewership and are seismic changes going on. That idea that there is something economical about the bundle and if you start to tier thin packages you are going to have to pay more for your broadband. Your question, your follow up is the key one. What about sports . Its so expensive. How can it continue to get more expensive . Or does it start falling off these bundles . We didnt ask him if he expects to face google in a bidding war. We didnt get to a bunch of things. Not enough time. Stags will be on the call. Now hes coo so he will be on the call. Offline not from disney but other people in the sports exec world. I hear weve got to lock these up long term. Google might decide to have all the rights. There are rights issues left. The bcs i thought was brilliant. Move bcs to espn. Suddenly they have to take bcs. Can you really afford not to take espn in a bundle . In an unbundled situation, step back for a second. Darn that, was a great quarter. You are up against frozen dvd up against comparisons. The next one we have 180 million lease domestically against what was probably the most exciting sports weekend i can recall. Right. Well done. Second biggest weekend ever after the first one. When we come back this morning, a lot more to come. Cisco chairman John Chambers who is stepping down as ceo after two decades on the job. Amid signs of a turnaround at olive garden well talk about darden ceo eugene lee. And jeffrey smith. A little bit of weakness as we kick off this tuesday morning. More squawk on the street. Netflix receiving an upgrade to buy from underperform. Taking a positive view on their longtime subscribers citing its rapidly growing portfolio of original target. Doubling its price target to 7. 22. Jeffries initiating tesla with buy ratings saying concerns of china sales are overblown. Netflix stock is 568 today. They take their 2016 numbers from 196 to 432. If you want to eat crow you might as well eat just a whole crow of the tree of crows we saw in the movie the birds. This was an extraordinary reversal of how a guy feels about a stock. 722 target used to be 350 target. Underestimated the impact of original content. Content is king. Thank you very much. Wow. My favorite. 2016 estimate 1. 96 goes to 4. 32. Is that all . Thats all the increase is . Thats all. Saw something he likes apparently. I would have called this is wrong. I would have said wrong. Wrong. I dont think the words we were wrong is in the upgrade. Misjudgment . The tesla call, jeffries initiates with a buy. Theyve done prop surveys that show the company could sell 500,000 cars by 2020. Their upside case 4. 50 on the stock. Its all about the battery. Worries about china overblown. This is the kind of thing that shorts, there is a short story out here. We know this from tesla. This says you are going to hear a repetition of the previous quarter. There were people betting on elon musk. Demand concerns remain overdone. Lets say if they deliver this quarter, there will be a lot of people very surprised. Moving more aggressively toward selling used teslas as they need to as they come back from lease and things of that nature. Seemingly putting a positive spin on that as though that helps to broaden demand for the car. Perhaps that is the case. Average selling price going up. Also ties into the idea used cars are worth more than we thought. Elon musk the battery halo from last week, even though people were saying this is vapor ware analysts want to believe, they very much when you initiate a buy and talking about huge ebitda people dont regard it as an earnings story. Jeffries saying this is a big earnings story. Shorts out here will be saying jeffries, please give me a break. They are talking about model three launch before 2017 commercial fleet. Production ramp faster than expected. You hear wait a second. Ford makes more cars in the time that i said this than they will make all year. The fact is this is a loved stock by some people because the car is such a blast. Well get cramers mad dash and countdown to the opening bell. Stay tune forward our live and first on cnbc interview with ciscos chairman and outgoing ceo John Chambers. One more look at the premarket. More squawk on the street straight ahead. Here at the Td Ameritrade trader group, they work all the time. Sup jj . Working hard . Working 24 7 on mobile trader, rated 1 trading app in the app store. It lets you trade stocks options, futures. Even advanced orders. And it offers more charts than a lot of the other competitors do in desktop. You work so late. I guess you dont see your family very much . I see them all the time. Did you finish your derivative pricing model, honey . For all the confidence you need. Td ameritrade. You got this. Little less than six minutes before the opening bell. Time for mad dash. Estee lauder. Strong dollar be damned here. It didnt matter. These guys have a product people want. U. S. Was strong uk was strong europe was strong. When you charge a lot of money for cosmetics and perfume and can get away with it this is what you get. This is a very well run company. Should be thought of as the king of consumer packaged goods, even though we dont talk about it enough. Macys Biggest Profit Center is perfume. Its a global franchise. Asia very important for this company which is run by an italian gentleman, i believe. Yes. When you looked at colgates quarter which is a Terrific Company and the stock goes down when they report when you look at clorox not as much international, cocacola does okay. These guys have all the same headwinds as everybody else. When you have a superior product you can get rich people to buy, it doesnt seem to matter after currency. It says something about what people really want. Dont forget ralph lauren did not deliver. That has historically been what we thought was the high end. This company is hitting on all cylinders. Its not talked about enough. It will be. Its going to be the blue chip for Portfolio Managers when it comes to consumer packaged goods. People were blown away this morning. Thought they might miss. Well keep an eye on estee lauder. First well speak with ciscos chairman and ceo John Chambers. He will be stepping down this summer. 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