Ibm shares as carl said moving in the opposite direction at least eight firms cut their price targets on the stock, this after disappointing sales and guidance. Tim cook optimistic about apple music and its more than 6. 5 million paid users. First up, yum brands announcing plans to split into two publicly traded brands, yum brands in china. Them focus on expanding those chains around the world. That separation expected to be completed by the end of next year and continues this trend of Companies Like alcoa, ge trying to spin, sell off, divide into two. Yeah, i mean, my problem here is that i dont like when this is happening, its happening at a time when there still isnt any stabilization in kfc. Taco bell might be added to china. They dont have taco bell in china, but it could be introduced over time, yes. New ceo, members from taco bell. The new ceo of china or yum overall . Yes, the new ceo for china, he has a good reputation. Look, i think that this is something that weve wanted. I would have liked it not to be done at the point of a gun, which i think you can tell us more about corvex and what happened. April Keith Meister introduced the idea of a split, at least to the public, but it does appear as is often the case that this is not something that was foreign to the company, jim. Right. It had been something they certainly had been thinking about and taking a look at was their pace quick nd as the result of him showing up as a Significant Shareholder and publicly stating he wanted to see this ham . Probably. Last week he was added to the board of directors. Right. Well, now they got it done. Now, its not as though they got it done in a weerks theyve been working on it for quite some time. To your point certainly it does look given the volatility in chooip as though somehow its a response to that, but it wouldnt seem to change much about how theyre going to go about operating in china. Now you are going to have a chinafocused company solely, which is going to own the restaurants that will be franchised to the yum brands, which will, by the way, become a noninvestment Grade Company so they are going to split it, then add a lot of debt to yum brands so they can return capital, operate this thing at four times, 4. 5 times. And i wonder whether thats not a risk if sentiment changes towards these high levered companies. I think dominoes went for that model and it worked. And it worked. This is probably the stock it up more because of that than it is actually up because of china. Remember, one of these these ease is that we have 7,000 units in china, we can put up far more. Mcdonalds has 18,000 units in United States and theres also youre buying these units at a very low pay back right now, very cheap. In other words, you get depressed numbers for average unit volume. If they can get the old numbers back then you will have a very inexpensive company. My problem is that last quarter their credibility was really shot because they really told you things were good in august and it turns out they werent. The companys response is you dont understand the volt tilt this have business and i come back and i say i dont want that volt tilt. I understand t those who want to play in china and feel left out by nike, apple, starbucks, you have a year for them to pull it together. Thats interesting. A lot of names that have been buffeted by china are resource weakness like a chesapeake or a wynn have had a miraculous october, yum has been left out of that club. A lot of it has to do with the fact that the company said things were going well and then in a very short period of time they werent. One of the things that this is not the old yum in the sense that china used to go straight up. Does seem like its week to week. Again, i dont know a lot of retailers, restaurants, that are literally week to week or month to month. They will give you transparency about the numbers. Lets say we were talking about mcdonalds and it was plus 2 down 4, plus 3. I mean, mcdonalds wouldnt be at 102, 104. In china they operate pizza hut and kfc. Kfc has been there for a very long period of time, pizza hut is the more casual of the dining experiences and thats where theyve seen nor pressure. Perhaps a reflection of where the Chinese Consumer is, or maybe not. We have gone back and forth about where things stand there. Again to put it in perspective, china owns all those yum brands is going to have 97 franchise restaurants once this thing is done t will move up quickly as a result of china, right now its about 81 but thats because they own almost all the units in china. They still have 20 margins over in china. Theyre still generating a billion dollars in operating cash. 1 billion in operating cash. In that country. Yeah. There is an opportunity to your point it gives people that is correct all right, i do want to own a noninvestment Grade Company with a stable cash flow profile thats going to return capital and or i can also go for the pure plate china now with the ups and downs conceivably but if theyre running the business well maybe more ups than downs. We have seen this. Phillip morris, fast growing overseas versus the altria. You have to separate yourself from someone who may have bought it at 85, 90 where it was not good and someone who bought it after this pre announcement and that person is feeling pretty good. I would say that it is a call not on china, but on their execution in china because i continue to believe that the consumer is doing much better in china, those auto sales are very good in china, the country is making a come back. You just have to hope that the execution has improved in pizza hut, not that good, and that the chinese suddenly discover that they like a burrito with a lot of chemicals in. You never know. Chipotle reports after the close. They have only eight ingredients in a burrito, some of these other guys have 80 ingredients. What are some of those other ingredients . Do i have to go to Westlake Chemical or or dow. Whats in those things . I mean, what is in someone give me what is that magic recipe. Final thought for me on yum if they do have that security that trades as high levered, if the high yield market runs into real problems they may fall out of favor. That at least is one potential risk here. Lets move on to ibm. Eight firms cut their price targets this morning o that companys stock after the dow component posted a revenue miss on a 14th consecutive Quarterly Sales decline. To be fair, theyve sold a lot of revenue. Ibm also lowering four year Profit Guidance in weakness in demand from emerging markets. Earlier in month on sidewalk on the streets jeannie spoke about coping with the head winds that face the company. Around the world there are different head winds that we deal with and it requires a different strategy for all different parts of the world. Obviously weve talked about currency and a number of these things before. These are all things that are part of the Global Dynamics that were managing right now, david. So that is all part about being a Global Business and all part about having a view on the longterm as well. The longterm. It is interesting, we have had two terms, ibm which has been in the midst f this transformation, if you will, making longterm decisions potentially that will benefit the company but short term dont look at the good and of course walmart last week, doing something somewhat similar. Right. Theres always the rick k its not going to work, but at the same time, jim, you always have to say, well, there is also a risk that if you didnt do it youre really dead in the water. Its easier to measure perhaps recognize the risk of action as opposed to inaction. I want to differ i think you are right in terms of what the thrust is, but going back over what Doug Mcmillan said last week, hes saying we are going to go amazon, were going to increase the revenues he didnt say that is correct youre saying he said that. Im putting words in his mouth. When you increase the revenues and dont do it to the bottom line what that says is we can be amazon, too. Take us off your screen for three years and you will think that were amazon and will pay more. Ibm i continue to wait for big clients to come in to say i want to be affiliated with ibm. Now, they do have the strategic growth businesses. Even there revenue decelerated. Decelerated growth rate 27 , i think. And when you go over an oracle Conference Call or you go over a sales force Conference Call its you listen to these huge clients that were won. Ibm does not have that. And instead you look at this older business and its dropping off too fast and it kind of takes my breath away because i dont know what they can do. I mean, ive been thinking back and forth about what they can do, can they split it up, can they try to figure out and then i come across a company that came public not that long ago called pure storage, okay, pstg, and what they said was that flash with this kind of enterprise flash is really just theyre getting killed. Whats the size of the company, 3 billion. What do cothey have bought it for a few years ago . 1 billion. Pure storage is killing them. No, theyre reactive yet, not proactive. They are, again, another year away from making a turn if theres a turn. One thing, 1475 to 1575 is a long way from 20. Remember the promise of 20 . The old roadmap that was abandoned i guess last year or a year ago. Its a tough one. Its a tough run. Now, that said the Company Still generates, what, 13 13. 5 billio in cash flow over the last 12 months. I mean, its always fascinating to watch these as they try to. Reinvent themselves, can they or can they not . The pace of change only accelerates and then its also about execution. Lets look at it this way, go back to your walmart analogy. The wall tons have clearly bought into what mcmillan wants to do, which is to grow, even at the cost of the bought ton line. Buffet, largest shareholder of ibm, is saying i dont want the growth, i want the buy back oochs and i want to be sure the bottom line is preserved. I think that the wall ton family is taking a longer term view than buffet is taking. Thats an interesting way to think about it. Youre right on the wall ton family, which controls walmart. If hes got them he doesnt have to worry. No. I have the level that he has them, its almost as if he is their view, which is that were tired of hearing about amazon being able to play with wampom, crater the Earnings Guidance and go beat amazon. Warren buffet is saying i want that buy back, i want that dividend, theyve hamstrung, they cant pay for pure storage, that might upset warren buffet. But they have done acquisitions. That wouldnt have been a big acquisition. Okay. Youre absolutely right. They will tell you that they have done today snools oodles and oodles. Have they done the right ones . If theyre saying that enterprise flash is hurting them and im not talking about sandisk flash, enterprise flash, pure storage came here and talked about the customers they are taking theyre taking ibms. Theyre taking ibms. We have a lot more on ibm and all the other earnings including utx, verizon, lockheed, harley and a lot more. Just like the eagles disney was a big winner as millions saw the trailer for the new Star Wars Film, ticket sellers felt the force as well and we will get to tim cook, his comments not just on apple tv but on the number of paid users for apple music. Take another look at premarket. Back in a minute. Tim cook expressing optimism about how apple music is faring out of the gate. Last night at a wall street journal tech conference cook said the Music Streaming Service has more than 6. 5 million paid users. Here is what else he said. Apple music i know im finding personally that i am discovering a whole lot more music than i was before. Because i was getting into a rut listening to that same old those same old songs and so i think its i think its fabulous and honestly to have, you know, over 15 Million People on there and 6. 5 million in the paid category and people just started falling off in the beginning of the month, im really happy about it. Also talked about apple tv shipping at the end of next week, said traditional tv theres 700 channels but you cant find anything you want to watch. Well, i think that i want to hear what verizon has to say about their offering with fios. When i interviewed loul mic cadden from verizon he indicated they were seeing significant pickup for that slim bundle of programming. Right. And i think the more you talk to millennials, it is true. Ive been watching disney trade up and i think that thats because espn turns out to be a little more irreplaceable than we thought. Yeah, he is right. The open secret is that from channels channels like lets say 14 to like 78 on mine, i dont know, if i dont want that crucial, you know, Catholic Pope paul vi game. Maybe i want to watch the millburn game against chatham. What are those games . I have no idea. You get up at 8 00 a. M. And go to the bar to watch them. That crucial womens lacrosse contest, i dont know if you missed it. It was a good one. Madison kept it against johnson. Thats like where i would like to see like, say, espn 2. No. Which is just highlight films of last nights game over and over again. Where is that that channel . I dont want to watch the rerun of summit high took the big match away from got it. Do we know whether apple music is a success . I dont know. You have the 40 of people who didnt take it. Spotify has a quarter of their yufrs paid and pandora doesnt break out paid. Its still early. Very early. Its early. Its interesting he said he likes younger people i know really like it, older people like me are saying, look, now i have more offerings than i know what to do with. Im deeply focused on trying to get bad blood. Bad blood. Yes. I thought it was bad blood. I thought it was like taylor swift. That is a taylor swift song. Bad luck. Thanks for clearing that up. I thought it was important. And giving us the latest rivalries in new jersey sports. Some of those are really incredible. You wouldnt even believe what soms ghost on in Central Jersey. In only channels 38 to of a had Central Jersey tv instead of bergen county. With the way sports is going you never know. It is live. Its live and hard to dvr. Curling. When we get back we will get cram cramers mad dash and s p is actually 1. 2 for break even for the year, but ibm is going to make the open a little bit more difficult. Were back in a minute. My language skills, ive read all of your lyrics. Youve read all of my lyrics . I can read 800 million pages per second. Thats fast. My Analysis Shows your major themes are that time passes. And love fades. That sounds about right. I have never known love. Maybe we should write a song together. I can sing. You can sing . Do be bop. Be bop do. Do be do be do. Do do do be do. All right. Here it is tuesday mad dash. Lets get to it. Where are we starting . Theres something happening at eton, what it is aint exactly clear. What it is here, this is oil and gas related. Youre going to start seeing these. Any company that has a line item related to oil and gas its just going to go down. The same way schlumberger said its going to get worse than better. United technology is trading up, doesnt have a lot of oil and gas, you get more aerospace and buy back being aggressive by jack hayes. This is out there. This is not part of the cleveland rent nance. When speculation starts with industrial this is the name that always comes up because inverted. Ohio company. Its in dublin. It has helped them not one bit, daftd. Paying a lower tax rate. This was frank, i have to tell you this is the industrial that people are most fed up with. Why . Because when things got better they didnt get better, when things get worse they get worse first. Its not doing the job. Somebody said how about parker hanifen, but eaten did not have such a bad business mix that they should be doing this badly. Lets move on to valeant, meg terrell was reporting on it a lot. Fascinating call yesterday morning that we reported on, some saying, whoa, did this Company Change its strategy . Now some would say no, but its a note where it takes your breath away because it says, wait a second. This company valeant a drug company is going to have to start making money the Old Fashioned way. New launches, commercial execution, r d. David, those things cost money. They do cost money and they are not the strategy thats been followed by mike pearson that has won him so many adherence certainly in the hedge fund world, namely, i acquire assets, i do everything cheaply, i get rid of people, i keep costs low, i use an extraordinarily low tax rate to help me do thindeals, generate cash flow, stay fairly levered. Thats the strategy, jim, it has been and the question is is it really a change or not . One thing they cant do is use this currency for deals. No. Valeant does not equal bristolmyers. Enough said. There you have it. Thats the mad dash for this tuesday. 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Here at td ameritrade, theyre always working. Like a custom screener on your desktop, that updates to all your devices. And you can share it with one click. Wow. How do you find the time to do all this . Easy. We combined every birthday and holiday into one celebration. different holidays being shouted back to work, guys i love this times of year. For all the confidence you need. Td ameritrade. You got this. Carl kant