Increase production to meet demand. Roadmap begins with shares of gap falling hard after the retailer reported slumping sales, stocks down more than 40 over the past year. Could it be time to buy . Allergan is on the move this after the companys Earnings Report and announcement of a 10 billion Share Buyback program. What is behind this big move . Well discuss. And valeants new ceo joe papa joined jim on mad money last night. Well see what he had to say about generating cash and buffetts right hand man charlie munger. Gap poised to open at fouryear lows on the companys fifth Quarterly Sales decline. Comps down 5 . The retailer also issuing some disappointing Profit Guidance for q1 saying its looking to streamline some operations and evaluate banana and old navy primarily outside of north america. Old navy down 10, gap down 4, banana down 7. We were looking for increases in some of these comps. Yeah, this is just one of those cases where this is part of this overall we have way too many stores. I really im trying to be unemotional about how bad they really are because people just dont seem i remember this from the heyday. And this is a company thats seemed to have lost usefulness. When you lose usefulness, its hard to get back. Identity crisis across the board. Deeply embedded in the mall. The mall traffic is way down. We know that from l. Brandts a very good models. You flagged that last week and that was an outlier because of course leslslie numbers beat, numbers beat. And a lot of it was victorias secret which i think was undermanaged. Gap is not undermanaged. Have you been to a gap . Ive been to a banana recently. There were some lines. There were . There were also huge sales. Well, i always feel like whats happened is you get into a situation where you look in there and its just like why do i have to be here. I mean id be lucky to buy jeans. Somebody said this morning the traditional retailer who outperforms now is an exception, and for a long time that exception was l. B. Yes. Wloostz whats happened we have not talked about Sports Authority how they went down, pac sun, annas linens, a very good company theyre not dropping like flies. Thats way too little. There is just a sense of im going to call it existential. Right. Is it poetic the day we get gap comps i hate to invest in irony but thats one of those massively ahead of consensus estimates. You read this report and now we know in 1999 there were a couple thousand dollar price targets that were the top. There were. But i think were going to go over a bit of that later because it is fascinating to read that report. A real outlier in what theyre looking for in ebitda for the company. Back to gap though to this point were all making i see some of the research notes, they had a huge degradation in terms of Gross Margins in part because they obviously werent selling stuff where they wanted to. 100 million short of a lot of estimates on the sales side, theyre now looking for 31 to 32 cents a share for First Quarter earnings per share, thats well below the street and so you will see the stock down this morning. Yeah, youre in a situation where youre in a vicious cycle down. How do you pull out of that . Frankly, look, my mom worked at lits, my father worked at g gimbles, we used to say how were they going to pull out of it, they never did. They never did. Finally the theme of mall traffic we come back to and weve had this conversation a number of times, which the mall i did watch one of the key presentations the other day. Even though i was there i didnt see it. Those guys are doing okay. You made the point theyre replacing gaps with things you got to go visit. They want gap. No one wants anybody to go under, no one wants anyone to lose their job but the fact is the longterm leases when they roll over the prices are much higher because no one is building malls. Shopping centers are rarely being built. Just remember Shopping Center and Shopping Mall do you see a day more people are going to go to the mall again . No. But malls have change in what they you know, they have restaurants now. Imax theaters. They have a pet you cant amazon a pet. They have pet co. Piercing pagoda. Piercing pagoda. Its very hard to sell no, i dont know. What the heck do i know . Really quickly we started the show saying is it time to buy, your answer is no. No. I mean, look, you want to go buy a retailer, costco is about the switch from American Express to viz u visa and costco has a value proposition. Do you have a costco card . I do not. You do not . My wife is an executive member. Weve never had the closet space for the giant ketchup and mustard and all that stuff. Well, i feel bad for you. Thank you. When we go to costco were two different people. Im sure you are but you have a lot of homes to fill up. A lot. We should get drexler on and ask him what he would do here. Mickey drexler, he has enough to worry about right now at j. Crew. That means mall traffic. When i go to the mall now i often feel like, wow, i mean, where is everybody. Its like the bull more lanes. Lets get a couple sixes and bowl. They got a lot going on there. The mall stores are great. The apple store is still jammed. Go to the apple store and theres still people there and you got to you know, apple. But the macys, saks, bloomingdales, youre like this is what people do in the country. Im aware of it, but theyre not doing it as much. You go to macys . What is that like . What do they have like shirts . I was in tjx the other day, i got these socks. I paid like those are nice. Do you like these . Theyre very nice. I got these for nine bucks. The guy said do you have any dress socks, and he goes those are dress socks. Amazing, in and out in four minutes. You know where else you can get those . Amazon, right to your house. Cheaper . A story from the morning and a name weve also talked about recently is allergan authorized a new Stock Buyback Program up to 10 billion. The drug company also says it expects excuse me, to execute 4 billion to 5 billion in open market repurchases in the next four to six months. Theyll buy a lot of it back pretty quickly to what they say are favorable market conditions. But it has to be volume limitation. If youre an Irish Company you cant do accelerated repurchase. Right. Theyll be a function of the volume every day. Perhaps more importantly of Course Company reported what was an in line earnings per share number 3. 04 and revenues were a bit light in terms of at least what analysts went into the quarter expecting. They maintain guidance for 17 billion revenues and 10 branded growth for 2016. And the stocks looking up a little bit. You can see there in part on the buyback efb though the revenue number was not exactly people hoped for. You know, the eye drug care from allergan that was up 21 . Botox up 14 year over year, those do matter. Dont forget theyre up against your friends at valeant in some of these determine to logical i just said your friends, that was mean and gratuitous, they are not your friends. No. Theyve never been particularly friendly with me. No, but i do point out these are companies that are gunning. You however did have joe papa on who i dont know if i would describe him as a friend, but he is the man who now is running valeant. I watched your interview with him last night on mad money, jim. You held his feet to the fire in terms of why he left perrigo and why he came to valeant. And i think we do have a couple of thoughts from him in terms of what he thinks he can do to turn this company around. Sure. Look at the tape. I know weve got some things were going to work on. I believe were going to be generating cash, because thats obviously important. Right. We are generating cash. Were generating ebitda. Weve got over 10 billion of sales. So i do think the footprint is in place. Do i have to execute on things . Absolutely correct, jim. But i look at it first thing i need to do is stabilize the company. Thats working with our employees, working with the physicians, making sure that we work with patients. Ive got to get that stabilization. Then after that ive got to turn it around and thats going to be launching some of these new products. Ive got to make sure i take care of the debt holders. Im comfortable i have a plan to take care of debt holders and generate shareholder return. Hes got a lot to do. My takeaway in listening to it was this could take a while. Yeah. And i think thats important because due diligence, you come in but are you going lets say you boost r d, well, thats five times. 3 of revenues to lets say you look at what theyre doing what allergan is doing this morning to medicines. Right now. Remember allergan is sworn bought by valeant. Lets see in that 11 billion what do you get the libido drug. If you want to become merck, if you want to become pfizer, you have to pay the price. The price is a lot of that cash flow the 2 billion in cash flow, you dont have it. When you have 30 billion in debt you have to make sure you can maintain a nice cash flow generation pace to your point margins will potentially decline if theyre no longer able to raise price and or also have to spend a lot more on right turn. R d. He did talk having to roll back. Youre talking 15 , these guys are three and change. Joe made a point that he wants to be in that milieu so to speak, allergan 19 . 19 . And now ive not seen this mornings. The deal were talking allergan still to close perhaps as soon as june, jim, a lot of money coming to the Balance Sheet. Theyll be able to prepay some debt. They have 40 billion in debt, you have 40 billion in cash. Obviously theyre in a position to buy back a lot of stock. But remember the volume restrictions will keep them in there every day most likely, but they cant do or its not as earnings per share overnight because an Irish Company you know, theyll be in there standing there. Not unlike apple. Apple is not an Irish Company, but i think youll find them in there right now at that 93 level, i understand. When we come back, wall street call has amazon going into the thousand dollar club. Well get some details on bernste bernsteins report. Also a live interview with mark cuban spohortly after the openi bell. Well get to rough opens for lumber liquidators, solar city, gap and some others in just a minute. You can fly across welcome town in minutes16, or across the globe in under an hour. Whole communities are living on mars and solar satellites provide earth with unlimited clean power. In less than a century, boeing took the world from seaplanes to space planes, across the universe and beyond. And if you thought that was amazing, you just wait. Amazons up in the premarket. The Company Announcing this morning its launching a youtube competitor called video direct. Amazon account holders will be able to upload clips on the new platform and then bernstein raises its price target from 770 to 1,000 saying it sees Strong Revenue trajectory from both retail and cloud businesses as well as expanding Gross Margins. Amazon, google is making coke, pepsi look like childs play. It is. Whats interesting about this amazon call from bernstein is this idea they say simply that they wont not be able to find new areas investment to keep up with the growth in gross profits, meaning margins will expand because they wont find enough things to invest in the way that amazon has throughout its history. Thats the one thing i wonder about. I mean, they write this report and then 20 minutes later they come out with a new service that one would expect may require some investment. From his first shareholder letter jeff bezos told you hes always going to invest to secure future cash flows. And so bernstein puts out some incredible targets. And, again, a lot of it is due to what they say will be margin expansi expansion, but they always seem to find something to invest in. Youre so right. The irony here is that this basically says, listen, they are out of things. And one of the things that i find is that if you look at youtube, i think its one of the more undermanaged assets so therefore its vulnerable. I think its very vulnerable. I think Facebook Live and look, the convergence is rather remarkable, but if you look at what youtube does, it just does not move the needle as much as i would have thought by now. For alphabet. And i think amazons he senses weakness he just pounces. He really is amazing. Hes you know, here, carl theyre talking video providers distributing content directly to the tens of millions they never give us the number, the tens of millions of prime users out there. And then theyll pay you based on how many people actually stream you for how long. But trump says the same thing. Millions and millions. Millions. Many millions. Bernsteins point is that estimates on earnings and 17 and 18 are in their words shockingly low. Weve heard from bob peck earlier talking about his projected valuation of aws. More than 100 billion. I remember when it first came out i chided him. I said, wow, 100 billion. Well, i think that was about a 300 billion valuation, probably low for the coal company. Yeah, i mean, this bernstein analyst has aws revenues at 12. 4 billion this year, 17. 6 billion next year. So the growth rates slowing but still incredible. To get to 100 billion you have to throw a pretty hefty multiple on it, but it is an extremely high margin business. But importantly also sees the growth of the Third Party Business which obviously has a lot of margin with it. Youre doing fulfillment by amazon, but theyre just taking money right off the top. Its a great business. Its a great business because theres no cost of goods sold for the most part except for wrapping stuff up. They continue to see this rampup in margin. I think this guys going to keep finding things to invest in. I think go after everybody. Thats what he does. Just goes after anybody. And its smart because the market rewards it without having to max out. But hes rewarded that Conference Call was amazing because they basically said, listen, we can do whatever we want. People said, well, theyre going to do whatever they want and we like that. Most companies staid said theyre going to do whatever they want, like solar city. Say please dont. Yeah. Hey, well, thats not in the cards. But amazon, when you get off the desk with retailers theyll say, yeah, our comp stores i hate amazon. You know, the business was pretty i cant stand amazon. Its like, guys, you want to just like give them a xanex and say okay. Amazon is the underlying theme there. It can move onto video and spend 3 billion on content this year or close to it. Remember when we used to think, wow, theyre going to disrupt the book business. Yeah, geez. In for a punishing. How about a little lack of imagination i think on a lot of peoples parts back then. A sell on kroger today by piper jaffry, i didnt think it had that much merit but talking its a bad time for bricks and mortar grocery. Thats all about amazon, go to one of their biggest outlets, its crazy. When they do pets, forget about it. Sell them . Just bring them to your house. You want a dog, be like virtual reality, you look at the dog, get the cage and then its brought to your house. Who needs petco . I like that idea. Your kids want a dog. How about walking by amazon, dog walking by amazon. Theyll send a person to walk your dog too . Look at amazon see what dogs they got there today. When we come back cramers mad dash, countdown to the opening bell, another look at the premarket and other news, icahn going net in one of his funds. More to get to when squawk on the street continues. At ally bank, no branches equals great rates. Its a fact. Kind of like social media equals antisocial. Hey guys, i want you to meet my fiancee, denise. Hey. Good to meet you dennis. Hey, jesse. Who are you . Im vern, the orange money retirement rabbit from voya. Orange money represents the money you put away for retirement. Over time, your money could multiply. Hello, all of you. Get organized at voya. Com. Time for mad dash on this tuesday. Nobodys going to be playing solar city. David, im a fish ficionado Conference Calls, this is one where the ceo starts, he says bookings are great, but they came in a lot lower than expected. So not as great as we thought. David, i have not heard these kinds of questions in my career. Bank of america says youre going to love this, what exactly is the Business Model of solar city . Then this guy, ben, he goes what is solar city . I mean, what is solar city. Thats a good question. By the way, what is the answer . What is the Business Model . It wasnt really clear. This analyst, bank of america lowered installation outlook for 2016 lower contract pricing, increase operating expenses, the headline for it is, who am i now . Existential crisis now who am i now . David, this is a company that i regard in first class crisis. Still getting credits for putting these things on the roof. Are you your energy costs are lower if youre a consumer . Basically youre saying its all done with mirrors and not solar mirrors, but there really is no business because they keep pushing out things. Now, i think it was a little harsh. But ive never heard analysts say what are you . I mean, who are you . Who is solarcity . What is she . It was just a total it was sart, no exit. Yes. All right. We got an opening bell a few minutes away. We should be playing sun city on the way out. Im not sure chip got to that one though. Oh, we got mark cuban coming up as well. Stay with us. This might look like a zerogravity drop. But its actually a triumph of predictive analytics. Because of optum. Through Population Health data, they provide insights so doctors and hospitals can identify highrisk patients. Like me. Asthma. Potential hospital visit. So now thanks to optum, this asthma things under control. Gravity not so much. This is healthier, powered by optum. From health plans to providers to employers. We connect all parts of health care. Healthier is here. Youre watching cnbc squawk on the street live from the Financial Capital of the world. Well get the opening bell in just about a minutes time. A lot to get to. Were going to have a live interview with mark cuban in just a few moments, but amazon, guys, we were just talking about that call out of bernstein raising their price target to 1,000. Its going to test some key re