Another IPO Top?: Street Smart (08/08)

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Aug. 8 (Bloomberg) -- On today's "Street Smart," Trish Regan and Adam Johnson find your last trade of today and first trade for tomorrow. (Source: Bloomberg)

High-end conversions.

We really appreciate it.

That does it for on the market.

We will be back in another 30 minutes with another market check it -- neither market check, but first "street smart" is next.

Ipo binging and purging.

The hilton ipo.

And orange is the new black.

But should it be your new investment?

Three takes on whether catching fire and crossfire can fire up your port olio.

And some of the sweet stuff for the c-suite.

This is "street smart " with trish regan and adam johnson.

We are tracking your last rate today and your first-rate tomorrow.

We have we closed -- weekly jobless guns coming in at her than expected, and also china data looking pretty good.

Exports and imports.

All right, trish, time for the big picture.

The picture that shows you exactly what is happening now.

Take a look at the dow industrial average.

It is the first time over the past four days that we are up.

We are not up a lot.

But we are finding a way back to the highs we made last week.

Look at the 10-year.

It is a similar story.

A quiet day.

Not a whole lot of movement.

The 10-year was down one basis point.

2.59%. again, we go back to those numbers you just mentioned, trish, out of china.

Stronger imports in china.

Certainly there will be demand for commodities like copper.

Up three percent rainout.

All right.

Julie is keeping and i am things in the newsroom 4s. i have to keep a watch.

These are pretty incredible reports.

They had a smaller loss than analysts had been looking for, and the founder and chairman of the company back as ceo, taking the reins.

In addition to that, another big personality story, jcpenney, another comeback story.

Bill ackman, one of the big investors, and has disclosed that the former ceo until 2004 would be willing to return as chairman if he gets approval over the new ceo.

Remember, mike altman himself had money to take over the reins as ceo, but it looks like there is a search for a replacement for him already.

Finally, another big personality story.

This one involving elon musk and tesla.

Those shares surging after tesla posted an unexpected profit.

Analysts had been looking for a $.20 loss and he came out with a $.20 profit.

Those shares surging, now up more than 350%. pretty incredible.

We want to move on to the big story.

The hilton ipo.

The hotel operator is getting ready to go public next year.

It was the largest purchase ever of a hotel company.

There is the series of rabbit equity, ipo's nicking -- of private equity, ipo's making a splash in shares.

History repeats itself, and six years ago private equity firms went on a buyout binge.

Now that they are all purging themselves of the things they bought, could they be looking at yet another ipo?

We are joined by cristina alesci, our senior analyst, and jason kelly.

Julie -- let's start with you.

Should we be nervous?

They bought these things and now they are trying to palm them off?

Does it signal anything in anyway?

The smartest guys in the room are selling, if you should ask them.

Well put.

You have seen that selling bench.

There is that bailout from carlisle, apollo.

We keep hearing this theme of we are getting money back to shareholders.

But it is not doing a huge amount of deals, i don't think.

Right.

Do we know how many there might actually be?

We do not know yet.

What is interesting, this is the private equity unwind of this oil.

A lot of these stocks have run up because investors and analysts were not expecting to be able to exit these large investments.

The question is, going forward, will they continue and how much more is left to sell in these portfolios?

Will we see the stock prices continue to rise?

They see big prices back in 2006, 2007, and they are trying to get the money back as opposed to saying this is a home run.

It would be tight -- it would be tough for blackstone to spin it as a home run.

They had to do a lot of refinancing, changing the entire capital structure of the company.

A lot of work went into this deal.

A lot of work and private equity firms tend to want to do on deals -- if you can come out with a valuation at or below cost, that is not the kind of sweat you want to do over deal.

Forget what you paid for it in the past.

What you can sell it for now, that is how you come to a decision.

So what can they get for it?

It depends on what the market will pay.

I think the market is paying incredible valuations.

They are still punishing companies that are not quite ready for the limelight.

83 of these private equity or venture-backed ipo's are coming back out.

As jason said, careful who you are buying from.

Whoever it is might know something about that asset that you do not.

What we know about the ipo market is we have been able to reverse that vicious cycle on average ipos that have come to market have been at 20% and investors are bidding on.

If we can throw the chart back up -- one thing to keep in mind, although there are a lot of ipo's we still maintain large stakes in these companies.

Yes, though they are not selling cheap, they have to continue generating value to get returns on the stocks.

Even though they are selling, there is more running room for them to perform on the investment and another indication of whether we are seeing the market -- not just the ipo.

How much secondary -- ah.

In a lot of cases they still have to hold a percentage on the book.

When you look at the deals they are referencing, 2006, 2007 they are really broken down along the lines of what works and what doesn't. dollar general turned out to be a great example for kkr because they bought a discount retailer just at the time when the world was going into a tailspin.

The secondary point is huge.

That is what investors, what private equity investors are counting on as they sell their stake over one year, two years, three years.

Does this market top in the market?

Cristina, you and i were talking off-camera in the newsroom.

It does not necessarily mean that.

What i was saying before, which is what jason was reiterating, we have seen a lot of follow-up investment by kkr and apollo both.

Both kings this year.

If you look at dollar general, those were ipo's, but these guys are getting out of the stock and the ipo's that a year ago -- they are selling more stock as the market will bear.

Didn't we see this in 2000 11? we did.

Jason and i were in the newsroom reporting on this.

We remember that time , nielsen -- i am playing devil's advocate.

It is important to note these guys had a huge amount to get off their books at this point.

Remember 2006, 2007 were record years for private equity.

It was literally the last adl.

The ceo looked around and said, uh -- quick $6 billion later.

The cycle has some trickiness to it.

What we are seeing is a lot of these are coming through now.

The big question is, are they buying enough?

Let's not discount the fact that these guys love to talk about how smart they are.

We have one of the cofounders of apollo at nine times, six times earnings.

Does it signal the market is having enough?

Nest -- not necessarily.

It took a while for the ipo markets to get back, and there was some pushback there with facebook and the large ipo's. some of them were out, some of them were jammed.

To the extent that they would see investor behavior, irrational candidates in the marketplace, yes.

Not every deal is being well received.

On that optimistic note, we will leave it there.

All right, coming up -- sometimes defense is your best offense.

We have insight and action.

Also greek and out of work.

Why record unemployment is leaving youth in revolt in that region.

We will be right back.

? sometimes defense is your best offense.

Time for some insight and action.

Let me show you exactly what we are talking about.

We have the private sector versus the s&p 500. which i know that we have thought about this year to date.

The defense is running.

Here is the curious thing about the defense sector.

Again, the index is accounting for about 40% of the s&p index.

Hmo's are only 11%. everything else accounts for about 11%. biotech -- that is where all the gains are.

That is where the gains in the s&p 500 healthcare -- take a look.

The health care best-performing stocks, five of them are actually in biotech.

These are year to date.

Boston scientific.

Are you kidding?

Up 94%. that is where the action is.

1, 2, 3, 4, 5. you can buy those spots or you know what?

Make it easy on yourself.

Go out and buy the etf.

This is up 40%. the ibb.

You just have to know where to focus in healthcare, trish.

I guess you do, adam.

Healthcare is not only the best- performing sector.

It is also the most expensive.

We are being joined by our guest from aeg capital.

And for streak red -- 24 years of investing.

You are part of the healthcare and wagon.

Why?

Finally after a decade of the lay we have -- decade of delay, we have these coming on the market, and that is why i am still bullish.

This is going to be a $300 stock or higher because biotech is diversified.

It is not just macular regeneration.

That has a seven percent increase year-over-year in regeneron's last earnings.

However, it is really about this cholesterol reducing drugs that will be the replacement for lipitor.

Doctors have already said, we are going to prescribe this drug and it is the next in a ration of looking at this protein that -- the next generation of looking at this protein that produces cholesterol.

You do not want a one trick tony.

Of course, as i listen to you, you know this company.

You have to know the drugs, the company.

It is really a changing the world story.

Adam, it is really true.

If you go all the way back in the chart, you can see for 20 years, it has flatlined.

Regeneron has gone nowhere.

It can take decades and be extremely risky.

Even my colleagues and associates who do nothing but biotech all day long will tell you you have to know this is rick cap will -- risk capital.

The ibb etf.

Quick that is the way you go.

Diversify through the idf.

Understand that there is a lot of volatility.

-- diversify through the etf.

Understand there is a lot of volatility.

It is great to go in with that etf.

And regeneron has this cholesterol drug?

Yes, for 2014. cracks are they going to disclose that publicly?

-- are they going to disclose that publicly?

Yes.

Thanks.

Under 25 and unemployed.

Greek youth are in revolt.

Part of the global outlook.

Plus, our inch is the new black and three takes on lions gate.

-- orange is the new black.

? this is "street smart" on bloomberg television and streaming live on your tablet, your phone and bloomberg.com.

The latest unemployment figures out of greece are ugly.

It is hard to fathom unemployment can be as high as -- 27.6%. during the great depression we saw in unemployment rate at 25% here.

When you look at young people, that rate is just astounding.

90% unemployment for those between 18 and 24. in athens they have had a regulatory process against and a lot of unpopular tax sites.

And there are those straight protests.

You about to ask, what is this going to mean for the country going forward?

You have any entire generation that is not going to know what it is like -- to get a job.

And for the long-term -- we have what we call the eco-boom, we call them the d generation because they sleep a lot.

We have seen ceo's warned because the order will be worse than expected.

Quick sure.

Even here in the u.s. it is really about youth or king.

The greek prime minister is in the u.s. meeting -- he is.

He is speaking with president obama today.

Biden has spoken about this a few times.

They will have office meetings.

Thanks.

Thank you very much.

Ok, coming up the triple threat.

Hunger games, madmen -- before the bell.

We have and jcpenney.

Bill ackman says that the company is looking for a new ceo.

Bill ackman with a letter that bloomberg news as obtained.

The former ceo , the ceo from 2000 until 2004, again according to ackman, would be willing to return to jcpenney.

The board is conducting a search now.

A lot of moving parts that jcpenney.

It has been a minefield recently.

Ron johnson was brought in from apple.

Each ride to revamp the company.

It did not work well.

You see they are up about 7.5% on this news.

Stay tuned.

We will give you all the developments on jcpenney as it happens.

Quite a tough time.

It looks like lions gate has the right stuff.

The company has acquired two major franchises.

Twilight and the hunger games.

Lions gate purchased crossfire, the romantic novel series, which has sold more than 12 million copies.

They have hit more than two dozen record highs this year alone.

Can this carry the stock even higher?

Jon erlichman has more on the strategy and the trade.

So, your thoughts john?

Will this help the company?

They need a new hit.

I can tell you one thing with confidence.

I am not a teenage girl.

Which means -- [laughter] they make all sorts of entries.

But they have had home runs with twilight.

That continues to be bigs -- the big story for them like similarly filmed -- similarly themed films like ender's game, etc.

And then they have the television components.

The madmen show.

They are also trying to do a lot more original shows for online services.

Some people who have netflix no "our inch is the new black -- orange is the new black." that is expected to generate new revenue in the 2014 fiscal year.

If they keep making revenue, investors stay happy.

Talk about catching fire and crossfire and what that represents.

I think catching fire is pretty predictable.

Many look at the massive box office for sequels.

It probably will do 525 box office.

Domestically a little better because it will play in imax.

Internationally, they probably will have very good numbers.

Enders game will be the beginning of november.

The company has done a good job downplaying expectations, noting they are more of a distributor.

That is smart and clever because the economics will downplay expectations.

The hope is the replacement for twilight will be divergent, which is a series of three books and for movies.

Again, they have done exceptionally well.

There is certainly the option for more twilights to be made.

Jon erlichman, what is the magic for this company?

How do you keep making it's like this?

With no misses along the way?

It took a while to be the stock market darling.

For a bunch of years there, lions gate was putting out mostly small budget films.

If it would do well, people would get excited.

But they have had this 1-2 punch from having the deal would summit to acquire the twilight franchise.

Now that they have got that, you get a little bit of predictability there.

They have been building the tv is this for additional stability, because you know what you are going to get from the series.

That helps.

The next time you have an earnings call and you say, this is doing well, remember , there are markets like russia and latin america and china.

Overseas.

That is the story.

But yes, that is some stuff.

All right.

108%. they are acting like teenage girls, aggressively buying.

I am selling though.

It is a comparatively expensive call.

But following the money room last september.

I am bullish, and i am certainly not going to get in the way of the stock after earnings, looking for a continuation of earnings.

Not getting in the way.

Thanks so much.

Adam?

Coming up, a way to get executives to give up company dirt.

And a little more for your sweet tooth.

Ice cream shops may need to take their box of joe and go home.

? tim wharton's company does have its fans.

But frankly the chain has had trouble getting traction.

Also, a lot of americans are not taking to this.

Julie hyman is here to talk about it.

A i remember at the company ipo, people were so excited.

They thought starbucks.

It was all of the canadiens.

North of the border, timmy's is something they call it.

At tim horton has 4300 restaurants.

Really the bulk of those are in canada.

Only 808 in the united states.

At and the company sees the profitability of those stores as much lower than the canadian stores.

In response to all of this, there are a couple activist and investors who have pushed for a scaling back of the company's u.s. business.

What is the company actually coming out with?

Became a with earnings important that was to say, yes, we are going to scale back.

We will start focusing more on franchisee elation ships in the united states and in 2014 we are going to scale back and figure out another way to attack the united states.

This was about par where they were with canada in the last order.

-- last quarter.

Again it comes back to the profitability issue.

Some things are just not as routable.

Last year, canadian stores generating -- first or.

Here in the u.s., only $20,000. it is an enormous gap between the two.

It is a huge difference.

Starbucks is up 42%, whereas tim horton is only up eight percent.

There are a couple of different issues.

There is the expansion in the u.s. which is not worked.

But in canada, there is also the saturation point.

They sell 10 of -- eight of every 10 cups of coffee in the canada.

There are more there than there are mcdonald's. one other point i wanted to make quickly.

Shareholders pushing for the scaling back also want cash back.

As shareholders do.

And the company will be buying back up to 10% of its shares.

I guess that makes sense.

If you cannot grow the business, maybe you can drive up earnings per share.

Ok.

we will see this up close.

Yes, you will.

And -- a very special double issue of bloomberg businessweek.

It will have the leaders and innovators.

This week, we have the chat with a handful of unique individuals over ice cream.

Take a look at this interview.

I would love a cup of pistachio, please?

It is one of my favorite ice cream places.

Yes, parker gets a lot of attention for pioneers of e- commerce, right?

So, eating that person, i want to ask you, do you like shopping ? i do like shopping.

However a lot of my shopping experience is stock.

So the mediocre experience -- is design very central to what you are doing?

It is a broad sense.

But that is not the only thing we do.

We actually design experiences.

The way that we are living is different than the way we were 10 or 20 years ago.

So, retailers need to be where the customers are.

At the end of the day, we are building lifestyles.

There are the global lifestyle brands.

We have two core missions.

One is to radically transform the industry.

The second is businesses actually can scale, can be profitable and you do not have to charge a premium for its.

Is it working?

Like so far, so good.

Up next, betting on two recoveries.

The market has not quite figured them out yet.

We will show you that, coming up.

? . . time for chart attack.

There are a couple charts today.

We are looking at china and brazil.

An interesting conversation with our closer.

All right, let's start with some of the trade numbers.

Import and export.

Oath picked up.

-- both picked up.

10.9%. the import number improved in china which means companies will benefit.

Yes, very much so.

Let's look at what the dow looks like.

This is exactly what we are talking about here.

Forgive me -- hillary cramer.

I am fixated on the k. you can see the china exports up.

Why is that?

They move together?

Intricately they are related -- intra-gourley -- integrally they are related.

You see the grain, that means there are economy is strong and they're going on.

The brazilian economy, you see this activity in china and outside -- ok, investors want a volley.

They have not seen 17% on the s&p 500. volley is a an iron ore miner.

China is very important.

This document is been depressed.

-- this company has been depressed.

It has a difference with china's and tristan importing.

Let's come here.

Let's look at where they do business.

Let's look by region.

This is really --wow.

It jumped up.

$48 billion in revenue.

Up for those who are not growth investors -- even if the stock only doubles from here you will still be better off.

The chinese imports matter to vale because this is where they do the bulk of their business.

But the stock is still down.

Vale stock is down.

A lot of that is because brazil itself has become very depressed . once commodities drop, brazil drops.

This is an $90 billion market cap.

We have these lien dollar market cap companies.

So many investors do not know.

Who are tomorrow's winners?

Tomorrow's winners are vale.

V-a-l-e. your point is they get so much business with china, look at the business with china.

China is improving.

That's right.

Good stuff.

All right.

Interesting conversation.

Victoria's secret -- angels -- we have your top 10 stocks.

And we have a preview for you next.

Also, hunger games fever.

Find out when lions gate reports earnings.

We are back with the close, right after this.

? ? if you missed everything, we will get you got out right now.

They opened 13 months, it rose 0.7%, mcdonald's is introducing a new menu items including chicken wraps and egg white breakfast sandwiches.

Down 5% after lowering the rating on the stocks that underperform from neutral.

The first performance noting that numerous managers and marketing editors have left the country.

Even though the company says the second quarter net income more than tripled.

Shows like madmen and breaking that helped raise them during the quarter but there are almost over.

Price lined up about 0.5%, the second quarter earnings report.

Estimating earnings of $9.43 a share in revenue, $1.7 billion.

Microsoft rising 2.5%. they upgrade the stock to overweight.

Also lifting earnings guidance for the second quarter.

I still can't -- i grew up in columbus, ohio.

It can't be a more boring transition than the no.

4. dell.

Michael dell lashes out at carl icahn.

He is accused of grandstanding.

He says his lawsuit is just another cell block.

In dodge the bank is under a criminal probe, this is the latest in a swirl of mortgage related losses.

We are still trying to figure out exactly what happened.

They prepare to release the hundred games catching fire, the sequel to the hit movie with jennifer lorentz -- lawrence.

Groupon today soaring 21%. the co-founder, permanent ceo posting strong of an expected revenue.

Managing to break the three-day losing trend.

Getting better than .1%. trades settle, the s&p up about 6 km.

-- about 6. also the china data out as well.

Time for the roundup.

These are the stories we have been tracking ahead of tomorrow.

I want to start with breaking news, a relationship with china.

Smithfield agreed to be part of the chinese company.

Another holder of the company , it is not familiar with this plan, seeking group to form a rival bid.

This was still sort of mired in controversy, that is too strong a term.

But it had been the subject of hearings on capitol hill.

Senators hate to part with their pork.

A little punditry coming to us from adam johnson.

If you look at that intraday chart, you will see what you might expect, a big spike in the shares.

You also have trade data that came out better than estimated.

They imported more and export more.

That is an absolute net positive.

Six consecutive quarterly profits.

The mortgage giant was seized five years ago after it nearly collapsed during the housing crisis.

They will have sent treasury $105 billion.

The company received a bailout of $117 billion.

Mortgage delinquencies are now in their lowest level since 2008. it really does feel mice with the news out of fannie mae and freddie mac.

Even if they are wound down after the most recent initiative, -- this is a problem because they are stepping in and buying more of them.

At the same time, it is a bank that does not step than to support the mortgage market, we will not c.e.o.. the mortgage is turning them into securities, it is very circular . of the adjusted basis is 18 cents a share, the sales story roads here more than what was expected on wall street.

It is a relatively small sample.

Most of the hundred games domestic box office, they made a point of highlighting the are showing good growth in the business although we are waiting for the next big hundred games film.

The tv side of the business saw bigger revenue growth than the film division.

Film was 8%, at t tv doubled revenue to get a lot of licensing.

They have the film entertainment backlog of $1.1 billion.

Remember, this is a stock that already had a big run this year.

Can i ask you a question about lions gate?

They are good at working with the new broadcast media.

They worked with oranges the new black, they released movies on itunes before theaters.

Are they better than their competitors at working with these divergent kinds of media?

You might call them the scrappy player going for some of the projects that don't necessarily fall into the big studios.

They definitely see an opportunity with those folks.

We have more earnings, this time out of price line.

This has been such an incredible story.

I just ran the numbers earlier today.

Since the market lull in march of 2009, this is the ninth best performer of more than 1000%. the numbers the, the company coming in $9.70, gross bookings up 38%. seeing bookings on its website rise by 38%, it owns kyak after a late last year, bookings.com.

In the third quarter, the earnings per share will be 1535- 1630. bookings will rise 27%-34%. at least right now the stock is going up.

According to an improving rental car unit growth, you can book your air travel and other areas.

This is unsustainable.

They have been very good to their investors, but you have companies not just like tripadvisor, but so many other competitors.

A can be analogous to amazon they are guiding up.

I know, but i think that we are setting up for a big letdown.

The barriers to entry are not the same as retail.

Cheap air, i know there is kayak.com, but pcln, this is not the time you want to get in.

Wonder if they do a better job of renting hotel rooms and other stuff.

Adam gets hotels off pric eline.

Expedia.

There is competition among the other players, an example of one where it came out with earnings last week.

And the non-u.s. consumer traveling are not using price line.

International competitors are coming back strong.

Activist investor is ratcheting up pressure on j.c. penney to speed up management changes.

The board begins the search for a new chief executive officer to be named within six months, perhaps.

By mid september, they say the board is looking.

[talking over each other] ron johnson, you are not getting the job done, get out of here.

The former ceo between 2004 -- they are saying that he could come back as chairman and if he had approval over the process.

The other interesting thing, according to people familiar with this situation, they are putting people forward for c.e.o. of j.c. penney.

It is unclear.

Have they talked to these people, are they picking the ideal candidates?

It is not clear what is going on.

You need an old school retailer.

There were problems with the herbalife investment, it is a bit of a red herring coming on today.

I think that it is trying to beat the drum.

It is 1 and dime.

What do you mean?

That is harsh.

That is true.

I want to talk a little bit about cars here, the honda civic won for small car crash tests.

According to all the data, the civic is a top-selling model in the u.s. in the upper small car segment.

I was thinking about this because i was driving a chevy sawtek -- sonic.

If you drive any of these cars, and you get into an accident with a real american car like a tahoe or ford f-150. you're toast.

These econo boxes are dangerous to sit in.

I got hit by a truck.

The civic is the most safe of the most dangerous cars to drive in america.

Tesla closed after surprising second quarter results.

Take a lesson.

-- listen.

There is room to improve.

I hope they do.

Sorry.

[laughter] i really do encourage manufacturers to bring electric cars more.

It is a good thing to bring it to market.

It will bring us a sustainable transport future.

I wish it is going faster than it is.

The analyst asked him what he thought of the bmw and he starts answer and then starts to laugh.

It is a ridiculous looking little car.

Tesla roadster, i can't believe bmw threatens them.

They might sell a fair amount of them, i'm not saying they won't. tesla, great looking.

The i3 looks like a smart car on a diet.

Maybe it will sell well in europe.

It has an internal combustion engine.

We will take a look at what is next on street smart.

Profiting from proxy sites, the ceo of financial solutions.

And making bread with butter systems.

His little brother wants to revolutionize the way they eat out by taking your tablet to the table.

A graduate student goes a clever way to get a job at goldman sachs, here for an interview on weird wall street.

Stay tuned for your first-rate tomorrow.

? you know those proxy mailings that flood your in box every quarter?

Someone has to send them out.

They handle the back-office technology for 98% of financial institutions and it adds up to a $2.4 billion business.

The firm reported fourth quarter earnings that beat analysts' estimates and the success comes down to one reason.

When they attack, they go and action.

We're joined on the set right now.

What do they really do in terms of boosting the revenue opportunity in your bottom line?

Activism and additional revenue.

All nontraditional activities at about the much revenue.

We participate not only in virtually every meeting in north america, who but for institutional capabilities, every meeting at around the world.

I am curious to get out as electronic correspondence might be changing the way you do business?

It has been a key strategy that we continue to take advantage of.

We flood the mail boxes.

I have gotten my share of papers in the mail.

You need to sign up for electronic delivery.

We have eliminated home that which is processed without paper right now.

Me out of pocket cost goes down, corporations save money, everyone wins.

The role we play as an honest broker.

Our goal is that it being processed with rock-solid accuracy.

There are all these shareholders out there behind all of these nominees.

And when the polls close, they get to say, here are the results.

That is because we have $1 billion invested with huge data centers making all this happen of seamless basis.

And they are a partner of bloomberg trademark.

The latest results were strong, but the company's blockbuster franchised enough to fend off competition?

We will discuss at after the break.

? ? time for the next big trade, activision raised earnings on sales, and i thought everybody was moving to a mobile.

We are entering a new consul cycle -- console cycle.

We think the news cycle will be much kinder to companies, the bigger ones will do better.

There aggregating a much bigger audience which, -- with much bigger games.

They are capturing more share, more hours.

Are the games more compelling?

This is some of the most members of content that there is out there.

There is a core audience that is very large and very connected.

That is ultimately what you want in media.

They were introducing new games, what took them so long to get back in the game, so to speak?

The cycle as a bit problematic because it introduces new hardware.

There is more to it last year, they had a hit that earned them about 21 cents beyond their normal earnings.

This year, is before the transaction.

You have about 25% because of them buying the shares.

What they have done is they have bought the shares by about 35%. organically, 15% earnings.

Thank you very much.

That means to be bringing you some market news.

Reganomix, internet royalty.

? you are at a restaurant and you wind up waiting 15 minutes before you can even order first drink.

There is a way to make it better.

With butter.

There is a new system that would put a tablet on every dining table so you order right away, and there is your drink.

One of the code readers of the system comes from a pretty high ready.

Also with us elements of a of the restaurants, the first business to pilot the systems.

Walk us through how this works.

I find it easy to imagine a future where people don't have the flag down their servers when they need something or when they need the bill.

Though we have worked really hard to do is create the best possible customer experience to bring restaurant into that future today.

You come to the restaurant, you're seated and greeted by your servo like you would be normally play all also have this device at the table you can use to order at any time, but it really works seamlessly with the existing wage staff e open up the tablet and he said, -- wait staff.

You open up the tablet, choose your meal and it gets sent between you and the kitchen?

We keep the staff and control.

They may want to do the appetizer first and the andrea little later but from the customer perspective, everything is accessible and on demand.

You have implemented the system in your restaurants?

We have been really happy since we started experimenting with it.

The servers are responding very well to it.

It makes their job easier when it gets into the groove of what they are doing.

The customers loved it.

It is right at the tip of their fingertips.

There have to wait for the waiter to come by to take the order.

E run the risk of losing a personal connection the customer would have with their server.

And maybe the ability to of self?

They do a good job of keeping the servers in the loo.

It would be a problem of the orders went straight to the kitchen, but you have a great report.

It works really well to up so because you think you want the extra glass of wine and the moment has passed.

Workers get in when the moment is to capture them.

That almost sounds like it could replace the waiters?

I think they are still really important in the wall process.

People still like to have the face and they are essential serving the tables.

Helps with efficiencies, and i think it is nice to bring a little technology into the restaurant world.

I've traveled in many airports where they have something quite similar.

How do you make yourself more relevant than the competition out there?

Thank you for having me here.

We know that we are definitely not the first one in this case, but what we're trying to do here is bring the best experience to the customers, and really make every dining experience a fine dining experience that is one of our values.

With the technology, we can provide people a better experience.

You have a lot to live up to, quite the footsteps given your older brother.

How did you come up with this idea?

I was always personally frustrated with the way that restaurant workers.

I like to enjoy the food and drink and the company of the server, but when the server is not around, it is just not a great experience and as far as my brother, i am lucky to have him as a brother.

We're also very lucky to have him has an adviser.

What is the single best piece of advice your brother has given you starting this business?

Ship it.

Sell as many as you can, i love it.

What about the design, the stuff that enables you to ship it?

A that you always want to build the best possible product.

I was really a teenager when google blew up as i did not always understand what they were doing and how they were doing it.

I've a did a really good job on product and making their users happy.

That is what we try and focus on.

It is pretty good that you can go to him for advice.

She is carrying the emmys in hollywood, we will explain why.

? ? hollywood is having a serious love affair with cable.

In the drama category, not a single show from a broadcast network.

Where does this leave broadcast content creators to the extent there are any, or any affected content creators.

Where a senior vice president of research at verizon media.

Let's start with you, why is it that the networks lost their mojo and cable was so effective?

As an to the fact that the networks are putting out the same old cop and a lawyer and medical dramas.

Cable is putting out a lot more interesting characters, innovative.

In short series the control of from episode the episode.

They take a break and they kick up again.

Is this the next evolution?

Sitcoms in the '80s and '90s, cox and robert shows, reality tv, and now series?

The golden age of trauma, networks are picking this up.

They can monetize this because it can be streamed on the internet.

A cbs show, they are getting $750,000 an episode.

Next year, they just announced a spielberg series next summer.

The risks you can take in cable, will homeland really fly on broadcast?

Like a survivor, big brother, they might do well on broadcast and maybe not so well.

The technology is basically making the show's more watchable because you can catch up on the serious.

Now out and watch the three seasons and a week if i need to.

In the past, there has been no way to get in.

The broadcast stations are heavily reliant on advertising.

It begs the question, i want to hear from both of you guys, are we seeing a convergence?

Is it converging so it doesn't matter whether it comes from a broadcaster, cable provider, independent studio?

What allows you to do it is, i have caught up on breaking bad, i know the story line, i will watch this season on the plasma.

A lot of people will watch the regular season.

The numbers have gone up each and every year.

They make it more important to stay on live television.

They have recently come together in a partnership for a certain metric of engagement.

I need to catch up so i can watch the latest episode of madmen or breaking bad so i can talk about it in real time.

What about an integrated platform where you see the show on one side and the twitter feed on the other side.

Almost every operator has a model that is basically that, including -- which has products like that.

It is the very close wave of the future.

Homeland one last time, so i think this year, it is a conflicted antihero who is a female.

I think we are starting to see a movement towards that.

I just caught up to the point where i can start watching live, i can talk about with my friends real time.

I can't let you go without letting you talk now.

Who is going to come out ahead?

Part of what we're talking about is that they want to invest in more programming, and more billions of dollars, and that cost money.

That is part of the argument.

The pga tournament as this week, and what about football season?

September 15. angry time warner cable customers out there.

Football is the end point to a d.o., live sports programming.

And there is recorded programming were both of them are contributing to why cbs watcher dollars and ultimately it might be in their interest.

They can be authenticated on your mobile device.

To offer its a a la carte, it points -- it points to time warner owning these regional sports networks.

His point is, why don't you have your own program?

The reason we bought these networks.

It is also a fair point.

I bet you that these have come to a deal.

They are arguing over price.

Everyone doing this for a few years, you look at the year cbs had by far and away the most watched network.

They are huge and have a lot of content.

We are glad you're here to make sense of it.

Alex sherman, bloomberg films.

Stealing c the deal >offee and a donut.

He wants to get -- sealing the deal with coffee and a gun out with a rather brilliant breakfast plan.

? ? okay, time for weird wall street, a young man stood outside the battery park ferry terminal near goldman sachs, giving c out,offee and donuts this morning so he can get a job.

His goal is to get hired in the investment-banking industry.

We are bringing you a very special guest today, welcome to street smart.

You are out there all morning.

Did you get a job?

I did not, but i got an interview.

It is more than i could ever ask for.

I did undergrad at the university of arizona.

That was incredible, circumnavigating the globe in a ship.

Do you get credit for that?

It sounds like a party.

Somehow i got credit.

You are a marketing guy, i don't know why you want to go to wall street.

I could not agree more.

You have a web site, michaelpenn.com.

You are out there trying to get a job, and you have a lot of leads today.

It looks like you're getting the foot in the door.

Why banking?

This is exciting, somebody wants to go in the banking after all of the bad -- you will do ok.

What is it about banking?

Why go into banking?

It's a game.

You can play the market, entered the market like strategy.

You can play against people.

Were you the national co- champion when you were 9 at chess?

It is all downhill from there.

Good stuff.

That wasn't weird at all, that was pretty cool.

? ? it is almost 56 minutes after the hour, so bloomberg television is on the markets.

Here is how stocks ended the day.

We managed to finish in the green even though the dow flirted with red earlier today, up 28 points.

The s&p up 6.5, the nasdaq up 15. let's take a look at what moved in after hours with reaction to earnings.

Both stocks are trading higher.

Let's take a step back and look at what has been moving in markets recently.

That may bring in a senior equity strategist, joining us from st.

Louis.

Great to see you.

I want to start with earnings, and you actually think that this season isn't so much a macro driver of stocks as it has been in past quarters.

At this point in the cycle, things slowed down and earnings growth slows down.

The probability of a big overall mess, they are really pretty small.

We're looking at low to mid single-digit kind of numbers.

The individual companies are going to miss big, they are going to be by a large amount.

When he lifted the overall market, pretty much in line.

Nothing all that exciting and you can probably expect that for the next few quarters.

Gosh yes, earnings have been at the same sort of the rate they have been.

Does that tell us something about the in demand economy and the economic outlook?

That is what the market seems to be reflecting.

The revenue growth the last few quarters, nothing to write home about.

You had better gdp growth.

It is really quite strong at this point in the cycle, about 2.6%. that is the story for the rest of the year, it will not accelerate very much.

It is not going to be very exciting.

Economics wise, modest.

When you talk about economics, let's get to what might be more exciting.

There seems to be a disconnect here from investors and economists.

I was talking to michael earlier, most economists are putting the tapering what is going on here?

This text has been automatically generated. It may not be 100% accurate.

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