BlackBerry for Sale?: Street Smart (08/12)

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Aug. 12 (Bloomberg) -- On today's "Street Smart," Trish Regan and Adam Johnson find your last trade of today and first trade for tomorrow. (Source: Bloomberg)

There is a whole industry that exists already in that industry is not going anywhere.

They have not been able to shut it down for years.

There is an industry that will limit the pricing for the product.

I do think there will be a need to control distribution because you have a drug that has a high street value and high street demand.

Doctors' offices, medical clinics hospitals will need some way to keep track of inventory.

Those companies that have a good way to moderate it are good investments.

We will watch to see how it turns out.

Thank you very much.

Back with more on the markets and 30 minutes.

"street blackberry for sale.

The struggling smartphone maker launches an effort to try to save itself.

Is it a good buy?

And a whale of an earnings tale.

The world is releasing its first full earnings report since the company's ipo, but an expose say about the darker side of the marine park either could affect them.

That plus, doing less time, federal prisons are facing overcrowding.

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

Flat mining after g.d.p. mrs.

-- flat lining after g.d.p. misses . correct to 0.5% growth it's something, but not what we were seeing from japan earlier in the year.

Time for the big picture.

We will show you what is happening for our markets.

You can see on the far left side, the dow jones industrial.

It reveals overnight concern over japan, slower growth.

Take a look at technology.

That is where the the excitement is today.

It the other -- the iphone5 is coming out september 10th.

And blackberry says it could be for sale.

And finally, take a look at gold.

The chinese are buying a lot more gold than they did last year.

54% more than they did in the first part of the year.

These are the stocks that you need to be watching as we head into the close.

Matt miller in the newsroom, what are you watching?

Correct i am keeping it off with alex iyan -- i am taking it off with alexion.

There are different ideas on price.

And cisco reported -- ciscosysco reported estimate is no longer on ballads.

And finally , a beam's c.e.o. said the market is fragmented but to many private the owned companies.

But acquisition costs could be hurting everyone these days.

Correct blackberry is on the brink of putting itself up for sale.

And this time, the company means it.

It said it was considered -- considering strategic alternatives last year.

Now is looking for a special partnership or an outright sale.

Prices for its z10 smartphones have been cut.

With prospects dimming, who would want to buy blackberry anyway?

I want to bring in jon ehrlichman, and gas.

Mark, i will start with you.

Do you run the risk that you will seemed desperate?

That a good question.

I don't understand why they have done it like this.

Why now?

Clearly, that is because the z10 operating system has not gone according to plan and the board has decided it is time to pursue alternatives.

The hardware business, frankly -- the services business is highly profitable.

Grex and you're talking about blackberry i am.

Yes.

But the hardware business is a bit of an albatross.

For those in the industry, it is not as if this is being used.

It's almost got a for sale sign on it anyway.

And now they're coming out and think about by the way, in case you missed it, these really are for sale.

What might be the strategic options for them right now?

When you think about how things have gone like this before, who might be a buyer?

Or do you think that people learn their lesson learnpalm?

Everybody likes to kick the tires.

Maybe there is a possibility with some of them asian manufacturers.

-- with some of the asian manufacturers.

Knowing exactly their reasoning and the thinking is always the tricky part to what you were talking about.

Maybe if you want to have ownership in a brand that in the past has been well known, you know, for now, to take advantage of the services they have.

Neither option is to may be just go private.

Expressing the option to get out of the public eye.

We did not get a sense that there was a massive appetite for doing this deal right now.

Any way you look at it, it is expensive.

The the -- i think the reason the floor is this the in in the stock right now is there is not a lot of assets.

Your burning cash and losing subscribers.

There is a threat right now of them actually taking it private.

That is the biggest threat near- term.

Why, it -- why?

It would be a take under?

Well, there's a big short interest.

Correct the value of the patent, -- the value of the patent, and there seems to be a lot around the patent of i and.

Explain those.

They are a lot of patents all throughout the technology.

They have already sold some before.

They went to a long time where they were buying a lot of stuff about two or three years ago.

Everyone was scratching their heads on why they were buying stock.

The problem is, what price can they get for it?

They might have a handful of really valuable patents.

Either arrest could go into a grudge sale.

A -- and the rest could go into a garage sale.

Do you think there are opportunities for this company in a sale?

If they can get and cheap enough, is that of an opportunity?

Is a very tough business.

I do think the services platform is very interesting.

It is the best secure messaging platform out there by far.

It is ubiquitous in the enterprise.

Whether you could open the platform up and then use it and take into account highlights and and android and then create something -- taking into account ios and then android and then create something.

It almost becomes its own stand-alone app.

You have to get it done, but it has potential upside.

The book value is about $3.5 million, but there are some interesting patton's there as well.

How do you patent and purchase something like that, a stand-alone bloomberg im?

Bloomberg?

Correct blackberry.

The problem right now the, how fast is the cash going away?

$1.8 billion is out but they are on the balance sheet.

Right, but they're spending a lot right now.

Could they just focused on the instant messaging and say, so much for the hardware business?

Could you spin that off?

It is tough to say.

From our numbers, the real problem in the business is in the services piece.

-- the real profit in the business is in the services piece.

A year ago, silver lake partners was talking with blackberry and knauss over late partners is in a deal with dell.

Could you imagine a scenario where dell and silver lake take dell private and somehow they find value in part of black.

? -- blackberry?

That is a bit of a stretch for me.

I think they have to get that deal was first and start working on that transformation.

We all love to the blackberry and then the iphone seems to have organically taken over that space.

Where did they really go wrong?

Not getting new products to market fast enough.

One of the co-founders looked at the growth in the emerging markets that you were talking about and focusing on the growth of the blackberry business in those areas went in north america all the talk was about the iphone and then about the android devices.

They have a lot of starts and stops with getting the new operating system to market.

It is a time gain.

If you can be incredibly successful in the phone business, you deserve a star.

From the beginning this is an incredibly difficult business.

Keeping that success is so difficult.

Things change so fast.

Thank you for being here.

Merck is our clothes are today.

-- mark is our closer today.

We have a quick break and then we will get to some stuff that we want to share with you right after this.

? it potential big change in europe this week could mean a potential big opportunity for investors.

Here is today's insight into action.

You'll see a for the first time in six quarters, european gdp may go positive.

It is up to tens of a 1% -- to tenths of 1%. that is a big change.

How robust is that growth?

In.

, not that much.

Their only 106 companies in europe.

There are small, medium, and large stock, the euro stocks 600. about half of them are growing zero to 10%. it and about one-third are still contracting.

Growth in europe is not easy to find, but is being led by several sectors in particular.

Here they are.

Of financials, industrials, and consumers account for roughly one-third of each of the growth that we are seeing.

Financials, sales at 44%. industrials, 20%. consumer stocks, 17%. under financials, we are talking sales, not earnings, but sales.

There is growth, but you ought to know where to look.

We found the top three companies in each of those three sectors.

And those three sectors and account for most of the growth.

In financials, swizz prime.

And on industrial combine the estimate.

A lot of the growth is coming at of the u.k., which says that the growth is still fairly narrow.

But this is where you find it.

Go to bloomberg.com and i've got those stickers.

If your the comeback kid, why can't a close the deal?

Almost 30 years of experience leading top m&a teams, including lehman brothers.

Mark shaffer, we want to welcome you back to "street smart" and it is always good to get your perspective.

You pointed out that europe seems to be turning the corner here.

We have seen about a $500 billion hold from the peak in 2007 from western europe.

Look at north america, india, asia pacific, they're all down.

And the big hole in western europe.

But it is understandable, given what has gone on.

I imagine you are still sort of shellshocked from all that has happened.

You're looking for signs that growth is here tuesday.

And until you really feel that we are totally out of the woods -- to stay.

And until you really feel that we are totally out of the woods.

I think you are seeing some of that now, but the question will be how deep and what's the duration.

They always say, by low, sell high.

If you're trying to do an acquisition can are you missing an opportunity by not the opinion?

Correct -- the issues are global in terms of our business.

And that goes to geopolitical risks as perceived by c.e.o.'s of boards.

July was a better month.

It was the best this year.

Is it getting better?

August will be slower because of vacation.

Let's see what happens in september.

What about financing deals?

How easy or difficult?

Volumes are better.

Conditions have improved.

And given the amount of liquidity in the system and where the rates are, i do not think that is the issue.

It is really more the fundamentals of the deals themselves.

You could get the money if it is a big seller.

To a certain extent, there is a bit of a disk of equilibrium.

-- and missed on its equilibrium.

If you're a seller, it may not be an historic peak, but it is certainly going out.

If your the buyer might almost incentivizes you to jump in more, right?

Because you're curious about what is going to happen yet -- next year.

The issue this year is the transaction numbers north of $200 million are down substantially.

Volumes have been driven by a very large number of transactions.

When transformational transactions are up, it makes it look like it's an ok market and then when you look under the covers of life is not as robust.

What about the macro investors right now?

Based on this.

The the in m&a, the answer is that it looks a little bit better.

It is too early to call.

September will be interesting for us.

But the kind of catalyst for us to necessarily believe we can call an upturn at this point cannot -- at this point, i do not see.

When volumes are higher than they have been, the underlying health will be transactions just north of $200 million.

Understood.

Good to have you here to explain it all for us.

Abe-nomics?

How about, no.

And we will take you to see world before it opens its books tomorrow.

? breaking news right now in j.c. penney and bill ackman's dispute.

If you're keeping score between j.c. penney and ackman, it looks like george soros and's fund management and current management own about 12% stake.

This is coming against bill ackman, who wants to replace mike allman.

This is all over sales.

This fight is getting uglier and uglier as j.c. penney store calls for survival.

Coming up next, selling big on shampoo -- shamu.

? the the reporting after the bell tomorrow, 0's first report.

-- c. world's first report.

Since going public for mossy world's stock has been on a tear.

New controversy is giving some investors pause.

A documentary explores killer whales in captivity.

Specifically the 1,200 lbs.

Or cry that killed three people.

-- the 1,200 lbs.

Orca that killed three people.

What are people saying about this?

Gregg's there is always a risk when a movie like this hits theaters.

The movie opens on july 19th.

If it has an impact on the open, we will see it on this one.

-- we will not see it on this one.

So far, investors love this stock.

That has clearly helped blackstone, which bought the company in 2009. the company still owns about 62% of its stock.

The other companies will focus on florida.

An increase in tourism and not part of the country has helped see world overall.

The company will probably have to continue to spend on attractions, like antarctic akamai empire of the penguin.

It is the company's largest expansion ever.

It opened may 24th, and given the expense, it looks really expensive.

How much did they spend it?

That is not publicly disclosed, and i'm sure that's not a mistake.

Many analysts have a good read on how much has been spent.

It is not a cheap exhibit.

Tim, do you have a quick estimate?

I cannot remember the number.

I know the company has been very cautious about the guidance it has given in terms of what to expect in revenue growth in the quarter because of it.

What do you think of blackstone and its affect on -- what do you think of the documentary and its effect on a tenant?

Is there a concern about animal rights?

It is possible.

And there is headline risk about which something like that certainly does bring, and then the reality of whether it affect attendance.

I do not think there are actual issues with attendance.

Because the movie just so recently came out.

I have seen that there have been some cheaper admission prices being offered in orlando.

I don't know how much that might be related to the film.

In reality, i think it remains to be seen.

Most investors aren't -- are not concerned.

Correct -- the stock has a pretty solid level of support.

The simple way to look at this for a long-term bullish position is to buy the shares, but also to purchase them put.

A december 30th.

It's going to cost you at about $2.50. and looking at the chart , they have been between 2.39 and two 0.40 -- $2.40. if you look at six flags for it has almost the same pattern.

The aside from price and how expensive it may be for and arctic cat, what else are people saying about this news play -- a new display?

Analysts and investors are going to ask them how this display will be driving attendance going forward.

The company is playing off of the idea that the economy is recovering.

And investors backing this stock will play on the idea of theme- park in general.

Regional parks have seen a big bump up, thanks to that trend.

With all theme parks, capex is always a big question, because you have to generate new and better right all the time to keep people coming.

And in this case, blackfish might be , too.

The bold new move on the war on drugs and in the next hour for the youtube starts becoming content king, find out how you get paid on youtube.

The u.s. is only 5% of the world population.

It's also got the largest prison population in the world.

It is number like that that have the attorney-general eric holder introducing new policies for drug offenders.

Here's what he said today.

Is washington winding down its war on drugs?

We're joined with the effective director from the moron policy.

It is too little, too late, but incredibly significant.

Is the first time the attorney general has spoken out this boldly about mass incarceration.

It is the first time they have put together policies that could make a difference.

The the does this mean they will become a state issue?

Grex the states are already leading the way.

New york, california, even places like texas and arkansas.

It is time to turn it around.

Can you make a direct link to drugs, specifically marijuana?

The drug linked is overwhelming.

Half of the people in prison are there for non-violent charges.

And the vast majority are low- level violators.

There are a lot of marijuana violators behind bars in federal prison.

I'm not surprised about the fact that holder could have used his speech tuesday that they wanted to give washington and colorado a chance to implement their initiatives.

He wants the credit, right?

He wants to separate these issues.

The the that will be another day, another moment.

The the but it could also be saying, washington to buy your on your own.

If washington, d.c. has that they do say, then the states can go ahead and do this.

I the fact that he has not said something is more good news than bad.

Correct a lot of other celebrities were be at -- were behind act -- i lot of celebrities were behind asking the president to rethink the war on drugs.

Do you think it had any effect?

Legislation is changing so quickly.

Eric holder said from the beginning that this issue of math incarceration is something he hoped to be his legacy project.

And he said, don't expect me to lead, but i know we need something.

In the end, it reflected the fact that -- it was like fdr saying that they needed the ball right in the 1930's and they pitched something radical and his response was, make me do it.

I think what the white house is saying, make us do it.

It does this mean that we will see the end of marijuana prohibition?

We will have to keep on a few others -- keep an eye on a few other states.

Congress has been slow.

That is the real problem.

Some have said there is a political reason behind this as well.

That is, this has effectively become the new gay marriage, in that it incentivizes people to get to the voting booths.

A lot of republicans came out to vote against gay marriage years ago.

A lot of democrats, especially in swing states, are coming out to vote for marijuana legalization.

There is some evidence that suggests that younger people show up in greater numbers in washington and colorado than any other swing state last year and in previous years.

The the -- the major difference is that a marriage now have the president and many governors and senators on its side.

In our case, we have no president, no governor, no senators essentially.

The public is leading and the politics are lagging.

The the are we where we need to do away with criminalization?

With marijuana, we are now going to the point of saying, let's legally regulate it like a call.

With other countries -- portugal is a real model.

They basically said, we're not going to put people in jail for possessing or using a drug.

If you're a real bad guy, will catch you for something else and lock you up, but we will not lock people up where a person's only offense is this.

And when it cost $35,000 a year to keep someone in jail, we have a problem.

It would make a monumental difference.

Other countries are leading.

America needs to follow.

Before we say goodbye, we have been talking about the war on drugs.

Breaking that had its season premiere last night.

Come render your team put together a tribute tying breaking bad to the war on drugs.

Let's watch that.

? acting at the end of that you said it just creates violence.

And after prohibition, your incentivizing people because the profit margin is that much higher because -- and that's it leads the tomb of violent crime . out capone created -- prohibition created out upon an organized crime.

Our message was, drug prohibition create all of those evils.

Drugs themselves are a problem, but we are making it far worse with prohibition of the industry.

The the up next to my deals, deals, deals.

Or lack thereof.

? it is time for chart attack where we are showing you a chart that will make you smarter.

All-time highs are in yellow.

Consumer confidence in red.

Even look at the inverse of the vix.

You would think that with all of that coming together we would have a lot of deals right now, but that is not what we are seeing.

Here to help us figure it out is are closer.

Mark, what is going on?

If you go back over a longer time frame and chart volume even further back than 2008, you will see a correlation of the lack of fact.

As indicators turned positive, volumes go up.

In the last few years, these correlations have broken down.

Indicators are up, but we have not seen volumes improve.

That is why the market is not that strong.

And what you're saying is that we need some catalysts.

What would catalyze the market?

Growth in the u.s. is about 1.6% this year.

But many believe that we can grow to 2% or better.

-- we need the belief that we can grow to 2% or better.

Also, in our business, it does not take a lot of deals for people to want to get involved.

What we thought we had in january with four or five very large deals, then we're really back in it.

It is a combination.

It is like housing.

If you think about 2007 and early 2008, ended in as high as it can get, that is not healthy.

Is there a sense that this is the new normal?

It could be.

We are basically at 8 $2 million market.

Is that the new normal?

Down from $4 trillion at the peak period and that could very well be the case.

This is the second chart.

You can see the first seven months in red, and the last five months in blue.

What is your interpretation?

I do not fully understand the chart.

He will have to give me more on it.

We have not caught up to where we need to be.

Right, this is just a volume chart.

Ok, i got it now.

It could be in the near normal.

-- the new normal.

It could be liquidity or debt rates.

And when you think about what we have been through, europe has been through so much.

There's a lot that has to happen for people to start feeling psychologically better.

We have more with mark cumming.

-- with mark coming out.

The top 10 stocks you need to know about.

? . . all right, if you missed everything that happened during today's session, don't worry.

It is time for your top 10. at 10 -- car markers worry about a new deal closing in.

The company has the recent run- up in share price.

And rock law the revolutionary electronics maker will be saving one point or billion dollars.

The transaction is the largest u.s. aerospace deals so far this year.

Sysco with an s. burdened by higher operating expenses.

Also, it canceled its outlook for 2015. the office of retailers have narrowed the field of ceo candidates.

There are more than 100 names.

And steinway, the pm maker has received a $485 million offer from an unidentified investor.

State feelings.

Dole up 5%, agreeing to a high takeover offer from -- higher, i should say, from former ceo dave murdoch.

$12 a share he offered back in june.

You know at one point they owned most of the hawaiian islands.

Interesting.

Dole and the hawaiian eye hangs -- a lien islands.

It is a different era.

Not with bananas though.

That is too keyed up.

-- that ischiquita.

Would you pay more for a chiquita banana?

The brand is worth something.

All right, simple food.

The maker of hungry man dinners agreed to buy wishbone for $105 million.

It brings them annual sales of about $109 billion.

Ooh, wings, please.

All right, facebook after sheryl sandberg sold shares in the company.

They finally got back to the ipo price.

That is the first time since going public in 2012. number two is campbell.

The company said in final talks to sell it european branch.

The latest news is ceo morrison wants to reshape the company.

Our number one stock of the day -- it is black it -- it is blackberry.

Up 110%. this after its status was questioned as an independent company.

[bell ringing] the dow off about four points now.

The s&p 500 down almost two.

Looking for industrials -- telecom, the standouts.

There is concern that japan, the autonomic not working as well as some thought off of that gdp read.

That is your close.

Again with the markets off slightly.

Time for the roundup.

Here are the stories we are tracking for tomorrow's open.

We will kick it off with you.

Jpmorgan -- two former employees may be charged as soon as this week for their role in the so-called london we'll -- whale scandal, although the "whale" is unlikely to be charged.

According to the times those facing charges include javier martin, art tahoe, julien grout.

Prosecutors are waiting penalties for the bank because as $6.2 billion loss is not enough.

Why not punish the shareholders a little bit more?

But they made almost $22 billion last year -- yeah.

To a certain extent shouldn't be bank be able to take some of these risks?

Do we want to go back to the utility basis or you are not allowed to take risks?

If you talk to a number of regulators, they will say yes, absolutely including senator warner.

As su kleeenan told us earlier, it is not the crime, it is the cover-up.

It feels like the justice department just wants to go after bankers.

You cover up a trade, you do something you should not do, you do not have the oversight you should have had -- you could argue.

Not necessarily.

Money.

They lost money.

The question is, the was the victim?

If the shareholders are the victim, how is finding the eight even more going to the shareholders out?

If it was not reported correctly, then perhaps they were not able to make a good enough inclusion when the loss was coming out?

$2 billion, $6 billion -- with all the handwringing over the london whale --and by the way the way, the whole licensing crisis -- housing crisis, jpmorgan never once had a losing quarter.

Absolutely.

I am just saying, if the shareholders of the victim, why punish the shareholders.

If you want to save the american system is the but to him, then -- all of want to know is who is looking for the new iphone?

I would like one.

We could get the new product launch on september 10. of the two main things, yes, camera, processor, ios 7, but the main thing will be it has a fingerprint sensor.

In theory that could help weeks businesses have these kinds of transactions.

And your wife or husband can't get and just because they have your code.

Always thinking.

[laughter] the other thing that may or may not happen would be a lower priced fun.

They would not be value the iphone 3 or 4 , they would literally make the cheaper phone.

Specifically for the asian- pacific market.

That would be a big game changer for apple.

Indeed.

Silence.

We want to hear more.

You want to hear more about what is coming out.

Adam says it will be 5c. 5s is what they are speculating.

They say it will not be revolutionary, evolutionary.

Do they need some super sexy product like an apple tv or watch to pull forward?

Ok, tracking the news of wall street power players -- that may just be a hashtag away.

Carl icahn says his twitter account is the way to check on what he is doing.

He will use his account from time to time to communicate with the public about our company and other issues.

His trigger handle is @car l c icahn.

It is possible that the information that mr.

Icahn post on twitter could be deemed to be material information.

My sources tell me that he will not he and activist in the stock.

He is targeting a company he likes very much and thinks there is a big opportunity and i also hear from my sources that he has already pulled large for this company.

That is expected to break next week on -- you guessed it -- twitter.

If you want to find out what it is, you will have to go on to twitter and follow mr.

Icahn.

What i am hearing is this will be more like netflix as opposed to something like dell.

A good company instead of a bad one.

Less fireworks.

Click something that will boost revenue, you're saying.

Yes.

Do we have a guest?

I was going to add to the netflix position or something -- do we have something new?

You know, a new day and age.

Carl icahn is on twitter.

Think about what twitter has done, not just for the new systems.

It is almost guerrilla marketing 101. create your own twitter account.

Get your news flow from other people.

Follow the most influential people.

All of the suttons,, you have a new york times-wall street journal -- you have to love this because social networking is a deal for this business.

The ubiquity of sources, it information sources.

It has really changed our business because so few things actually put it out.

Now you have to get an intern to monitor carl icahn's twitter feed.

[laughter] i follow as much as i can.

That is what you need somebody else.

He is building his twitter followers.

Everybody wants to know first.

You have your source at home now.

My parents at home can do that.

Are your parents on twitter?

No, i'm just saying.

But there are no editors on twitter, so you can't always believe -- if your parents were on twitter, you would use the underscore.

What is the underscore?

It is so old school.

I do not even know how you get the underscore.

Why don't they use a dash?

The you know who followed me last week?

My seven-year-old.

All right, here is one for you.

Private equity buyers are getting into their skivvies.

Maybe a takeover target as right it equity buyers look at the price target.

75% this year, and yet it is still cheaper and a lot of the competition.

Cheaper than michael cores, quicksilver, under armour.

-- michael kohrs.

$175 million.

Ah, the bra maker.

Warren buffett is in this space, and is acquisitions at about 43% market share.

Does any of us wear hanes underwear?

I guess i will just ask the guys.

Do i really have to answer that on the air?

I have michael jordan.

They have the most iconic name and the whole world.

They have the guy who went crazy for two and a half men, charlie sheen in their ads.

I do not know guys that still where tidy whitey's -- wa ear tidy whitey's. it's a different world.

Let's talk about the movies.

Elysium made $35 million, but fell short of forecasts.

Maybe moviegoers are breaking up -- the way president obama broke up with damon.

Did you see that?

He has the lowest ever approval rating.

Matt damon.

That is his base.

If he does not feel like he is doing it for him, he is not doing for anyone.

Right?

Did you see it?

Did you like district nine?

Yes.

That is the better movie.

It has a similar feel.

Like any movie where you plug something into the back of your head.

You have to go the extra mile.

That is the problem with the summer movies.

Flop after flop after flop.

Hang in there.

It is easier once you get the quirky movies and the blockbusters are over.

We did have world wars z, which was fantastic.

It did not necessarily do that well.

Think of all the movies.

World war z, the one with tom cruise.

The end of the world movies -- i like roy conn's investment in net flicks.

A lot of people are just waiting for the movie to come out -- they want their own investment.

Their own movie.

Click speaking of carl icon, lions gate.

A lot of these movies are coming to itunes, things like that before they go to theaters.

Completely changing the distribution systems.

It is truly revolutionary.

It has changed the complexion of how we watch things, do things.

Basically the way we live.

Everything is converging.

Tv, radio, computer.

It is all becoming one.

And it is all about mobility.

And you can watch bloomberg.com -- bloomberg tv when you're walking down the street.

It is available live.

Again, very different.

You do not have to be tied to the tv.

Or a cable service provider.

Bowlby plug.

Here is what is coming up next on "street smart." it is a bird.

It is a plane.

It is the hyperlink.

Elon musk plans to unveil his hypothetical mode of high-speed transportation.

We will tell you if the tesla ceo can go 400 miles in under 30 minutes.

And the digital start that making the move from the subway to cyberspace.

Opening up the online guitar case.

Plus, a messy desk competition.

And a futuristic funeral.

That is today's weird wall street.

Stay tuned for your first trade tomorrow, all coming up.

? today, elon musk reveals his plans for high-speed transit system that he says could eventually transport people from los angeles to san francisco in 30 minutes.

He is calling it hyperloop, and if it sounds impossible, don't worry.

He can handle the criticism.

This is what he told a group including google and a group of they think that plans to bring big ideas to the forefront.

We want to look for these opportunities not just for the sake of it, but there is an industry either stagnant or in decline where the product stays pretty much the same or has gotten worse over time?

These are industries where you think and so not possible, that is usually where there is an opportunity.

At in the space industry, things have gotten worse over time and not better.

We went to the moon in 1969. now the space shuttle is retired.

Nasa cannot get a single person into orbit without the help of the russians.

That is a terrible trajectory.

And liftoff of the falcon nine rocket.

Flex it appears to be distorting.

How can you thrive in an industry where giants received huge subsidies?

But they have become somewhat relying on the subsidies.

They are not very good at innovation and unwilling to take risks.

Provided you can get through the initial startup phase, you create technology and they have no real ability to catch up.

That is what we are finding with spacex.

The world is going to change so dramatically in the 21st century.

We are going to try to aim for a big problem rather than a small problem.

We are looking for industries that have been stagnant or even an decline.

It is worth trying to start a company to change the way that industry he hates.

-- the way that industry behaves.

Obviously that was a sex -- spacex.

The question is, the hyperloop.

We're waiting to hear about that at 5:00. we are joined by our guest from stanford university.

Professor, thank you for being here.

Question --hyperloop.

Is it hype or the next big thing?

You folks on the east coast do not get it.

Poor elon, he has won office in san francisco and one in l.a., and and as all of us in the west coast know, planes just don't work.

Hey, you don't have to deal with weather out there.

What is it about this you think will work?

The physics are solid.

This idea sounds outrageous, but from a physics point of view, it is less outrageous than you would think, and frankly no nuttier than the idea that planes can go in the air without crashing.

It has been heavily to the.

-- it has been heavily studied.

Hyperloop is a great name.

It is a magnetic suspension vacuum tube linear system.

It is basically a train in a tube that does not touch the walls and goes real fast.

It is suspended in the tube and there is no friction.

Is that a fair way to think about it?

You have to pump the air out of it.

The speed -- elo n has hinted at it.

You would have to evacuated to 1/10 of one percent of the air pressure that we all are breathing.

In essence you are creating space.

Elon already understands space.

Where does he put it?

That is the interesting thing.

We hope it will be between san francisco and los angeles and you guys on the east coast wing it.

We are not bad guys over here.

You put it underground.

You tunnel lit.

-- it.

What about safety?

What are the issues around something like this?

With any new technology, there is always safety issues.

It is in a tube.

It is not going to hit a cow.

It is underground.

You would have to do safety systems.

It is more a question of unfamiliarity.

Lanes were unfamiliar once upon a time and people take it for granted that they do what they are supposed to do.

What about earthquakes in california?

Do you really want to get in a tunnel along the san andreas fault?

It is better to go along than across it.

Tokyo has run a high-speed trains on earthquake fault zones for years.

The train automatically slows it there is a quick.

The one wrinkle, if we are all right about the rumors, the one wrinkle is the cost of tunneling.

Tunneling technology today is pretty expensive.

At all the studies done in the 1970's assumed we would come up with a new tunneling technique.

High-pressure water jets, what is called flame application, using a powerful torch to dig through.

If you solve the tunneling problem, this is a very doable proposition.

Fascinating.

The next time you are in town, come over and we can prove we are ok guys here on the east coast.

Sure.

That's a deal.

Much more elon musk happening tonight.

Catch risktakers tonight at 9 p.m. eastern.

Coming up, we will tell you what luxury retailer has an ipo, next.

? neiman marcus is on sale.

The store a retailer filed for night be ok and june.

It has received interest from private equity firms.

What are we seeing neiman marcus go for or sell for?

Here's the thing.

If they can get as much as they could get in an ipo and a private sale, they would rather do a private sale so they could take the money off the table as opposed to selling overtime in the public market.

But here is the thing.

At private equity firms around this do not want to pay more than nine times even -- nine times ebitda.

The owners think they can get eight to $10 in an ipo.

That is the difference -- they can get $8 billion in an ipo.

That is the difference.

Thanks.

Making money on youtube when we come back.

? bono, gaga, and conti.

One of these names is not like the other.

That is because jack cont i is promoting himself on youtube.

No labels.

Just jack and his fans.

They are paying him for each video he posts.

Think of it as a digital tip to our.

Jack, thanks being on the show to explain what is behind this concept.

I wanted something where my fans would be able to pay me for releasing videos, which is what i do best.

There are other platforms where i was ready to find crowd funding resources and things like that, but not really on an ongoing basis.

Patreon was a way to connect with my fans.

It is totally optional.

People can say i will pay you one dollar for a video or, you know what?

I will pay you $100. what guides people to a suggested contribution?

There are tiered options.

If someone wants to give one dollar, they can.

There is the patreon fee.

If they want to give $100, they can't. there are levels of support.

Patrons get different rewards for different levels of patrons.

What is the most money you have made on any video?

What was commercially most successful?

Unfortunately ad revenue is not a lot.

There are creative revenues to making thousands of dollars on ad revenue.

Your typical creator -- think about that.

$100,000 -- 100 house and fans -- 100 thousand fans.

These people are literally making $50, $100 per video on ad revenue.

On patreon they are making between 10 and 100 times that.

They are solving the problem of delivering value to content creators.

Is completely changes the way that sponsorship has been done.

Is this the direction we are headed, where people figure out what they want to pay for and they are willing to pay for it?

Yeah.

I think we are in a day and age where we have content creation -- we are in the middle of a giant creative class of people.

Drawing up thinks, sometimes millions of dollars, and for them to have the tools and resources to publish their content, talk to fans to rectally and monetize that.

Right now that is unprecedented at the rates we are seeing it on patreon.

Jack, how scalable is your business?

How big do you intend to get?

Do you want to have a large studio type operation?

Where do you take it from your?

My goal is to help content creators make a living.

Right now i'm outraged by the fact that there are people reaching hundreds of thousands of fans and they are having to keep a part-time job and work behind a desk at starbucks or whatever it is.

I want them to be making content . it is not just 10 people or 100 people or 10,000 people.

It is literally hundreds of rows and's growing up, taking advantage of direct to fan publications.

How scalable is the business?

I think it can be used by millions of people, maybe hundreds of millions of people.

And yet it is all voluntary, right?

You can donate.

You don't have to donate.

It is not a pay wall.

Creators do not want a walls.

That hinders organic growth.

Imagine if someone said, watch this cat video and you had to pay one dollar to watch it.

Why would anyone do that?

It adds so much friction to the process.

We are not posting content.

The content is available for free on all these other platforms.

It is encouraging people to pay if they want to and people really, really want to pay.

This is content they are connecting with on a regular basis and they are really enjoying and loving and they have this connection with the content creator that again, is something unprecedented because of the web.

They are able to connect on a one-to-one basis and they want to support, they want to help that person create more content area -- create more content.

For people listening to you, they should go to patr reon.com?

That's right.

Go watch our video and see what it is about.

We appreciate you being on the show.

Thanks, jack.

Final thoughts from our closer, mark schaefer.

As much as we have talked about how deal volume is not what it was in previous times, you are saying not is all lost.

Give us a glimmer of what could be headed down the pipeline.

Any good news ahead?

I have been criticized for being a doom and gloom purveyor.

We will see an upturn.

There is too much demand to rationalize portfolios, rationalize capacity utilization, find growth.

You cannot do it organically.

We will see secular upturn.

I do not want to suggest we are in this morass forever.

It will improve.

It's hard to predict.

Think about all the things we are seeing right now.

Talk about the digital space and hyperloop and patreon.

Life is changing.

The world is changing.

One would have to think that m&a would be kicking in at some point.

I certainly hope so.

Mark shafir , thanks for being here.

Thanks.

Want to drink with the big boys?

You better order a glass of water with that.

Plus, a missing elevator?

We have the story for you.

We will be right back.

? x ok, do you take it neat or on the rocks?

Water may have a more central role in your dining experience.

A new water mania with more than 20 varieties.

And there is a summa yates to help you --sommelier to help you pair your h20. this idea, a lot out of the box.

Some people may be thinking this is ridiculous.

Who needs advice for water?

I don't even want to say it is out of the box, because when i drove over here to the studio, i went to the gas station and they had 18 different brands at the gas station.

You could have used someone to guide you through that.

But you think people in general need someone to help them figure out which water is which?

We want to give a better experience to our the most tumors.

If you have a different variety, and if you had a restaurant with just one white line, one red 1, 1 rose wine -- are they really that different?

I mean, really?

Yes.

H20. everybody knows that.

So, people are thinking, why is it different in taste?

It depends on the mineral content.

My highest water has over 3000 cvs levels.

What is the most expensive on your menu?

I have one glacial water from canada that runs for $20. $20. i have got to be honest with you.

I am kind of feeling like the emperor has no clothes.

You have a water that you say goes particularly well with pork belly?

Is that right?

That is the great thing about the selection that we have read we want to do this new approach for our customers.

We have a couple him in already and said, thank you so much.

We still have the possibility to choose a direction.

This is good, i think.

So, to pair with pork, that is a very rich dish, and i have a water from france.

It matches the heaviness of the dish.

Just like a lovely pinot noir.

What if i am eating cheese?

Maybe a blue cheese, maybe -- i love stilton.

It can be a very acidic taste.

So, we have a water serving at a restaurant.

You can have more and more aroma from the cheese.

Ok, what is the markup like on these waters?

On these, we do not make any money because i wanted to show people the variety of water.

Some are expensive to buy them, to get them into the country.

I have been here two years from now in germany.

I did this in germany all the time.

But the hardest thing is to get them into the country here.

I've got to be honest.

As i look at all these bottles, glass bottles, shipping water from around the world, not exactly the most echo friendly proposition.

Are you getting any bush back some people saying this it -- are you getting any pushback from people saying this is -- you getting anypushback from people saying this is unnecessary?

Or are people who say the same thing -- this is a california wine.

Why do we need the riesling?

It is all be paid level.

It is the same way with water for me.

Of their are some you cannot get in the united states.

What is the most popular water?

All of them, actually.

I really thought, we would have some waters that would sell really good to read and some that were not selling.

And right now, we have sold almost every single ran already.

Very interesting.

I saw the menu there.

Voss is $32. that is really good water.

All right, thank you very much.

Let's get ready for the ride of your afterlife.

Now you can pay to have your remains launched into space.

Kind of weird, but that is why it is part of weird wall street.

We will be right back.

? breaking news on eli mosk -- elon musk.

The hyperloop.

We finally have those details.

It looks like this will be a double-barreled shotgun with tubes on either side.

The tubes are mounted on columns elevating elevating them from the ground.

They go up to 800 miles per hour.

They can transfer port -- they can transport people or people and cars.

How it moves is revolutionary.

It is based on thin skis that shoot out air in tiny holes.

You can think of it as playing air hockey.

When it is pumped in, it has this question.

That is the new part about all this technology.

The interesting thing is to get these rods moving, the role of magnets underneath the skis -- kind of like when you're in a roller coaster and the roller coaster starts.

What moves the roller coaster forward is what will be repelling the skis forward.

He says that he could build this with about $6 billion if only people went in these spots.

If there were cars in these tubes, it would only be about $10 billion.

Compare that to a high-speed train which is looking to be about $70 billion.

About a dozen people at tesla and spaceex have helpedelon musk check the specifications.

Alix steel, thank you so much.

Time for weird wall street, where bizarre is business as usual.

One topic -- is a cluttered or clean desk popular for the workplace?

The messy desk -- check it out.

It actually produces more creative thinking and ideas -- oh, really?

Taken no.

Look at my desk.

Look at adam's desk.

So maybe there is more creativity on your side of the desk.

If that might take away here?

Oh, really.

Although adam is one of my closest friends, i never trust anyone with a clean desk, because they could quit at a moments notice.

Oh, come on.

Trish would have to bring a whole movie company man.

She is staying.

Ok, we are moving on.

You better be in shape if you work in this opening.

It is a 47- story skyscraper.

It is missing one critical element, apparently like my desk.

An elevator.

You have to walk.

Where was the architect?

Mind-boggling.

This is according to a report from the daily mail i am going to withhold judgment until we find out if it is true.

A wonderful country that has had economic issues.

Just ask the people.

Apparently they cannot design a building.

They have great architects.

All right, thank you, everyone.

Markets update next.

See you back here tomorrow.

? . . . like it is 56 minutes past the hour.

Bloomberg is on the market.

Let's look at where the stock closed the session.

They are in the red by just a little bit.

This is down by about six points.

The nasdaq lining climbing things to a couple of big-name stocks.

Both rallied by about 2%. a lot of company news.

George soros siding with jcpenney.

Soros backing bill ackman.

Here one investor we spoke to that explained why he he closes his in jcpenney -- his position and jcpenney.

Bill came and as an underperforming management team.

He has had a great track record.

We sold our position when it turned into a four-year restructuring that could have nice returns or could not work.

In which case it would be down a lot.

We had to solve our investment way before ron left the firm.

Blackberry is struggling to find a catalyst for their server phone business.

It may put itself up for sale.

They are re might not be too many buyers.

They have been looking at alternatives now for a while.

In terms of who might be interested.

That is a top list.

Microsoft has what they need.

Nokia has what they need.

Samsung and the others have the android operating system which is doing quite well.

It is a pretty limited potential list of buyers.

Netflix, the online streaming company, ended the day up by about 1.5%. netflix is 175% more expensive than the beginning of the year.

Netflix is making inroads to nanjing cable companies for viewers.

We spoke to michael who says netflix to 's success could be its own undoing.

The cable companies and the networks means netflix gets more power.

Netflix serves to win over the customers.

People start to cut the cord.

You will see content pulled because the content owners make a lot more money from cable than they do netflix.

Have the power does live with the -- rest with the content makers.

The ongoing battle between cbs and time warner cable continue to go head to head.

All in all, a mixed session for the benchmarks, the s and p, and the dow.

The nasdaq climbing by about 1/4 of 1%. the dollar snapping a six day slump before retail sales are out tomorrow.

That will be the focus.

We're coming to the end of earnings season.

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

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