Dell shareholder say no to michael dell as a slip -- shares slipped less than $13 a share.
The buyout offer remains a cliffhanger.
Should a do-nothing congress do something about the deficit?
We will talk about the deficit.
Steve forbes joins us for the entire hour.
And forget hardware.
Ibm and google, they pull ahead again.
Good morning, everyone.
This is bloomberg "surveillance." i am tom keene, live from our heat wave world headquarters in new york, it is thursday, july 18. joining me as always sara eisen and scarlet fu.
I will kick it off with a morning briefing because a lot of economic data today on the calendar.
8:30 a.m., initial jobless claims.
945, lumber consumer confidence index.
It is a big deal.
I like the regional manufacturing indices.
Ben bernanke that's a fine before the senate financial committee.
Some fireworks there.
Some market moving, terry.
Plenty -- market moving commentary.
Danaher, the iconic industrial process company -- it is, they do it better than anyone.
They bring in companies to straighten up, put it in the company, and stocks go straight up.
I do not own shares.
I should say that.
Thank you for the disclaimer.
Morgan stanley, 7:30 verizon, after the bell, to poll a, google, microsoft, and of course the dell load today.
As we know, it is set to happen here it we will take you there to austin, texas, the site of the dell load.
Quite some drama.
Nokia just out with earnings.
Less of a loss than was expected.
This is very important for european viewers.
Nokia been a real struggle for any given number of years.
Their operating margin, look at that across the bloomberg , negative two percent versus negative four percent.
So they do a little better than margins.
Cells of the -- sales of the lumia coming and lighter than expected.
The stock was dropping down about 5%. again, just hardware issues . hardware is tough.
It is a commodity.
Nokia inflates to the smartphone game.
Doing a data check?
Excuse me, i was fiddling there.
We look at equities, bonds, currencies, commodities.
It has been a nonstory for pushing for days except yields.
2.48%. sarah,, why did you come lower?
-- why did yields come lower?
Ben bernanke's comments were considered dovish.
Week housing data as well.
Ben bernanke said look, i am taking a data point by data point.
I do not have any preset course when it comes to taking away all of the stimulus.
West texas intermediate, 106, elevated a little bit.
Let's leave it at that for now.
Not that much going on here christ there is a lot going on.
We scour the papers as always, the web for stories making the front pages.
Scarlet, you have got those for us.
We have to start with dell.
It is on the front page of bloomberg.com.
It is turning into a nailbiting game of chicken.
Michael dell in silver lake wasting to lobby the shareholders to make sure that the share offer is not too low.
A lot of people say the $14 a share could earn over shareholders.
Investors -- if investors reject michael dell's deal, the stock could fall further.
With the price announcement of a few days ago, by side technology driven thomas they said no.
I missed it yesterday afternoon.
The stock is just doing this.
There is no other way to put it.
Uncertainty going into the vote.
Cristina alesci says they do not put their weight around very lightly or often.
We will check in with her a little bit later on in the show because as we understand, the vote is set to go through right now, but that could change.
We will get an update from her.
The other update is that his chief ben bernanke.
He is all over the pages because he said the fed will support a week economy -- a weak economy.
He basically promised no retreat from the even monetary policy after the shock he delivered to markets earlier on.
Can the fed supports an economy?
I don't know.
We will see.
The other front-page story we are looking at is something we have been following for a while jp morgan could see a record fine.
Allegations that it manipulated electricity markets in california and the midwest.
This would likely be larger than the record first fine against barclays earlier this week for almost $500 million.
This is interesting.
Talks could still fall apart.
But it does show how it is increasingly aggressive on its stance.
The debate within jpmorgan, people saying are you kidding me, we're going to fight this, leading the charge on that.
Others that jpmorgan saying wait, we have other headaches to worry about, let's get the thing fixed.
Even if it has a $500 million fine, it is not going to do much in terms of what it means for the balance sheet.
Another front-page headline with jpmorgan getting find -- it just gives going.
Our guest host this hour, steve forbes, former presidential candidate force behind the iconic forbes.
You wonder where my charge a came from?
I stole it from forbes.
My father was a shut up and look at this chart -- ruined me for ever.
That explains a lot.
It is steve's forbes' fault.
Steve leavy with us, it "in the ,"plex," a great book.
The idea that the central bank can affect the central economy.
Does our central bank have too much power?
It certainly can affect the u.s. economy but not in the way we have been led to believe.
This whole thing on qe has really hurt the economy.
What's ben bernanke has done is put the money out and put it back in.
What he has done is distort the reddit markets.
If the government, big companies, mortgage backed securities, or because you don't know the road credit, small businesses until recently have been suffering.
If the fed did not come in, would we have a much higher unemployment rates, say 9%, 10% or 11%, now create a large yield for society?
if they had not done the qe, we would have a stronger economy today, we would have a more vibrant credit market, on the high end and the low end here remember, the big job creator is small businesses.
If you have a credit market that is not meet their needs, that stumped the growth.
The fed has harmed the economy.
What i don't understand is why ben bernanke is not getting more.
He puts the money out there and brings it back in.
The first time we have the monetary base bigger than the money supply.
That is crazy.
The members of the house financial services committee did press him about the qe and stimulus.
One of my favorites quotes saying that bernanke is from mars is bernanke said we are not defending wall street more than we are main street.
Is that true?
Wall street is doing very nicely with this.
It is very easy money.
In terms of getting credit flowing into the economy, no.
We have never seen these before.
Where a central bank why that the collateral of the banking system, all the long-term bonds, and puts money out and brings it back in.
But it is done now.
The question is -- how do they get out?
Every time they do qe's, nominal gdp suffers.
It hurts the economy.
Within each nominal gdp, mr.
Forbes, is the idea of the animal spirit of the nation.
Your father has written about this for decades.
You picked up here and what your critics get wrong?
If we are all in search of animal spirit, how do you respond to be below call you a deficit scolds, saying you're wrong about taxes as the only solution, how do we move forward together?
In terms of the federal reserve, let the credit market operate again and have a more stable dollar.
In terms of taxes, realizing you lower tax rates, you get more economic activity.
Just look at the difference in economic performance during states that have no or low state income tax, and those with high ones.
Very, very clear.
I have to admit, i will give you points on this review cannot ignore the texas and florida booms as we had governor scott without the other day.
We we want to bring stephen leedyvy in with us, he is the author of "in the plex." google will be reporting tonight.
There is all these talked about innovative move, yet the company's bread and butter is advertising.
That is tied to the larger economy.
You can't get away from that.
That is right, but they managed to keep going.
The economy that, the economy is down.
There are still people clicking on the ads and business model is still working.
I think part of the reason the optimism of wall street has about google is because they agree with google that they're going to come up with something in addition to that.
They are encouraged by the things coming out of google's research and development to make google on top of other things, particularly mobile.
We will dive into google, and steve forbes on what we see in washington.
Morgan stanley out at 7:15. let's get to company news.
Let's start with disney, getting rid of it car allowances.
The company is a limiting the executive perk as it continues to reduce part -- costs.
One monthly car allowance amounted to $900 according to a disney executive.
The media giant has been slashing expenses by higher -- firing workers, outsourcing of a closing offices.
Tiger woods rehabs with nike.
What has been with nike cents -- tiger woods reups with nike.
Woods has been with nike for years.
Report seven thing that woods' current nike deal pays him $20 million a year.
Shares of nike fighting 5% -- nokia, nokia -- i'm sorry, nokia.
Among among the numbers getting attention, sales of the lumia handset fall short of the estimate for seven .8 million units.
-- 7.8 million units.
Can they put in an expense regime, exit here at some point.
That will continue that theme.
It is just a -- they own the finland.
It is just iconic.
The guy to make "angry birds" own the finland.
We will teach you later.
It is hot outside.
The country is literally roasting.
How about the heat map?
Tom, maybe you should take off your jacket.
He forgets in new york city, 98 degrees.
We had three or more consecutive days of this.
Some blazes have been above 100 degrees.
This is affecting 130 people -- 130 million people throughout the northeast in the midwest.
It is so hot that tom is going to take off his jacket and where his bowtie with no jacket.
We need the appropriate strip music to go with this.
I feel better thatright now.
Coming up on bloomberg "surveillance," here's a number for you -- 20 or $.4 billion.
That is the buyout deal -- $24.4 billion.
That is the buyout deal offered to shareholders from michael dell.
Our deals reporter cristina alesci know the answer to that question.
She is live at dell headquarters next on bloomberg surveillance.
Good morning, everyone.
Bloomberg "surveillance or go." later this morning, a conversation with james gorman.
Erik schatzker speak with mr.
Puts warnings out.
The dynamic of the earnings business and how morgan stanley is dealing with the deleveraging and a fixed-income market on wall street.
Meanwhile, this is bloomberg "surveillance." i am sara eisen here is always with tom and scarlet.
The long-awaited shareholder vote on dale and that buyout is finally heal.
-- finally here.
Michael dell and silver lake hoping that the shareholders vote for their $13.65 per vote share.
Our deals reporter, cristina alesci, is that dell's headquarters in round rock, texas, just outside of austin.
Cristina, good morning.
First tell us do we know whether the vote is going to happen today gekko?
According to some of my sources and reporting, we will see a meeting starts, but it won't last for a long because it will likely be adjourned and the vote will be delayed.
Just to give you some context here, this was a post be the home stretch and what walmart essentially the beginning of more negotiations between michael dell and a special committee.
The company is expecting or has set up for about 320 people to get here today.
We don't know how many are actually going to arrive, but we are expecting that michael dell himself will be in that room, as well as representatives from carl icahn.
Give us a play-by-play of the last 48 hours behind the scene based on your conversations with sources of what michael dell and silver lake have been doing in anticipation of this voting day.
They have both been lobbying shareholders are actively to get them to come over to their respective sites.
Carl icahn wants to see this deal that is on the table today, voted down, sara, so we could see continuing of that intense lobbying.
Remember, there have been a number of very reputable, very vocal shareholders who thinks that the $13.55 deal on the table right now is not high enough.
There are two kinds of shareholders in the "no" camp, those that will accept it potentially higher offer with michael dell and soberly, and those was about to shoot this thing down and really want to support carl icahn for the proposal, which will really need to vote this deal down in order for carl icahn to implement this proposal.
Why is it important that the price has come down against michael dell?
Do they have swelled -- do they have sway over the other investors?
They are a well respected name.
They don't throw around their reputation very lightly.
It is not just tivo price.
Remember, we have another big investor -- blackrock.
You have two big investors out there basically saying $13.55 is not high enough.
Now it comes down to a game of chicken or bluffing.
Watching the share price to climb by minutes.
Steve forbes with us, all the saints have been in forbes magazine for.
You and your dynasty have pushed creative destruction in america forever.
Is this a destructive creative destruction?
One reason michael dell wants to get the company back in private, he knows there will be major surgery on the thing, and it is not want to be bothered by shareholders.
One where the other, the company is going to go through massive reconstruction, creative destruction, if you want to call it that.
Is carl icahn doing a public good here?
It is legitimate to ask in terms of the buyout are you getting the right price.
One way or the other on the operating side, it is going to go through major, drastic reconstruction.
Dell knows it, and he wants to reconstruct his own creation.
Stephen leahy ofvy, author of "in the plex," he was known as a distribution guy genius in many ways.
Now he is working a very different world.
Clearly he has , looking at a lot of people thinking wait a minute, you are trying to sell this at too low a price, but you can make the argument -- what really is he going to do with it?
May be the winner here is not necessarily the winner because what is going to happen, there is no guarantee the new dell can try to be like ibm and twist the and services and cloud computing when there is very tough compete -- tough competition in that.
This leadership has not seen the writing on the wall of their core business.
It is going to be a bit of a mystery, cristina alesci, our reporter out in austin, go have some barbecue during a break if they don't do the vote.
Awesome barbecue is the best.
Thank you, i have not had the barbecue yet.
Stephen levy, thank you for being here.
Stephen forbes as well.
Our footer question the the day -- what is the best deal for dell?
Tweet us on bloomberg television, streaming on your tablet, your phone, and bloomberg.com.
-- tweet us @bsurveillance.
Should a carl icahn's deal, michael dell's deal?
This is bloomberg "surveillance." this is bloomberg "surveillance." i am sara eisen, here is always with tom keene and scarlet fu.
And top headlines, panama is waiting for united nations inspectors the military weapons of found on board a north korean ship.
Panama seized the ship as it was traveling from cuba to north korea.
They have arty found aircraft military systems and other it weapons.
You and will inspect whether it violated any sanctions.
Rajat gupta has been ordered to pay almost $14 million in penalties to the sec for insider and training.
-- insider trading.
He is free pending an appeal.
A group of senators has reached a deal to and that stalemate over student loan interest rate.
The agreement rollback rates on those undergraduate stafford loans from 6.8% back down to 3.4% for the year that is ahead.
It also ties future borrowing costs to market fluctuations on the 10-year treasury note.
You have been way out in front of it.
It is good news that that interest rate is cut in half, absolutely.
I wonder who will pay for that.
Let's get to morning must reads.
With those student debt loans not being paid off and so many people struggling to find jobs, my morning must-read takes a look at how american graduates aren't able to find jobs because so many of them did not major in the stem disciplines.
This is one reason why people do not major in science.
College students are not to may -- not to blame -- of course, this is one of the roots causes why the tech industry wants to reform education.
Steve forbes with us, steve levy with us as well.
It is about parents angling the death into your trigonometry?
I think that is part of it . thanks to high technology and community colleges, kids can now get the around the impediments they have in high school itself.
Kids have to take the initiative to.
If you're going to go to college, if we are going to spend hundreds of thousands of dollars on your education, where are you going where you might get a return on its?
Steve levy , we'd relate how smart these people out west are, do we?
They are incredibly smart.
You see people like bill gates throwing money into the education system.
It is not an unattainable intelligence.
It is bringing that stuff out and getting a system that caters to that.
This conversation will continue.
We will talk about washington spending.
700% -- the amount of washington spending has increased since the 1970's. this is bloomberg "surveillance." i am sara eisen here with tom keene and are less so.
Tom, we need a minute hubbell a they of brenda nikkei testimony . there and i will be on later this morning during the q&a coverage of the chairman.
Futures up to, 10 year yield its mind.
Looking pretty smart right now.
Euro-dollar, $1.3111. and west texas intermediate, $106.27. when you look at gainers and losers, it is interesting because yahoo!
Did not show the revenue investors were looking at.
Alibaba has surged.
Stock price gets a lot of benefit from a stake in ali baba and yahoo!
And mattel sinking almost 7%. falling barbie sales hurt profits.
Mattel getting hit yesterday.
Jcpenney also seeing its earnings estimates reduced by credit suisse, the home department, remember ron johnson's last hurrah?
Is barbie over?
I was never into barbie.
I know you were a big fan.
We have five daughters, so we supported mattel very nicely.
They will always be in.
Is there barbie creative destruction?
We get different barbies, but it is one of those durable things that go on and on.
If you're one proclaims their death.
American girl dolls have done better -- american dolls are phenomenal, hugely expensive, but every girl wants them.
They talk about them, the clothing -- i mean, wow.
Barbies on the cover of the "financial times," talking about barbie world, doll sales tumble at mattel.
An interesting point you poor you brought up.
We'll talk about washington now.
They're talking about barbie christine lagarde.
That would be a very elegant barbie doll.
I think that if they complements.
Do you know how long the tax code is you go?
And that does not count all the rules and regulations, which bumps it up from about 4 million words to about 9 million words i govern this thing.
That is why we have you heard, the word counter.
74,000, 9 million words.
Momentum is building for a rewrite.
The dynamics have changed , the deficit is shrinking, we see new agreements on presidential nominees, and now student loan rates, what is tax reform really something they can ever agree on gecko?
You look at the flat taxes , steve forbes has gone on forever.
What is your item one that they should be doing right now?
I think we could easily get a consensus to move forward immediately on the business side, decluttering that a little bit, reducing tax rates there.
May i suggest the refrigeration of -- the repatriation of for-profits, bring that back with some form of incentive to invest, to create jobs.
That is a bipartisan idea, isn't it?
As you know, they did a so- called amnesty 10 years ago, five points 75%, -- 5.75%. treasury got an $18 billion quickfix third what it did not do that that last year i don't know.
I want to look at the broader picture.
You are running for president, you can talk about deficit, you can talk about growth.
Here is paul krugman really pushing back against the religion of economics.
We are going to bring that up right now.
He talks about this phrase, the deficit scold.
The liberals won't listen to what you say, listen to the club for growth, they will take it in.
But for those on the right, it is our way or the highway.
How do you push back against professor krugman?
He truly believes the government spending stimulates the economy.
Instead of taking resources out of the economy.
We have to remember what milton friedman said back when $1 trillion with zero money.
He said he would rather have a $1 trillion federal budget that was out of budget -- that was out of balance and a $2 trillion federal budget that is in balance.
You have to look at the resources taken out of the economy.
And vermillion a million years ago, the chief secretary treasury and more difficult times, look what it is, liquidate back, forget the middle class, liquidate this.
What is a new conservative voice that can -- i think it is the republican party rediscovering ronald reagan, rediscovering jack's camp.
That is progrowth.
Can the libertarian voice right now that is percolating for 2014 am a 2016, canada libertarian stridency meet the ronald reagan party you were weaned on?
I think you will see them in 2014, you will see them in the primaries.
If you do not have a positive, progrowth agenda, you will not get through.
If you are in favor of raising taxes, you will not get anywhere.
I think you will see a real push for massive tax reform, stable dollar, patient controlled healthcare, very positive stuff coming up.
Part of what house republicans into this problem is the debt limit and the entire debacle back in 2011. it turns out we are approaching the debt limit again this fall.
What is your advice to your republican -- this is going to be a real test to republican leadership.
That thing is like a nuclear bomb.
They are not going to have the government shutdown.
So the question is -- how do you start to control spending?
Without blowing up the government.
Republican leadership is the leadership of the senate of the united states.
mcconnell of kentucky voted against the immigration bipartisan efforts because he has got to get reelected by republicans in kentucky.
Where is the ability of the republican party to move to the middle ground you and my father stood for?
Take the debt ceiling -- that is a blunt, crude instrument that does not work.
In 2011, both republicans and democrats, the white house was heard of it, and so what was the economy.
What they should do is try in the future to lay the groundwork for instead of the debt ceiling, have debt as a certain percentage of gdp, have the spending of a certain percentage gdp.
If you violate it, your salary -- the party itself got itself mired up by people who were sitting on that nuclear button of the debt limit.
You mentioned jack kemp, wayward he be in the party today?
Where is jack kemp today?
Surprisingly in the person of paul ryan.
He was weaned on jack kemp.
He was an indoor and -- he was an intern in power america, which camp helped cofound.
In terms of the deficit, do it anyway -- who, repeal the 1974 budget act, which took away an almond powers of the president.
The republicans should say even though we are against president obama, we will restore those powers, we hope you use it wisely, but you have got to have powers to restrain the spending.
The concern of every american, whether they are striding democrats, striding republicans, is a republican dialogue that has shifted away from these icons you speak of of reagan, of jack kemp, how do we get back -- in terms of taxation, i think you could see it certainly on the business side and the personal side very quickly.
The row question -- don't just keep pointing fingers at republicans -- zero question -- is that the white house interested a deal gecko?
If it is, you will get on very quickly.
You know what is involved.
You are suggesting to throw whole thing out and start from scratch.
Can the split republican party really coalesce around an idea for the new tax code gecko?
I think you're certain to see it now.
The heads of the house ways and means committee is working on precisely such a proposal.
Not as simple as i would like, but moving in a direction.
Which is all the chevy truck at the home run derby.
It was a great moment for america.
It was just fabulous.
Steve forbes on immigration -- how do we get this through the supports your republican party?
Quacks on immigration, i am god the summit -- onset immigration, i am glad the senate passed a bill.
They should go further on he house side.
On h1b visas, they should have doubled or tripled or quadrupled them in terms of overall immigration.
There is a good amendment where you raise 1.5 million immigrants a year.
The key is to get a bill where you meet the needs of the american economy and allow for traditional legal and immigration.
We will continue this discussion.
Steve levy with us also on google.
Quacks also, we will talk about phones.
The two-year contract you have to sign, wireless carriers are finally caving on the contract.
T-mobile taking the lead here.
How would that is changing the business and where it is heading.
Bloomberg "surveillance," on bloomberg television, streaming on your tablet, your phone, and bloomberg.com.
Quacks this is bloomberg "surveillance." i'm sara eisen here with tom keene and scarlet fu.
Investigators are pointing at a chemical using pesticides as a reason 22 elementary school children in india died after eating a free school lunch.
That chemical may have been mixed in with the food.
Police are examining samples of the food.
And they can use to store cooking oil that was used in the lunches.
Home prices in china rose to and 69 of 70 cities.
Prices rhyming 13% in beijing, 12% in shanghai.
The gains came as the chinese government struggles to rein in the speculative investment as the economy cools off.
Retail sales in the united kingdom rose for the second straight month in june.
Sales edged higher by .2%. may sales jumped more than 2%. it was the first back-to-back again for retail sales in almost a year.
Quacks it is very cool.
Really interesting to see how that works out.
Single best chart -- here is single best chart, and the theme is ? men, men, men ? march our show that working age men are simply not working.
The chart -- the top smooth line shows information for men aged 25 to 54. in the 50's -- in the 1950's, 93% participation.
Now, more than 11 out of 100% of men are out of the labor force.
It is the main reason why the bottom, jagged line, the employment to population ratio, has plunged over the last 50 years.
There's been a lot of debate whether this is a structural or cyclical problem.
. certainly there is no shortage of supply.
The demand is the issue.
Steve forbes, what do we do about people that are not want to learn framework dynamics or organic chemistry or statistics?
There is a large part of america that was a manufacturing job.
I think in a vibrant economy, you find all kinds of jobs.
For example, in terms of not high skill, a lot of us are getting older.
Home care is going to burden can -- going to burgeon.
There will be a huge demand for labor there.
What are they the nice nice things about high-tech, just like driving a car, you don't have to be a mechanic to learn how to drive a car.
I will go with that, but steve levy, is google a subsidy for tire manufacturing jobs in akron, ohio?
There will be more and more of them.
Higher up the chain of scale, which are going to report -- be replaced by automation there.
Your cabdriver will be replaced by the self driving car.
Plenty of jobs that we once thought you could not have a computer do are going to be done by computers.
Fewer people are going to run bigger operations because of technology.
Certainly going to be a continuing theme, technology and productivity.
Have you had seen new cover of "rolling stone"? boy, this is the first on there has been any budget about -- any buzz about "rolling stone" anywhere.
And drugstore chains are refusing to sell the latest addition because of this cover, which is huge -- features a suspect in the boston marathon bombing, and dzhokhar tsarnaev.
Let's talk to a magazine publisher, shouldn't we gecko?
They portray them is basically a rock star.
Some readers have canceled their subscription.
Is great great to have someone talk about a magazine cover.
Not in a content.
Quacks actually yes in that context because -- quacks actually, yes in that context because the magazine have the power of moving the discussion by which we put on the cover there.
I worked at "newsweek," and able to really seriously what was on the cover there.
Quacks there is a difference between provocative and faithless.
-- and tasteless.
Quacks in 1938, "time " magazine had hitler on the cover.
But it was him as the organ of death.
They had a money context, but him as an evil man.
"rolling stone" did not do what "time" magazine did so many years ago.
Would your father think it is appropriate?
He would do it all the time.
Covering a story is legitimate, but doing it in the way that you pointed out this makes the eye looks like a rockstar instead of an evil person contrasts with what "time" did.
They get a play from it, but i think people are going to say you are so desperate, you would do something like this that will not help.
Quacks the boston mayor slammed it.
If you're in the technology space -- he is also at "newsweek." was as appropriate?
It was over-the-top to do it , but the discussion is valuable.
We will get to learn about this kid.
I have not read the story, but if i gather it gather it is something that it is not a love letter to him, not a celebrity profile.
It is the same kind of in-depth story we have seen other places.
He was on the cover of the "new york times," and it was a similar but people are accurately pointing out this looks like jim morrison back there in 1971. that that was what i thought, jim morrison angle.
It is a real privilege to both of you talk about the social moment.
All over twitter last night.
Coming back, we will also talk about google because google is gearing up for earnings after the bell.
Companies focus on high-tech roddick like self driving cars and google glasses, which don't really matter too much for the bottom line.
We will discuss google business plan going forward on bloomberg "surveillance," on bloomberg television, streaming on your tablet, your phone, and bloomberg.com.
? be sure to check out the new issue of bloomberg "businessweek." the cover story is tesla.
Why everybody loves tesla.
And 10 years of business in silicon valley really upending the business of detroit.
The stock has gone from $32 a share to 130 to dollars.
We will get to other company news from the files of " bloomberg west." here is scarlet third quacks shares of nokia down 5% overseas as it is falling down.
The company also sales of its lumia hands that were below forecast.
4.7 million units, below the 7.8 million that analysts were predicting.
It is down to the wire for michael dell and carl icahn in the battle for the pc maker.
Shareholders scheduled to vote on dell's 24 billion-dollar buyout bid today.
The vote could still be those bond to give dell and its partner, silver lake, more time to lobby supports.
Bloomberg will have entire coverage from the dell shareholder meeting in austin, texas throughout the day.
Ibm raises its forecast after posting second-quarter earnings that topped analysts' estimates.
Saying it will earn over $60 a share this year.
It is better than previously forecast.
Ibm has increased profit by shifting away from low-margin is is is, cutting jobs, and buyback stocks.
That is today's company news.
We also have more earnings from automation.
Just reporting that profit matching analysts estimates of $.73, revenue of $4.4 billion topping estimates.
It is the highest since the 2007. comments are modern nation on industry new vehicle sales reaching the mid 50 million units in 2013. vizio making company -- comments that the automated industry remains the bright spot in the u.s. economy.
We will talk about -- talk to him, mike j -- mike jackson, writing detroit.
Meantime, we will talk about google, venturing into self driving cars, high-tech glasses, and crystal-clear high- definition tv downloads.
The real bread-and-butter is the search market.
That is where it makes its money.
The strategy may be about to change.
Mobile as eating into profits.
This is the story.
It is just remarkable that the share price shows it is the single performer of these companies.
Stephen levy with us among "in the plex," his knowledge of google.
When you walk in a building, any world headquarters, there is a feeling -- what is the distention of the google headquarters?
It is this intelligence really.
They don't want to have any people working there who aren't and credibly smart and incredibly driven.
That is really what they select for.
They select people who want to think very big and take on egg challenges there.
The original search was a big challenge.
You look at the things that google -- class of, self driving car, you could make a justification for all those tie into what google does.
You talk about the glasses, at some point in the future, i will not put a date on it, you will not buy a pair of glasses.
For the past eight or nine months, google has a field test where it is figuring out how to move its services onto this entirely new way of getting information.
People are actually writing apps for it.
Quacks compare and contrast microsoft with a big splash d siloing -- desiloing.
Iker soft is -- microsoft is adopting a google style system that is based on centralizing what they do there.
One thing they're going to do that i think bloomberg actually came up with that google does is how all the executives work together and be physically in one place, network with each other on a regular basis, so they're not competing against each other but working together for a common goal, with a common core of the business.
It is fun to talk about all of these new businesses they are working on, going places where nobody has, as larry page said himself, but the core business is of course advertising.
How are they doing on mobile advertising?
Have they nailed it?
They have not nailed it, but they are ahead of everyone else.
That is part of the confidence there because they have some components with the local maps, they just came out with new mockup -- new maps, which is a great platform or advertising, they're doing better than everyone else.
When someone cracks the code, it is probably going to be google, or google will be in a position to adopt it quicker.
In terms of added revenue, i know the cost has been declining for google.
Is that something the executives are worried about?
If people click more and there is a lower cost, they say it is good for advertisers as well as good for users.
Steve levy, thank you so much, "in the plex" is the book . steve forbes, thank you so much.
Wonderful debate here.
To see where the republican party is in two years time.
Coming up in the next hour of bloomberg "surveillance," we are all over the potential dell deal.
The day with it to be the vote to take it private with silver lake.
We will see that is actually going to happen.
Dell stocks slipped to under $13 per share.
The offer remains a cliffhanger.
We will go to austin in a moment.
War and stanley reported earnings at this hour.
Volatility has been good to them.
Let's clone espn.
Everybody jumps into sports.
This is "bloomberg surveillance." i'm tom keene.
Joining me, as always, sara eisen and scarlet fu.
Joining me from bloomberg business week is josh g reene.
This is an exciting thursday.
We have morgan stanley and a possible fed vote.
That made getting caught up with the morning briefing.
There is economic data to watch.
Unemployment claims, initial jobless claims, the bloomberg a consumer comfort index at 9:45. any confidence index is a big deal.
We are trying to gauge the health of the american consumer.
A 10:00 a.m. report from the philadelphia federal reserve.
The regional economic activity guage.
Ben bernanke -- gauge.
Ben bernanke testifies at 10:00 a.m. earnings to watch today.
Before the bell, we have the iconic industrial processing company.
This hour, the real ones to watch, morgan stanley, verizon, chipotle, google and microsoft.
At 9:00 a.m., the del vote -- dell vote.
Some more companies news with scarlet.
Shareholder a schedule to vote on the $25 billion buyout bid -- shareholders are scheduled to vote on the $25 billion buyout bid.
Jp morgan could be hit with a record fine for manipulating energy markets in california and the midwest.
The wall street journal and the new york times say it could be more than the one to $45 million barclays was signed earlier this year.
Disney getting rid of its car allowance.
It amounted to $900 according to a disney executive.
They have been closing offices and outsourcing to close -- to lower costs.
It is not a g4. let's give back to our top story of the morning.
The long awaited vote on the dell buyout is finally here.
There has been resistance, most notably from carl icahn.
Cristina alesci is at dell headquarters this morning, just outside of austin.
And an expert on companies after leveraged buyouts joins us from boston.
And we have josh greene on the set.
Cristina alesci, what do you know about what the delta will take place today?
The special committee is going to be here today.
The airborne to open up a meeting of shareholders and probably shut it down and delay the altera until later -- and delay.
Vote -- delay the vote until later this week.
You can vote electronically.
What they hope to do is force michael dell and silverlake to reconsider in the face of all of these protests from shareholders.
What will likely happen is that michael dell and silverlake will tell the shareholders, this is our best and final offer.
Shareholders will have to decide yes or no.
They can change their vote from no to yes.
Josh lerner has seen deal after deal.
What with the board of directors and the disgruntled shareholders like to see michael dell do?
This is a classic company that is ripe for a leveraged buyout.
It has a really good core, but it has been buffeted by the winds of fortune.
We have seen this again and again whereby a groups have been able to come in and create value for everybody.
I agree with that.
Why why aren't we seeing a true lbo?
Did they set the price too low?
This is a smokestack, metal- bending business.
Coming up with a valuation is hard.
You can set the glass is half empty or half full.
Maybe we should be comparing this to the $18 a share it was trading at 15 months ago ha or to the $10 or $12 a share it was trading at -- ago or the $10 or $12 a share it was trading at two months ago.
Cristina alesci, if they delay the vote and it does not happen today, do we hear a higher bid?
Do we hear from carl icahn?
Carl icahn once this vote to go through today.
He wants an up or down say on whether shareholders agree on the $13.65. some shareholders are in his camp right now and could change their vote.
There is a lot of risk on the table for iscarl icahn.
He wants to take this company over.
He is telling shareholders, do not focus on the short-term drop or the short-term volatility.
Long term, there is now you.
The company has done 15 gaza billion in the acquisitions and are just starting to see the fruits of those acquisitions.
Josh greene is with us in new york.
These people are hugely respected in my world.
These are the names.
They are saying no to michael dell?
. what happens if there is a vote and it fails?
If this vote goes through in favor of carl icahn and we move this soap opera down the road, is this a $10 stock?
A lot of it comes to how credible the icon double-cross icon offer is.
It is the classic -- a lot of it comes down to how credible the, i kind offer is.
It is the classic bird in hand being worth more than in the bush.
I want to know what happens with michael dell?
What recourse does he have in the voted does not go through?
He has to have a hard discussion with silverlake.
They could call the shareholders' bluff and say, this is our best new final.
The rest is on you guys.
That is his leverage.
Carl icahn is saying, look what happened to this company when michael dell took the reins back.
The share price has gone down dramatically.
Why would you let this guy who does done a series of expensive acquisitions and buybacks take the reins of the company, which he thinks is undervalued.
There is the game set up.
Professor, you teach game theory at harvard business school.
When you teach the course, how does this end?
It is not a prisoners' dilemma, but an offshoot of that.
How does this end?
The greater than greater thansilverlake brings to the table -- the credibility that silverlake brings to the table could result in some kind of buyout action.
Cristina alesci is near austin texas -- the austin, texas.
We will be checking back in with you.
That is the heart of the matter.
Where in silverlake on this?
You are hearing from michael dell on the partnership.
What happens if this voted does not get done?
That brings us to this twitter question.
What is the best deal for dell?
Is it carl icahn or is it dell?
? good morning, everyone.
"bloomberg surveillance i'm tom keene.
The new parlor game is that the fed -- the new parlor game is at the fed.
How about the mid year economic report?
Chairman yellin, a year from now will take some tough questions.
You bet on who the next chairman will be.
The hot parlor game in washington is who will be the next sec chairman.
There has been a lot of jockeying for position.
Larry summers is making a big behind the scenes been.
The irish online broker is laying odds on all of this.
They called the right last time.
They got it right.
People tend to steer at the all -- the online bookies.
-- stare at the online bookings.
What is interesting is the number 2, roger ferguson.
He is not a name that gets a lot of chatter on the washington social scene.
Why roger ferguson?
He was on the watch for 9/11 when chairman greenspan was on of the country.
Not a front line monetary economist.
Not a guy you see on tv talking a lot.
He would be an historic pick.
The first black fed chairman.
If you talked to some of the more same people, he is a popular name.
Not somebody who is on somebody rents -- somebody's radar.
There is alan krueger, at 25-1. nicholas is 1000-1. the black swan said.
I do not see it.
-- the black swan fed.
If you want to lay that bets, these are the odds.
What is controversial about lawrence summers?
What is controversial is his personality and his personal style.
This is a job where you need to be a diplomatic -- be a diplomat to bring people together.
People think he left the obama and mission early was because there was turmoil.
I likes the with-people think he left the obama administration early because there was turmoil -- people think he left the obama administration early because there was turmoil.
This is "bloomberg surveillance." i am sara eisen with tom keene and scarlet fu.
The stock is trading a bit down.
$26.50. looking through the numbers, when you back out numbers like that valuation adjustments and the onetime charge to purchase the rest of the morgan stanley- smith barney, it is up 43 cents.
As we have seen with the other big banks, 17 alice downgrading their animus -- downgraded their earnings per share.
Looking at the -- 17 analysts downgraded their earnings per share.
They were expecting the profit margin to stay steady at 17%. 20%/-22% was predicted.
-- 20%-22% was predicted.
In terms of actual trading revenue, fixed-income currencies and commodities revenue, $1.20 billion.
That does tend to be a bit lighter than what analysts were looking for.
Moody's review morgan stanley's credit rating and it was downgraded.
They will commence a share repurchase plan.
William isaac is with us, the former chairman of the fdic.
He has a tremendous knowledge of the banking business.
Is the crisis over?
As we go into august of this year, the beginning of the seventh year, can you say all clear right now?
I believe the crisis is over.
I do not believe we are on solid ground yet.
We see morgan stanley recovering.
We see a better margin.
What do banks need to do to get to more solid ground?
We need more -- rose.
The profit picture is what is cloudy for the banks -- we need more long growth.
Banks are doing just fine in terms of raising a lot of capital.
But they do not have is a lot of long grove -- growth.
You grew up with 5th third.
It is a regional bank, but it has grown pretty large.
For these kinds of banks, it is all about loan growth.
You see it as tepid.
There are some signs that it is coming back.
Until the economy starts to grow significantly, we are not creating enough jobs.
We do not have enough economic growth for there to be a lot of loan demand.
I want to highlight a q uote from gorman, a ceo of morgan stanley.
Morgan stanley is an investment bank first and foremost.
There are a lot of questions about what kind of banks they are.
They are too big to fail, but are they supermarket banks?
Today cater to institutional clients?
Do we need to answer that question first?
It is clear to me we need to figure out what these big banks are, what they are good at doing and what we really need.
I am not one that figures breaking up the big banks.
To go to you and your knowledge of cincinnati, yes cincinnati and you go across the river to kentucky.
It is not manhattan.
I think this is a headline item.
We have spent too much time on the new york banks.
What does your bank think about this new superbank?
The ceo's top of lot about mortgage banking revenue.
That remains a little uncertain.
What is your outlook?
But we hope happens is that as refinancing those by the wayside, which it will because rates of come down so far, hopefully the housing market will turn around and we start having loan growth and interest coming from new mortgages being put on the books.
There is no question that there is a lot of focus on the new york banks.
They are doing a whole bunch of things around the world that are not relevant to the u.s. economy.
They are the heart and soul of what is happening in the economy.
Bill isaac, sheila bair, nancy pelosi, john boehner.
Do we want to put the same rule book on a cincinnati bank as we do on jp morgan?
Deleverage ratio, for instance.
--m the leverage ratio, for instance.
I am disappointed that we are still continuing to punish banks.
That is not right.
The rules of the game should be the same.
If you have different capital ratios with different banks, the bank with the low capital ratio is going to won.
-- going to win.
The ceo of auto nation coming up.
This is "bloomberg surveillance," streaming on your phone, tablet and on bloomberg.com.
? good morning everyone.
"bloomberg surveillance." jack lew is the treasury secretary of the united states.
An interesting and timely compensation.
Look for it at 4:00 p.m. afternoon -- 4:00 p.m. this afternoon on "street smart." it is time for mourning movers.
I want to highlight shares.
Second quarter earnings topped analysts' estimates.
Ibm recovering from a rare stumble in the previous quarter.
Stock is up almost $200. you have to be watching dell today.
The shares are higher in the pre-market.
They had gone on to the proposed deal.
$24 billion offer from michael dell and silverlake.
The crowd iconographic that cristina alesci showed.
Just say no.
You wonder if they will have to delay the vote because of opposition.
The committee will be meeting early this morning.
The soap opera continues and.
We are watching morgan stanley.
The number need to know is 18.5%. that is the profit margin.
Gorman has completed the rest of the purchase of the morgan stanley-smith barney is venture.
The stock has been at a discount.
He needs to boost valuation of the stock.
He needs to prove a fundamental improvement in the wealth management business.
Josh green is with us from bloomberg business week.
You have a question.
Elizabeth warren and john mccain reintroduced glass- steagall.
There seems to be a by person moves to push these guys to the side.
-- there seems to be a bipartisan move to push the skies to the side.
The capital ratio should not be higher for the largest banks and the smaller banks.
All banks need to play by the same rules in terms of capital.
I think we do need to get the leverage ratio up in the big banks.
It is lower than the smaller banks.
We need to make the ground rules fair.
This company needs those big banks.
Companies that do business around the world need those big banks.
We need to be judicious and careful in what we do.
The former head of the palace said dealing with a failed banking system.
-- head of the fed says they were dealing with a feeling banking system.
We need banks to compete internationally.
-- with a failing banking system.
Banks in france and germany with the u.k. -- we need jp morgan to compete with bnp paribas.
I am not worry about competing with other banks.
In the late 1980's, japanese banks were gobbling up the world, but they were not being run well.
They did not have capital or profits.
It was all being done on leverage.
I do not think we need to compete on that basis.
We need to have strong balance sheets.
To precut the banks and not allow them to serve an ibm throughout the world the best to break up the the banks and not allow them to serve -- to break up the big banks and not allow them to serve the ibm's of the world is a mistake.
A busy morning.
I did not think it was going to be.
A busy earnings season case so far.
A big boost in profits at the world's largest money manager.
Rising stock market boosted fees.
Profits rose $3.80 trillion of the past year.
Tiger woods rei p -- re-ups with nike.
The company has stayed with him through his marital scandal.
There were no financial terms disclosed in his current 90 to take some roughly in the never of $20 million -- his current deal with nike takes him roughly into the area of $20 million per year.
That is our company news for this thursday morning.
Sending it back to you.
Good morning, everyone.
"bloomberg surveillance." all of our interviews are on the ipad, on itunes and android.
I am tom keene with sara eisen and scarlet fu.
This morning, automation reported quarterly profits that matched analysts' estimates.
New cars and trucks burning more from their operations.
More cars and trucks returning to dealerships for maintenance and repairs.
We will make the what-well, mike jackson, the ceo from automation -- we will come mike jackson, the ceo from auto nation.
An absolute bright spot in the u.s. economy.
It helped us achieve a record earnings per share of 73 cents, an all-time record and a 11% increase over the prior year.
The industry, as we forecast a the beginning of the year, we said it would do mid-15 million units.
He is optimistic and confidence that that will happen.
There is a genuine replacement needs.
We have exciting new products from the manufacturer that will improve fuel efficiency.
Hybrids and electric arc 3% of the business.
Turbocharging, multi-speed transmission have dramatically improved food -- fuel efficiency.
Gas prices are supporting vehicle sales.
We have the best financing ever.
We are on the short end of the yield curve.
You guys need to take one great victory lap.
The stock is doing great.
You had some skepticism about your model.
U.s. shown but critics they were wrong.
What is the best practice of autonation0-f autonation -- of autonation that other companies can learn?
Retail is an immediate one by one business.
The needs of your customer have to be met or exceeded instantaneously.
You can never forget that you are a humble real -- humble retailer.
We use our scale to build processes and technology over time that embrace today's consumer.
Today's consumer is digital- savvy.
They have no patience and they want and expedited transaction.
We cut transaction time in half over the last five years.
We intend to dramatically reduce them in the future.
Sutonation -- autonation can take a 5 year view and invest.
There is a procession that short-term rates will go up eventually.
The buying that we are seeing of automobiles and the frenzy, is it being moved forward artificially?
What happens when rates rise?
I do not characterize it as a frenzy at all.
The foundational driver of auto sales is genuine replacement needs.
We had a depression in automobiles in 2008-2009. sales came to a standstill because there was no financing available.
It pushed up the average age of vehicles on the road to a 11 years.
American consumers need to do something.
-- it pushed up the average age of vehicles on the road to 11 years.
The replacement meet those on for years.
We are in the early innings of a multi-year recovery.
That is the foundation.
Add to that the attractive financing.
Rates will eventually move.
The what i look at it, 100 basis points for our customers is $15. we have got to leave it there.
Thanks for joining us today on "bloomberg surveillance." coming up, the big business of cable sports tv.
? coming up today at 8 a.m., scott rigell, the republican from virginia.
The silicon keene with sara eisen and scarlet fu.
Would also is going on today one hour from now, netflix executives will find out if house of cards made history when the broadcast establishment announces the beginning nominations.
Scarlet fu is all over this story, the resident tv and gossip queen.
What is amazing is how they attracted top-notch talent.
David center -- david fincher and kevin spacey headlining this program.
He put it best when he said, house of cards was a real opportunity for the film and television history to learn the lesson the music industry did not learn.
Give the audience what they want, when they won it, in the form they want it at a reasonable price.
They disrupted the model, releasing all the episodes that once.
People are wondering if amc will do the same with mad men.
Scarlet fu, you are the gossip queen of the show.
What is fascinating about your commentary is that the distribution monopoly has been broken.
You would know.
I grew up in the cable industry.
I grew up in the newspaper industry.
Here you have this amazing piece of programming available on devices of all sorts.
It is no distribution monopoly.
In the next segment, we will talk about what it means to the fundamentals in the industry.
The economics of contents have replaced the economics of distribution.
Who lose this -- who loses?
Anybody who has pipes and the people who sets too high a price for their content.
I want to get back to house of cards and how can changing it is when it comes to the netflix budget.
Netflix spends $4.5 million per episode for house of cards.
On top of that, unlike a network, they did not have to shell out a lot on marketing campaigns.
A guide viewers to content by using the data from algorithms.
They want to get the nomination from the traditional tv awards.
Which it is the highest amount paid for a single episode on network television.
As a tool revenue stream.
It does not say netflix cannot sell the product -- the program to someone else later on.
We will talk about the booming business of sports television and we come back.
? it is "bloomberg surveillance." tomorrow on the program, john scully.
Maybe we will shift over to apple, apple, apple from pepsi.
The very good.
Let's again to some company moved -- company news.
It is down to the wire for michael dell and carl icahn.
Shareholders scheduled to vote on the buyout bid this morning.