This is taking stock for thursday, august 15, 2013. i am pimm fox.
We are going to focus on different ways you can sell and other assets.
Reluctant shoppers pushed walmart to cut its annual forecast.
We are going to talk to an executive offering customers a break.
Plus, examining the results behind the drama between carl icahn and michael dell.
What about buying and selling vintage automobiles?
An auction includes a 1956 aston martin.
All that and more over the next hour.
But first, headlines.
Let's start with dell's numbers.
The company continues to suffer from a decline in pc sales.
Revenue for the quarter was little changed over a year earlier and came in at 14.20 $5 billion.
Walmart cutting its forecast.
-- $14.25 billion.
Walmart cutting its forecast.
Disney has acquired -- third point has acquired a stake in disney.
Those are some of the top stories.
The pc maker dell, well, results exceeded analyst estimates.
How is this going to affect michael dell and silver lake's plan to buy the company?
Let's bring in cristina alesci and tori johnson.
-- cory johnson.
Ray joins us from las vegas.
Christina, let's start with the story that keeps on giving.
Sales, about $14.5 0 billion.
We were expecting this result to really bolster michael dell's case.
He was hoping to get out and head of carl icahn day in court.
If this report had been truly devastating, missing analyst expectations, it would have bolstered michael dell's case.
Now, we get news that they actually beat estimates, not by a lot, but it still bolsters carl icahn's case.
Carl icahn says the business has value.
At the end of the day, will it sway a court?
Probably not, but in looking at who has got the latest leverage here, it looks like karl icon maybe has the star next to his name.
Quit -- carl icon ahn maybe has the star next to his name.
We actually predict that in cloud, cloud services and applications, there is a $75 billion market by 2016 that dell has not fully tapped yet.
We see the opportunity there in terms of adding two essential growth.
How much is opportunity worth if you have not executed on at?
That is something dell could easily double in the next five years.
Cory johnson, come in on the idea that dell could take advantage of this growth in enterprise and cloud computing.
Ray wang seems to think they could do this easily.
Cori is already laughing.
Who am i to disagree?
Dell's numbers if you go through this are not that bad for dell.
You could lump a lot of it on top of blackberry.
They have done consecutive quarters in their server business, 32% growth and now 24% growth.
That is really big growth and really big business for these guys.
Add to that their enhanced services business growing in single digits.
It looks like things might have bottomed a little bit here already, and that does bolster carl icahn's case that the worst is over or the worst is insight.
If this is a bottoming , michael dell is right to get out from under it, but carl icahn has made the case that a lot of this is working.
Isn't there an irony that on the one hand, michael dell, who has the largest share of dell , that a bad report would actually be good for his it with silver lake to take the company private, but his company, if it performs well, that is a bad thing and that helps his adversary in this situation, carl icahn?
It is a little bit of twisted logic.
He wants to buy the company for as little as he can pay.
But he actually owns 60% of the company.
To get it on the cheap is an admission that he is trying to get the company for less than he actually thinks it is worth.
Keep in mind that he actually has increased the price on this deal quite substantially.
Yesterday, when the company released a revised proxy statement, you could actually see the back-and-forth between michael dell and the special committee.
I called dell was willing to finance the 13% -- $.13 dividend on his own.
He is putting more and more of his own money on the table, but he is not going to give away money unless someone forces him.
But someone is forcing him, carl icahn.
Ray wang, what is your perspective?
This is one of the things where you need synergies in place.
Just selling enterprise services group is a combination of hardware sales.
All of that comes into play when you are selling a complete solution.
I think we lost ray for a moment.
What is next for carl icahn?
He should be prepared to face a very tough judge tomorrow.
He is going against a judge who has already expressed some cynicism around carl icahn and the way he has handled this.
He has already told him to go home once before.
He is now bringing a slightly different case, and the judge has to consider the new developments that have come forth since the last time they were in court.
Not only did the board moved a special vote twice in an apparent attempt to move this deal to michael dell.
You were in the parking lot when dell itself changed the terms of how shareholders were going to vote on this.
Right, so what carl icahn well argue is that michael dell got to change the rules of the game, and dell will say look, we got paid to change the rules of the game.
That is how they protected themselves from future lawsuits, by the way.
They got close to $14 per share . that is a major problem for carl icon in fighting the case tomorrow.
They were being pushed by someone who had a big stake.
Cory johnson, come in on this.
You have a thought.
We have spent a lot of time criticizing companies and crummy corporate governance, the tricks they play around accounting rules, the tricks they play releasing information.
Michael dell releasing this the day before the court case might be the right thing to do even if it doesn't help his case.
He is leading the world and the court know exactly what the real numbers are for this company before they make a really important decision.
He should probably commended -- be commended for deciding to do that.
Yes, but you have to release quarterly results, right?
Yes, but they were supposed to come out next week.
A poll this forward by a week.
I don't think it is an accident that they came out the day before the trial.
The idea that the information is out there is commendable and kind of rare in corporate america right now.
Thank you so much, cory johnson, ray wang, and of course, cristina alesci.
Still ahead, where are the best deals in brick and mortar stores ? we will check in on that next.
? this is "taking stock" on bloomberg.
I am pimm fox.
The s&p had the biggest drop since the end of june.
In the treasury market, yield on the 30 year bond, 3.8 one percent, the 10 year, 2.77%, a big selloff in the bond market.
Here to help us understand what is going on is a chief strategist at russell investments and achieve strategist at credit suisse.
I want to start with you, steve.
What are you make of the selloffs today in equities and bonds?
Achilles -- equities were fairly valued.
We thought there would be some tension going into the end of the year.
This is a good opportunity to take a step back, look at the big picture of what you're trying to accomplish.
In the fixed income space, we are looking more at a yield normalization process.
There is a difference between interest rates spiking because of an inflation scare and the process by which interest rates normalize into a more typical pattern.
Interest rates don't do things on their own.
They react to what people do with fixed income.
The federal reserve is likely to taper.
A big portion of that is the borrowing of less money.
There is less to be purchased, so they need to taper by definition.
The jobs data today showed that jobs are improving.
320,000. not great shakes, but improving.
Also, inflation is low.
Ira jersey, come in on this.
320,000 was the initial print for jobless claims today.
What do you make of this selloff in the bond market.
Volumes were higher than they were on payroll.
That is something that was pointed out to me before i came in.
I think that is interesting because what you had today was a lot of selling overnight, not a lot of volume, and when we got to the lows of the day, you saw a little bit of buying.
I think we're extending the range and treasuries, and a big part of that his positions outside.
People were skeptical that the economy was going to expand.
Others argue it will continue to get modestly better.
The fed will taper.
As long as the economy does not fall out of bed, we think yields will continue to move higher.
But it is hard for yields to get really high without the fed increasing the federal funds rate because the difference between the two-year treasury and 10 year treasury, for example, has never been more than three percent.
You're a 2.75% right now.
Without the fed on the horizon moving the front end rate, i think it is going to be hard to selloff another 10-25 basis points.
If you were to lend me a thousand dollars and i were to give you an iou, basically a bond and say after 30 years, i am going to be paying you about $38 a year for 30 years and then eventually give you back the money you lent me.
This is the situation in the bond market today.
Is $38 a good deal?
It is less bad than it used to be.
We have been looking at things -- at fixed income being unattractive that the best for a very long time.
I think investors need to look at a globally diversified, multi-asset strategy.
America needs to get comfortable with the fact that the rest of the world exist and in an adaptive way look at how to invest in that.
What can beat inflation and give you what you need?
That is going to be multi-asset.
You need to look at real assets, emerging market, fixed income, and securities.
In a challenging revenue environment, not every firm will execute as well, and you need to find the better names.
I am going to make you an even better deal.
Loan me a thousand bucks for 10 years.
I will pay you $28 every year and after 10 years i will give you $1000 back erie it is that a good deal?
First, are you able to tax tom keene.
You like the taxing power of the federal government.
The other thing you have to remember about the treasury market is that it is an international class.
Treasuries are still going to be a place of quality assets.
That is one of the reasons they continue to stay a little lower than you might think otherwise.
I think that is a dynamic that is not likely to change that soon.
We have seen things like foreign buyers -- the data came out today for june, not a big surprise.
We saw large outflows in selling treasuries by foreigners.
The data confirms that has stabilized somewhat over the last couple of weeks.
Thank you for joining us.
Coming up, when top-ranked tennis players get ready for their competition in the u.s. open, they are likely to turn to ibm.
We will tell you why, next.
? quakes today, usta officials unveiled a plan for a retractable roof over arthur ashe stadium.
The u.s. open is said to be underway in new york city on august 25. it will feature novak djokovic, rafael nadal , roger fedor and juan martin del potro.
Here to help me understand not only how to renounce all of this, but the technology behind the event is ibm's representative, rick.
Melding computers and sports is not brand-new, but applying it to tennis and being able to put it opponents versus opponent, this is a revolution in the way tennis players actually operate.
Tell us what you are doing.
It really is different.
For years, we have been collecting data.
We have people on the sidelines tapping into their computers everything that happens.
But what we have done the last couple of years that has really come up this year is analytics , which are more predictive.
What we can do with more than 40 million points of data is show how fed erer needs to do what against djokovic or what djokovic needs to do against fed erer.
During the match, you are sort of pure own analyst, because you're seeing that data live as it happens -- sort of your own analyst, because you seeing that data live as it happens.
Are the players themselves getting this data as they train?
Let's face it, these are big businesses, each and every one of them.
They have coaches and people watching this data who really understand it, can pronounce it and really get a better understanding.
And they refine their game based on the result.
Tell us about slam tracker.
It is part of our six digital platforms.
It is amazing what has happened in the last few years.
Slam tracker is a scoreboard and more.
It will give you all the information i was talking about before, but this year, another new thing we're doing is focusing on social.
Our clients have told us they are interested in social.
They are interested in mobile.
They are interested in analytics.
How do we put all that together yucca that is what we are doing with slam tracker.
We -- together?
That is what we're doing doing with slam tracker.
What is on twitter?
What is the sentiment?
Are people pulling for one player or another?
And it is all real time.
We are every year looking for ways to bring people back, to get them involved, to get them interested in tennis.
Can you give us an example of how, let's say, roger fede rer or ref i am the doll would use this to play against each other?
-- or rafael nadal would use this to play against each other?
This is all opponent versus opponent.
So you can see, what are the key things i need to do?
Is it about my serve?
They can get real insights into what they are doing.
Thank you very much, rick singer joining us from ibm to talk about the world of tennis.
It is 26 minutes past the hour.
Time for on the markets.
The s&p 500 loses 24. the nasdaq dropped 63. the dow jones is down 225 points.
This is "taking stock" on bloomberg.
I i am pimm fox.
Now for headlines.
President obama has canceled the military exercise with egypt following yesterday's assault by security forces in cairo.
More than 500 people were killed when the egyptian interim government raided camps occupied by former president mohammed morsi's supporters.
Speaking from his vacation on martha's vineyard, president obama said the egyptian government has taken a dangerous path.
The united states strongly condemns the steps that have been taken by egypt's and her him government and security forces.
-- interim government and security forces.
We deplore violence against civilians.
According to a regulatory filing, berkshire hathaway 's total investment in wells fargo is $20 billion, larger than the 15 point $8 billion invested in coca-cola or 12 point $8 billion invested in ibm.
Buffett has said wells fargo navigated the financial crisis better than competitors.
Finally, news out of new jersey, the devils hockey team has a new owner.
Josh harris has agreed to by the team from former lehman brothers executive jeff vander byng.
The deal is reportedly worth $230 million and is the partnership control over the prudential center.
I will see you tonight on "bottom line," at 7 p.m. eastern.
It is the crucial back-to- school shopping season for retailers.
According to a harris interactive poll, 40% of households plan to do their back-to-school shopping this month.
Will they do it in the store or online?
Let's get some insight from the world of online deals from offers.com chief executive, steve schaefer.
What is offers.com?
One of the leading coupon and deals websites.
We take coupons and deals from the top stores and put them all in one place for consumers to save time and money.
These are electronic coupons.
There is a code you type in.
That is a promotional item and you get a discount.
Sometimes it is a code.
Sometimes it is clicking on the link.
Sometimes it is just knowing you're getting the best deal you can by using a site like ours.
And it is perfectly legal, right?
You can use the codes and it does not matter if the company sent them to you or if you went to your site to get them.
We work with retailers to make sure we have the best codes and that they work.
What are some of the different types of coupons.
I know they are time sensitive and product sensitive.
There are coupons.
There are deals.
Right now there is a big trend in using the word promos.
It is not really clear why they are shifting to the word promos, but that is one of the interesting trends now.
I want to bring in greg johnson, retail expert.
You made it in.
Thank to use -- great to see you.
We are talking about the way coupons change the way online retailers connect with their customers.
Jcpenney thought maybe coupons were a thing of the past.
That did not work out so well, did it?
It has been a mixed bag at best for jcpenney.
Ron johnson, late in his rain, brought coupons back on march 15, the ides of march, as it happens.
The pace of couponing is on the accelerant for jcpenney.
They are backed the old routine of people double-dip a non- coupons in addition to sale prices.
What do you see in terms of the public's affection for coupons, whether they are in circulars, online, or come in the mail?
It is a mixed bag, and it defends on whether it is manufacturers coupons, where youths -- use has been very modest, down from the old days.
But individual retail coupons can be very powerful.
At that bath and beyond, almost every woman who goes into shop brings in the 20% coupon.
A jcpenney, there is a great use of the $10 coupons.
Less so the percentage, but the $10 coupon is great.
If this is the case, there really is no full price, right?
Shoppers expect the coupon.
A lot of folks will fill up their shopping carts and if they do not have a coupon or a coupon code, they will leave it full and weight.
Give us an idea of the companies you work with and the ways they gauge what kind of deals to offer their customers.
We work with big companies, sears, kohl's, jcpenney's. one that we seen be successful is, they take what they think their average order will be, let's say it is $300, and then offer $35 off any order over $300, plus free shipping.
There are a lot of analytics that go into that.
With $100, save 10% and get free shipping.
Jcpenney for back-to-school did a 10% off coupon.
It was a code.
It was plus whatever was on sale.
So you got it on sale, plus 10% off.
This is the new world of retailing, isn't it?
Nobody pays for anything full price.
You are always looking for a deal.
You got results from nordstrom today, a higher-end retailer.
From macy's yesterday, and walmart as well.
Is the general retail environment soft?
It is soft, and we saw the most are medically in the walmart numbers.
Walmart represents about 10% of all u.s. retail sales, and the numbers are soft there.
Coles did slightly better, but a 0.9% comp is no great shakes.
Macy's actually disappointed with just slightly underwater comp's. clearly, there is softness in the retail economy.
We saw going into summer, and we are seeing it now in spain.
It is tough out there.
Are there other segments in the retail industry that are doing better?
We were talking earlier about luggage and home accessories.
What is doing well?
Right now, one of the stronger performing areas is home-improvement.
Home depot and lowes are still coming off a very deep bottom.
Major appliances are slowly coming back, but nowhere near the pace of the mid-2000's . automobiles have been nearing traditional sales basis.
Luxury is doing ok , better than the mid tier and value players.
Thank you both very much.
Craig johnson and steve schaefer, check out those promo codes.
Coming up, i am going to tell you about the big money behind some of the world's rarest diseases.
? this is "taking stock" on bloomberg.
Let's go to olivia sterns.
Happening in the u.s. tomorrow, first up, housing starts for july.
Starts likely increased after an unexpected drop in june to the lowest level in nearly a year.
Also, sap investors have until midnight to request a withdrawal of their money for the third quarter.
Ceo steve cohen has been indicted for failing to prevent insider trading within his company.
We will get a survey of consumer confidence for the month of july, a key indicator ahead of the critical back-to-school shopping season.
For more, go to bloomberg.com . rare diseases that affect a small percentage of the population are normal -- are known as orphan diseases.
Cumulatively, they affect millions of people around the world.
A company at the forefront of addressing some of these diseases, for example, it he appeared i path of pulmonary fibrosis -- idiopathic pulmonary fibrosis , is looking for solutions.
What exactly are orphan drugs and what is the government role in this?
Orphan drugs treat orphan diseases.
Orphan diseases are those that a sickly affect less than 200,000 patients in the united states per year.
So it is an actual numerical designation.
It is more than that to.
If you have a small market to sell drugs to, it is hard to incentivize drug companies.
The government has incentives to encourage companies to address these needs.
John hodgman, come in on the idea of orphan drugs, because intermune is at the forefront of this.
Tell me about idiopathic pulmonary fibrosis.
What is intermune doing?
We have a compound that has been approved and marketed in the european countries, 27 countries in europe, plus canada,, and is actually also marketed in japan by a different company.
Our brand is addressing idiopathic pulmonary fibrosis where cells gain access to the lungs.
It is a progressive, unpredictable, you're reversible and very fatal disease.
What is the status of it being approved by the fda?
It is not approved in the u.s. yet.
We presented our data findings to the fda in 2010, and they chose not to approve it.
We were also in the process of getting approval in the eu, and they did approve it.
We are doing another phase three study at the request of the fda, and we will bring that information back to them.
What we have said his second quarter of 2014, next year, so not very far away.
This process by which drugs are approved, how is it possible that in europe the drug is available, in japan, and canada, but not in the united states?
There was conflicting evidence in some of the larger clinical trials for this drug.
Part of what we also look at is the statistical significance in the differences.
The fta essentially wanted additional information to show yes, there is a real impact on quality of life for these patients and decreased progression of the disease over time.
He gave us the definition of an orphan disease, 200,000 threshold, as well as some incentives the government provides.
What about reassurance to investors that insurance companies will cover the payments for these kinds of drugs?
Part of what also needs to be shown in further trials is not just does this drug worked for patients on an individual level, but we know that idiopathic omen area fibrosis is not a reversible disease.
It is not -- pulmonary fibrosis is not reversible disease.
It is not curable.
The best we can hope for with these drugs is to slow progression.
What we would love the our cost effective studies that show that you can prevent hospitalizations and save money to the payers in the long run.
What is the cost to develop this particular drug, and what is the potential market?
We have spent hundreds of millions of dollars progressing pulmonary as well as ipf drug discovery as well as clinical trials.
Approaching almost a billion dollars in pulmonary in total and well over half a billion in ipf.
We have spent a great deal of money.
We believe in the market.
It should be a large market, as the doctor indicated.
The amount of resources required to get it through clinical and then eventually commercialize, it is a big investment.
We have made that investment in europe, and we intend to do it in the u.s. as well.
Having made that investment, if indeed the fda approves intermune 's drug, what happens to your company next?
Our intention is to commercialize it in the u.s. like we have in europe and canada.
We will put together a marketing and sales force to go out and market and promote that drug in accordance with our label h , and we will bring that drug to those patients that are desperately waiting for it.
I want to thank you both very much.
John hodgman is the chief financial officer of intermune, joining us from boston, and my thanks to you.
Always a pleasure.
Coming up, the demand for vintage automobiles is on the rise.
How about a 1956 aston martin?
If you have $2 million, you can be a player.
We will take a closer look at old cars, next.
? the city of detroit may have filed for bankruptcy, but the automobile industry is booming, and the market for vintage automobile seems to be going along for the ride.
Joining us now is auto editor jamie butters.
What do you see in the value of classic automobiles?
What we are really seeing in the depths of the reception, 2008-2010, superrich people were doing fine.
The market for 50-70-year-old rolls-royce is was as strong as ever.
What was soft was the muscle cars from the 1950s, 1960s, 1970s. too many people who grew up with those cars and now work in the car industry did not have the money or financial security to go out and feel like they could want $30,000 into a car or spend the money to refurbish it.
Now that stocks are back and dump the knees are hiring are feeling better and getting to -- companies are hiring, people are feeling better and getting to play with their cars more.
We are seeing that values are going up and the guys to fix these things, who remanufacture the engines or paint them up nice, they are super busy.
They cannot even keep up.
I was looking at a report that about 35 -- 25% of the automobile companies in the u.s. are running at 100% capacity because of demand for new automobiles.
What about the skill sets necessary to restore some of these automobiles that you are describing?
Well, they are similar skill sets.
They are different value chains.
The people working at the plants making the parts are running full blast.
That is great, because it means the people making 12 dialers -- $12-$15 an hour might even be working overtime or at least their full 40 per week.
Other guys tend to be a little more entrepreneurial and an historic way.
They are small shops, 2-20 people where they take things apart, work with their hands.
Each problem is unique that they are solving.
More like when you are watching orange county choppers or one of those chop shop shows.
It is more that kind of work than the factory line work.
My thanks to bloomberg auto editor jamie butters joining us from detroit.
Staying with cars and history, the first major automobile auction in new york in more than a decade is going to take ways in november.
Joining me now with that story is kutcher huss pitino.
Always a pleasure to see you.
There is a car you have your eye on.
Maybe you would like to take a drive in this.
Or for somebody to drive me in it.
How much would it cost for somebody to drive it?
It is a 1950 six aston martin.
It is gorgeous.
It has been restored.
It was owned initially by a very glamorous couple.
She was an oil heiress and olympic water skier.
The newlyweds got the car.
Click something perhaps less expensive but more sculptural, i keep thinking about things that people find in their attics or maybe a foodie market.
Tell us about a necklace that was worth a lot more than someone thought.
That was my favorite story this week.
Imagine, we are all dreaming of going to a flea market and buying a trinket for $10, 15 dollars, and it turns out to be an heirloom or maybe a work of art.
That is what happened to a person who was visiting a big flea market and found on the ground a beautiful necklace she liked.
She paid $10 for it sheared -- for it.
She wore it for five times.
Sometime later, she saw a similar necklace.
She saw in the newspaper a necklace that looked very similar.
What is the estimate?
$200,000-$300,000. that is a find.
Thanks for taking stock.
Have a good night.