Merck to Fire 8,500 in Strategy Overhaul

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Oct. 1 (Bloomberg) -- On today's "The Roundup," Bloomberg's Trish Regan, Olivia Sterns, Adam Johnson and Julie Hyman wrap up the day’s top market stories on Bloomberg Television's "Street Smart." (Source: Bloomberg)

Some of the gains we are seeing in the health care stocks.

Let's move on to the round of business stories we are tracking ahead at tomorrow's open.

Merck is slashing 8500 jobs, adding to 7500 cuts already announced.

Eliminating 20% of its global workforce.

They say it will produce $2.5 billion in savings by 2015. it will focus instead on developing new drugs.

Merck has faced several regulatory setbacks the past couple of years.

They want to focus on areas where they can win.

It is not easy in this business.

They had so many major patents that just fell off a cliff.

The same is true for lily and bristol-myers.

If you look at the stock performance this year, it is pretty much in line with the market, but other drugmakers have done better.

Merck is up about 18%. you have the younger upstarts, the biotech.

These guys are doing a lot better.

The biotech performance truly has been outstanding this year.

That is one of the key points going on, competition.

The price pressure is in part a result of the health act.

There are several things going on.

They lost the patent on the top- selling asthma drug.

Last year it only brought in $4 billion worth of sales.

I want to talk about the amr- us airways merger.

An agreement was reached and the suit will still proceed as scheduled, given what is happening in washington there is a lot of concern as to whether washington is still open for business.

They are going to go ahead and try this case.

This is a big deal, and here is why.

There were seven states plus the district of columbia ahead effectively join the federal suit to block his merger.

Texas is now pulling out.

You have to think that is very disconcerting to the federal government come because they are saying, do we still have a case in e texas was concerned that the company would move the hub from dallas, a major hub for american, and saying we are going to stay in dallas.

The other issue is really the overlap of routes.

This is why a lot of people have said the government vasquez is weak.

There are only 12 overlapping routes.

The real issue may be the 69% gates that would be controlled at reagan national by the controlled entity.

The government is also arguing that fares are going to go up as result, if you have fewer companies, the argument goes, then you have more pricing power among the companies that remain.

You still have delta, united, and continental, which are not exactly tiny carriers that the new companies going to dwarf the wood doug parker, the ceo of u.s. airways, has made the point that the only reason they want to bring these companies together is specifically to compete against the larger airlines.

To do that, they will lower fares, but they have to have a stronger infrastructure.

So stay tuned.

Let's move on to retail.

Another day, another depressing jcpenney headline.

Perry capital announced a share offering -- jcpenney announced a share offering, cutting the state to three percent, shares falling to their lowest level since 1982. check this out, you guys.

He bought the bulk of his state at an average of 15.70 and sold it at 12.90. this is just been such a loser persaud many people.

Perry got a lot of his state right after bill ackman stepped down.

It is just a matter of not losing as much money.

If i am bill ackman, it's like, what did i do?

They both said this thing is a loser, and i'm cutting it.

That is trader discipline.

Glenview capital is holding on, george soros is holding on, as far as we know.

Eventually it will turn around, it's just a matter of how long and having sufficient liquidity to do it.

A much-anticipated dinner between carl icahn and apple ceo tim cook occurred last night.

Don't forget, karl has been accumulating a stake in apple worth well over a billion dollars and has been really pushing the company share buyback.

I spoke to him ahead of the dinner and then after the dinner this morning.

Here's what he told me.

He said it was the first time he had met with tim cook.

He said we had a very nice dinner.

He's a very cordial guy.

I told him we think it's a no- brainer on every metric to do a $150 billion buyoutback.

Apple is in a position to borrow money at next to nothing, so why not do it e tim and i agreed to meet again and continue our dialogue.

I'm sure it was a very nice dinner.

He said i cannot divulge that, but we agreed to keep talking.

He has run through the numbers with me and he said if they just put a little debt on the company, they could do the share buyback and it will send shares well into the $600 range.

It is cheap for them to borrow.

They could borrow $150 billion at about 3%. this has to be a bitter pill for tim cook to swallow.

Finally they agreed to give money back to shareholders.

I don't think tim cook wants to do it again.

They didn't give money back to shareholders because they effectively cap -- gave money back to themselves.

Now it has gotten so big, how do you grow this business?

They have not issued a lot of dividends.

That has not really been there play.

We will see whether they decide to take his advice.

What is interesting is that tim cook did go to his home for dinner.

You think about carl's relationships, like the dell situation, not a good one.

He is the kind of guy that a lot of ceo's are like -- tomorrow, investors will have a chance to own a different kind of icon, the empire state realty trust.

The empire state building is part of this real estate investment trust.

It is having its initial public offering tomorrow to raise one point $07 billion.

It will start trading tomorrow on the new york stock exchange.

They have about 21 properties, but there has been a lot of contention over this ipo.

Various parties argued over ownership.

There were unsolicited bids for the company as well, but they are finally going through with it.

There was one offer of $1.4 billion.

They think they're going to do really well on the markets.

That is a hard call with the new york real estate market.

You buy a building, you put up the money, you collect the income.

All you're going to make is 3% or 4%. that is painful.

Retail investors are going to want to buy shares just to own a little piece of the empire state building.

I think that is ridiculous.

That is like when we heard productprada was going public in china.

Disney and dish agreed to an extension of their program.

This of arts of blackout of espn for dish households.

They are still working on a longer-term fix.

Alec sherman, you know the story as well as anybody.

The likelihood is pretty good.

At this stage it seems like the two sides are working together.

There are a couple of holdups.

One is that disney wants to have dish take on these two new networks in the future.

One broadcast college football games.

Another is fusion, which is a joint vision with -- joint venture with univision.

We don't how popular these things are going to be.

The second thing is autohop.

It is technology that dish has invented to allow you to automatically skip commercials on recorded broadcast shows.

All the broadcast networks have sued dish for this technology.

Some deal is going to need to be worked out with disney that either addresses this or doesn't address it.

That is another one of these holdups.

That is why we have an extension to a deadline am a but not a

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

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