tv Market Makers Bloomberg May 1, 2014 10:00am-12:01pm EDT
to go in the sale in may period in the midterm election. >> even given the fed and where we are now? >> there are always different caveat request thank you so much. sam stovall. thank you so much. we will be on the market again in 30 minutes. live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. the top.ange at ceo alan mulally will retire and be replaced by mark fields. we will talk with our mulally and with the chairman go for it. >> sprint still wants t-mobile and now there is talk at&t wants directv. we will see what is behind all of this m&a. >> how to keep pepsi from going flat. exclusive interview with the ceo of the soft drink and snap company, indra nooyi. welcome to "market makers."
>> i matt miller. -- >> i'm matt miller. >> i'm cristina alesci. >> perfect timing for us -- worked out pretty well. >> certainly did. breaking news on the economy. a key gauge coming up. mike mckee in the news with the headline. >> this will be a good news stories as well for the markets today. the isam report for the month of april comes in at 54 .9, more than expected and up from last point seven. the economy and manufacturing continuing to get together from the freeze we saw this past winter. >> thanks so much, mike. >> i want to get straight to the big news out of order this morning. ford officially confirmed what we have known for a long time, mark fields will be the next eeo. here he is at his news conference earlier this morning. aboutm very passionate
product and i share built by the vision on leading the industry through innovation, because it is exciting and it is great for our customers. is the product and innovation that first brought me to fort hood five years ago. before wef years introduced the taurus. at the first day i walked in here, the company has exceeded my first impressions. and first and foremost, the people. all of our people. that is the reason why i came to ford motor company. .> not a surprise reporting for weeks on bloomberg it will happen and indeed it would happen today but it does mark the end of an era. joining us now, maryann keller, who runs a consulting firm for companies across the automotive industry. a longtime auto analyst and will and really at -- legend in the industry.
speaking of legends, alan mulally will go down in history, will they not, as the turnaround king of america? >> absolutely. i actually sent him a note this morning saying you need to write a book on leadership, because i think that in my career of watching this industry for now 40 years, i have never seen anybody who has been able to transform a company from the brink of financial ruin with a product line -- i guess i have to differ, mark fields, because the ford product line for many decades was rather uninspired instead of pickup trucks. he transformed the products and brought the company back from financial -- to financial health. he transformed the culture. company'srmed the organizational structure by getting rid of extraneous brands that were distractions, and focus them on what is the essence of an auto company, which is product. did, in as he
relatively short time, without a lot of yelling and screaming as he often hear from ceo's even want to affect cultural change ,nd simply blame it on people he did it quietly, did it in his own style, and did it at a rapid pace. so, yes, kudos to him. will have many more opportunities to demonstrate his skills in the future, even though not at ford. >> you mentioned that not a lot of yelling and screaming. really quite the opposite. a very positive leader. not everybody at ford was on board with that first. no one understood his leadership style and mark fields was his first kind of acolytes, if you will. >> and that was the case. there was this notion in detroit that you have to be a "car guy" to run an auto company. the interesting thing is, there are very few car guys who ever ran an auto company.
most came out of the finance desk and they know very little about designing, engineering, or producing a car, urges by the in the street got itself into the trouble it did. ann, on the other hand, with engineer and understood big capital projects that did not pay off for many years. he understood big unions. he understood global supply chain management. he had all their resume elements you would expect would work well in an auto company, and he did. and what was remarkable is he oferstood ford had a lot talented people whose skill sets were not being effectively used. he did not throw them all out. he did not. i think that was a great fear some ofhaps underlie the criticism that he would've that come in and clean out. he didn't. he basically took the people who were there, who were all bright and talented, just simply not very well managed, and he motivated them.
the transformation in terms of the behavior of dealers and their respective dealers have for ford today and there loyalty is again acceptable to alan. if you look at ford positive relationships with suppliers, when he came in, ford was hated to cut the only thing that happened was you be the supplier up to give you a price concession. togethersort of work and ford positive reputation with suppliers as much of the her. you sort of go beyond what he did internally. it is how he built partnerships to support the company in a much effective manner than what was the case before. >> the company itself said 2014 will be a difficult year. why not make -- wait until next year to make the transition? >> because the time is right. mark fields has been an apprentice, if you will. he has been in an apprenticeship program now for many years. there is an inevitability about
alan leading -- a leaving so to some extent he has already been a lame duck for probably a year. you had all of that talk last year of him going to microsoft, and that by itself would have sort of diminished his effectiveness. and you had mark fields already running many of the meetings that used to be shared by alan, the internal operational meetings. so effectively, that transition would be underway, and it comes a point where there is really no reason to delay it. >> let me ask you -- we talk about alan really having the biggest hand in turning around the company. obviously mark field has been with them side-by-side for a while, helping to turn around and taking the thursday meetings over. what about bill -- he is the one that she is the one who brought an hour mulally and will be a -- mark fields will be a close
partner with alan. it seems like bill ford has had a real hand in leading the company. >> you know, this is probably a great example of a family dominated company that works. confidenceives me that had beenms put in place, the culture that exists today, the one ford notion, is one team going to remain in place. onced witnessed, as he told me, that there has never really been a successful, or a less dramatic change in management that we are going to have this time. drama andalways been controversy surrounding the outgoing and incoming ceo's. that is not the case this time.
so i know that he appreciates what has happened in ford, but i also think he is not going to let it revert back to the highly politically charged environment that preceded alan's coming. an ally.k he is i think he is also a very stabilizing force in the company. board haveand the been very, very effective in supporting alan. look to both the board as a whole and to bill specifically to ensure that the philosophy and practice in place now are supported. >> all right, thank you so much. appreciate your time. maryann keller -- keller, longtime auto industry analyst and kind of a legend herself in the industry. >> seems like she knows what she is talking about the >> coming up at 11:00 a.m., we will talk
live with executive chairman bill ford, really the guiding hand about -- around institution alan mulally created and now this succession. ceo alan mulally himself will speak to us as well. definitely don't miss that. it is time now for the newsfeed, the top business stories from around the world. our first story is about another change at the top, this one a yum! brands, the parent of taco bell, afc, and pizza hut. ceo david novak is moving to the role of executive chairman and he will be replaced by taco bell ceo greg creed. the move is effective new year's day. longll not be for really a time. sprint plans to go ahead with a bid for t-mobile. according to people familiar with the matter, sprint executives have met with banks line up i nancy. regulators have expressed concern that a deal may hurt competition. sprint is the third largest wireless carrier and t-mobile is number four and cristina alesci has been all over the story from the get-go and we'll be talking
about an and the little bit. the mayor of toronto is taking a leave of absence to get help for substance abuse. rob ford, nothing to do with company, has been caught on video smoking crack cocaine and since then he has become a a punchline for late-night tv comics. ford has been campaigning for another term, the election, in october. we hope to clean and sober before that. politically, and hot topic, replacing freddie and fannie may. we will talk to them head of the mortgage bankers association. >> lust, pay tv is in the midst of consolidation. makers at&t "market approached directv. this is "market makers" on bloomberg television -- this is "market makers" on bloomberg television. >> everywhere. >> nowhere on earth you can't watch bloomberg tv. >> no excuse. ♪
>> media bankers are having a very busy year. we have already seen hundred $60 billion announced m&a deals in billionour -- $160 announced m&a deals and a lot more candy coming, sprint is expected to make a bid for t-mobile and today "the wall street journal" is reporting at&t may make an offer for directv. what is driving this activity? bb.will bring in porter bi ra, to the realization their business models are flawed or trauma story frenzy? bighe ground underneath media is quaking and it will evolve into a whole new spectrum of distribution and content delivery. out now there is only one way that can save
themselves, and that is through scale. >> is it really save them? postpone,will just pushed out of the future a change that is already underway. knowsoblem is, nobody what it is going to end up being but we all know that mobile is mediumo be the dominant for everybody on everything. we all know that content is still going to be came, because you have to have something to go through the pipes into the airways. willou don't know how you recapture the financial gains -- the bundle cable packages they are giving, monthly subsidized smartphones and that the telecoms are having. there is so much uncertainty right now that they are all trying to get together and get bigger and bigger. i don't think, for example, t-mobile and sprint will get past the regulators. i think at&t should not be looking at direct but they should be looking at netflix.
>> one would argue they should be looking at -- because this has spectrum. just a ploy to get dish and charlie -- moving? >> i think dish and directv are more likely to come bigger than any telecom and directv but it is spectrum, you are absolutely right. you put your finger on the coastal area because wi-fi is going to overtake the old wireless telecoms to abuse and applet -- distribution applications. more is going through the airwaves. and wi-fi is almost ubiquitous now. >> what can the cable companies do to get mobile? at the end of the day, are you really going to see cable companies combine with wireless companies, because that is the only way -- buying spectrum. >> they are buying spectrum. cable companies today, but when you peel back the layers of the
onion they are really broadband internet service providers. comcast and charter and cablevision and time warner cable are all the largest deliverers of internet streaming in the world. and they are only going to get bigger in the internet site. >> let me ask you about the content. about thed to talking service providers doing mergers because they have been in an m&a frenzy for over a decade. the content providers? for example, you mentioned that -- netflix. >> reed hastings adamantly says he is not up for sale. but he has not got a long-term sustainable business model because he does not own any of the content, he rented, and it is getting more and more expensive as more important -- as more and more people, to his base. at some point, nobody talks about the off balance sheet contingent liabilities that he has a contractual content he bought 2, 3, four years out, but
he's got several billion dollars on his liability side of his -- a balance sheet that if he does not keep growing, he can't meet. >> the only way to get deeper into content was spending a lot more money and the question is, whether the money is still available. >> not only is it available, but the odds of creating house of cards any time you roll the dice is enormous. it, ifvision can do hollywood can do it, what makes anybody think that despite the metrics gathering is on what you and i like to watch, it is a losing game. >> although the model is good. i hate having to watch "game of thrones" wants a week, i like to watch it all at once. >> wait until hbo go becomes like netflix -- already in scandinavia and just a step away from doing it in this country. --the you think regulators >> they tried to double foreign
regulators turned it down. what everybody in the market wants to watch for is late june -- late june and early july when the supreme court finally decides what the story is about aereo because that is going to change the landscape. if they get it through and they are approved, you have to watch for a major, massive overhaul of the way the major media is set up. denied, it can impact on the cloud and on the future of internet streaming. it will hurt facebook, it will hurt google. >> 11 example of what will happen if it is indeed allowed to continue operating -- >> you have a question that les major heads of networks, will they go all cable and not give away their content for free? >> why not? i was wondering why they didn't do it for a long time. reality, it is a
question of how many subscribers theyreo going to have -- will not let you know but probably fewer than 100,000. >> people don't still watch nbc with rabbit ears, don't they? and we cann new york do that, but other parts of the country they can. >> other parts of the country can drive steam engine cars but they don't do that anymore. >> but right now, everybody is comfortable with the way the economy flows into their coffers. will beeretrans fees jeopardized if anybody from eight dollars a month can pick up all broadcast networks onaereo and there will be dozens more coming out if aereo gets approved by the courts bibb, interview p.m. with with t-mobile ceo john legere.
>> hold onto your seats, almost 26. the hour and that means bloomberg is on the market. check out the broader indexes. you are seeing red across the board. consumerwn, materials, staples, health care, industrials. not really a huge driver, though, as far as economic news or corporate earnings. an all-time high yesterday on the dow jones industrial average. >> we could hitting all-time high -- all-time highs.
we expect another one. >> there are still another good five and half hours of trading. and maybe you can run out and buy another pickup truck. >> i might like to. did you see the new f1 50? >> i know you love it. >> fairly attractive. up aftertches boosting its annual profit forecast. the stock had been declining this year, dragged down by worries over declining sales and earnings. let's lust -- >> it is up now. interesting. funny fiveeep gain, percent? -- 25%? >> i wonder if it is going to slim down. ha ha. >> coming up, the senate try to overhaul fannie mae and freddie mac. industry happen to the if he ever want to get one or again.
>> welcome back to "market makers." i am matt miller. >> i am cristina alesci. i am digging your jacket. >> i have gotten slack for not wearing a tie. >> i like the jacket. it is tie, jacket, or both. >> i will do my own thing -- my legere thing today. pink shirt. serious business to discuss. plans to overhaul government-backed mortgage giants fannie mae and freddie mac hitting a bump.
a bipartisan reform measure up in the air after the senate put off a vote because it may be losing support among democrats. even though the obama administration supports it. we bring in ceo of the mortgage bankers association, an advocate for this reform. what are the shots this gets passed? i were to have a vote in the senate banking committee, if they had the violin markups again, it would have past 12-10. the delay is trying to get even more votes on board. these senators just came back from a two-week recess. they are just digging into this important legislation. we will see what happens and whether a few more votes, board. -- come on board. >> that is the chances on the committee passing it. what about the overall chances of the bill passing both the senate and the house? depends on howit
much momentum is created in the committee itself as to whether this propels itself forward into a full senate vote. it is know how difficult to get legislation through congress. this is such a large issue. it is very technical and detailed. first, getting a stronger majority in the committee is the top priority of the senators today. depending on that outcome, i think it gives greater momentum at a greater likelihood that senator harry reid will entertain it in the full senate. >> this will replace fannie and freddie with the federal mortgage insurance operation. you will have government involvement. why don't i play devil's advocate and ask why would you want the government involved in any business, let alone the banking business? >> that is a great question. what makes the current system untenable, the government not only guarantees the mortgages, they guarantee the companies themselves.
there is very limited capital that these institutions have to put up to back back guarantee. that extensive risk, this $6 trillion of mortgage-backed securities, is an untenable scenario. what johnson crapo attempts to do is put private capital as a first last protection. only in the event of absolute failure of the entities themselves after extraordinary ,eep capital placed upfront with the taxpayer be at risk. it becomes more of an ftse model -- it becomes more of an fdic model. >> you are talking about a loss sharing program. how does that benefit your members? how this isatter of structure. several analysts have looked at the potential impact to mortgage related costs. we have seen mortgage rates
increase significantly and guaranteed these charged by and fannie mae. if we maintain the status quo, nose two companies will have pathway back to the way they once were and with zero capital, that in the next stressful scenario in the economy they will have to go to the treasury for even more money. the reaction we anticipate could be far more damaging to the housing finance system. working with the structure right now i'm making some minor adjustments to it, which we think of make it better. it is a far better outcome than sitting here in perpetuity with these two companies that failed city into conservatorship and found almost entirely by the u.s. treasury department and the american taxpayer. that is the part of reform we think is important. the timing of this is necessary. let's be clear, they are private companies -- they are not private companies anymore. they collapsed and were put into
conservatorship and taken over by the treasury department and the government almost entirely. that is where we need to move forward. ofpart of the result shutting these agencies down could be that mortgage rates go up. is that good or bad for your members? >> it is a bad thing if rents go up genetically. >> -- it is a bad thing if rents go up dramatically. >> what about not dramatically? >> we think they will rise one way or another. is a matter of timing. under the johnson crapo bill, if it passes, it phases in these changes over a decade-long ariod, which will create minimum impact to interest rates. >> cristina was looking at the homeownership rates here in the u.s. we are still not back down to levels we saw 10 years ago. 65% iscoming back down,
about where we are. if you look at the default rate, it is still not recovered to levels that it was 10 years ago. it is still higher. where do you think we should see those two rates? homeownership at 65%, is that the kind of thing that we should have. 65% of people, are they responsible to get mortgages and own homes? say 60 five percent are likely responsible if interest rates are right and home prices are right. this is all about sustainability. >> and the government stays in the game. government provide liquidity by guaranteeing those mortgage backed securities. if you have private capital guaranteeing the credit risk in front of that, the only government guarantee is to help bring that liquidity into the market while not putting them at risk for loss in the event of default. we are seeing homeownership rates declined and we expect further declines as we move forward. we are seeing it at the low end
of the housing price market, a to result of lack of credit availability in the market after this recession we have been through. it is a pathway forward and it will be more conservative. there is a solution to help get their. -- help get there. >> what are the odds this bill passes congress? >> i think it is a difficult pathway forward, but nevertheless this will be an important marker of a piece of legislation with a majority vote through the senate banking committee. whether he goes to the senate floor or not, this will become the framework that will be debated in the new congress if it is not handled in this congress. a lot depends of what happens over the next several days. you, david, ceo of mortgage bankers association. >> when we come back, battling an activist investor, staying on top of the snack and super sugary drinks business. goalie the soft drink -- growing
>> pepsi is not just taking heat from competitors like coca-cola, it is playing defense against billionaire investor nelson pressuring the company to spin off its beverage business. "in the loop" anger spoke to ceo indra nooyi this morning. what is her response to investors like peltz? say she isoyi will listening to their investors but she is shutting out all the
noise and focusing on what pepsi does best, they continue to drive growth through leveraging their beverages and their snacks . she is facing a few headwinds, including a softening soft drink market. has also hit coca-cola. you have seen pepsi's stock up about 4%. dropped by about that much. this is where peltz comes in, over the long term since indra ceo, they have underperformed coca-cola. he says the company would do better if it could split and focus on each segment, either beverages or snacks. i asked indra nooyi this morning, i said why do beverages and snacks work so well together, this is what she said. >> the pairing of these two is like peanut butter and jelly. they go together. they naturally go together. if you are creating a food and beverage portfolio in the
convenience space, you are creating pepsico. says there is lots of extra costs that could be cut he of the company, including has proposed consolidating their for headquarters. they should shut down new york and chicago and merge them into one, he believes that could save billions of dollars. she says she has listened to some of his proposals and she still feels that the strategy she has, the board is behind her, is the correct one. i asked her what does she think about the proposals made by peltz last year? anything ando pepsico that does not create value or simply adds costs. shareholders in the company, we take shareholder value seriously.
based on the analysis we have done and the makeup of our employees, where we need to attract the best and the brightest, our current architecture is the right one. we're going to stay where we are today. >> thank you to "in the loop" anchor>> betty liu. let's bring in kevin, portfolio funds, $50gabeli billion in assets under management. he owns shares in pepsico. pepsico, where it is a go from here? there is discussion about how bad sugary drinks are for adults and children. >> especially in new york. >> what efforts are they taking to get into the healthier businesses? when disposedead to their sugary drinks portfolio as well as some of the diet soda does coming under pressure in the last year or so. they have a lot of zero calorie beverages.
uices, theyaked j had a venture and yogurt. that has been a push for the company. beverage is only about a third of sales of the company. really the snacks business is the bigger piece of profits as well as the bigger piece of assets. joking around saying of course snacks and beverages go together, a salty chip and a sugary drink. using these two businesses could be run separately. >> they could be run separately. the argument, as ms. nooyi articulated, is they have a power of one and a lot of synergies. what ceos always say. investors still want them to break up the company. >> what are the synergies? >> if there are any, it has not
shown in the results. they have struggled more than the market despite those headwinds. they did have an approved quarter in the first quarter of this year, about flat. there is still quite a ways to go. when we look at the company we see a wonderful snacks business that would trade at a premium valuation in the marketplace. high single digits, they are the leader -- >> why are you supporting nelson peltz? >> we are paying close attention -- >> do you support him or not? >> one of two things is going to happen, they are going to improve the performance of the business of the stock will respond or they are going to come under pressure and be forced to split up. you think it will work itself out. there are a lot of cases where it does not. for example, ebay with paypal. to split themts up, most analysts agreed it would be better for the shareholders.
the management is not going to do it. they are going to fight tooth and nail, isn't indra nooyi going to fight the same way? >> they have certainly resisted. what i would say, if you look within that industry -- one of the things we focus on is our catalyst to surfaces out you. financial -- >> catalyst? >> catalyst to surfaces value. >> jargon alert. >> takeoffs, spinoffs, split ups, as is being proposed here. >> that worked out. shareholdersrge when they were acquired. hasndelez, which mr. peltz been involved with. energizer, just yesterday, announced it was splitting up. stock was up 15%. it has worked in this sector. me to believe for it would not work in this instance as well. the onus is on the company to
improve. -- look, a lot of times it looks like executives are ignoring investors. and nelson tells -- and people like carl icahn and nelson peltz make noise. how come you don't go down that same route? it would be easier for indra nooyi to hear you. as to whatot comment we are going to support or not support here. mr. peltz's case certainly is compelling. from a financial perspective. either way, i think it is a win-win. >> if you look at the broader picture for sugary drinks and food that is terribly unhealthy, is there a concern that regulation is going to hit those businesses -- >> notches regulation, but tax. attitudesven cultural
. will there be a change that pushes them to do things more than just diet sodas and yogurt? >> sugary yogurt. yogurt, by definition, has sugar in it. >> the yogurt ie tends to be terribly unhealthy. cristina will say that is not healthy for you. that is yogurt, with flavorings and sugars. thatey have moved in direction already. caloriesax proposals, is interesting. they have responded pretty well to changing preferences. especially in that frito division, they have not suffered. they will continue to do so. when you have the leading scale in the industry and a wonderful direct score distribution. >> lays, doritos, wow. a bag of cholesterol.
>> warren buffett's shareholders meeting is this saturday. tens of thousands of investors will descend on omaha to take part in the woodstock of capitalism. buffett is a paradigm of the virtues of capitalism. a 29-year-old activist investor started reading buffett when he was 12 years old and has followed him ever since. name is ryan morris, i am
29, i am managing about $15 million. warren has said he lives just like he makes $150,000 a year, except with a private jet. before the berkshire meeting last year, to pay our respect to the great church of quality -- flew tolity, four guys kansas, which is cheaper than omaha, and we got a cheap rental car to drive. we stayed in the crappiest hotel. we go to the events where they have free food. $48 a night for the four of us in the busiest weekend of the year in omaha.
at 11 years old, i had this idea that i wanted to change the world through science. the idea totroduced me that even if you are the best scientist, you will not make the future happen. the guys with capital are the ones who make those kinds of decisions. that sort of flipped a switch for me and i opened "forbes is this guy buffett. i started reading his levels. it sounds very simple. it was accessible to a 12-year-old is amazing. that goes to the power of how he can communicate in a way that is very primal and accessible. choose your try to heroes wisely. he has been my hero since i was 12. warren buffett has said just about the best example that any business person ever has.
he has had a huge impact. >> fascinating. such aen buffett is great storyteller. he is not just simplifying things. he is putting a narrative around all his investment ideas. which is very compelling. is compelling to a 12-year-old, he is already 29 and doing quite well. >> we are in the wrong business. >> i don't know about that, we get to talk about cars. >> when i am on set with you, it is magic. >> magical. cristina alesci and i will be right back. "market makers" is back in a moment. we will talk about cars. we will interview executive chairman bill ford. and now outgoing ceo alan mulally. do not miss the second hour of "market makers." ♪
>> live from bloomberg headquarters in new york, this is "market makers." we will talk to chairman bill ford. , nond the all-time champion uncharted cable operator more than espn. we will hear from the president of the sports television empire, john skipper. >> welcome. i am cristina alesci. >> i am matt miller. eric and stephanie are on assignment today so we are filling in for them which kind we haved out here in
some m&a news. ford news. the two of us fit the bill. i will give you the news feed. the top business stories from around the world. as christina said, a changing of the guard, retiring and being placed by mark fields on july 1. ford said mulally recommended speeding up the timetable for the change. >> you have created this floored that we know and love. in ford goingent forward, i will be there best cheerleader and i cannot wait to see profitable growth going forward. know the story. press in a few minutes, we will talk with alan mulally and the chairman. stick with us for that. sales with ford dropped unexpectedly last month.
in car sales. general motors on the other hand posted a gain more than seven percent. chrysler was up here president obama having fun at the expense of justin timberlake. on facebook, the president posted a picture of himself with justin timberlake and the caption reads, it will be may. justin joke on timberlake pronouncing "me" like "may" in his boy band. brandt says it is promoting the head of the taco bell chain to the ceo of the company, which includes kentucky fried chicken and pizza hut. julie hyman is here now to tell us about the new guy and the change. untile putting it off 2015. >> he is not really the new guy. he has been at the company since 2001 and is head of taco bell
already. this is a promotion from within. they are giving him a lot of time to ramp up to be the ceo. this is a long succession plan here. >> is it because taco bell has done so well? >> it is not clear exactly why it is something about taco bell. it is just something about him. the current ceo has been there since 90 99 in overseeing the young brandt since it has exploded in size and market value and in number of locations in sales, etc.. he is 61 and it makes sense for him to sit down. edward jones said this is not necessarily surprising that they would promote from within someone who has also risen up through the company. he has been a chief operating officer and has different positions. he was the leader before and has international experience as well at various consumer brands, including some of the young brandt sportfolio. he is moving up now.
taco bell is actually the smallest in terms of the various yum! brands in terms of the number of restaurants. they do not break out revenue. they tell you how much the revenue goes up at the various chains, but they do not break it out or are just beginning to do so again after not having done so. you see the way the company structure works, you have taco bell and kfc, except for china and india. india and china are in the fastest growth within the company. >> does this have anything to do it yesterday's announcement that taco bell's around the visit 88% cow? class it is purely coincidence that that announcement came out. if you read between the lines, maybe there was a subliminal message. >> sodium phosphate fillers, they say, are not healthy, and delicious. taco bell's flutist..., but i was hoping the ground beef would be almost all cow.
qwest but you're smarter than that. >> that is true. january 1, a long way off. they are telegraphing this to investors a long way off. that is the trend. ford is also telegraphing. now, officially. thank you for that. equitynother private firm is set to go public this afternoon. it is that time. ares management is seeking a valuation of close to $5 billion, much smaller than publicly traded rivals. let's bring our private equity reporter in our l.a. bureau this morning. seven, a small offering, but is this the right time for a private equity firm to go public echo how are investors acting? class all this week, i have been at the conference in l.a., round a lot of investors.
i asked about a dozen investors and can only count on a few fingers those who had any hesitations about the ipo. maybe that is because they all worked with the ceo back in the 1980's, but i think it is more that private equity, as you know, has had seven years to prove itself in the public market their blackstone going public in 2007. just reaching its ipo price, again, after a long dip. spoken to who are familiar with the plan have said eye on keeping a close how private equity firms have done in the public market in the past two years and they think it is now proving itself to public shareholders. they think now as stocks of other private equity firms have done well over the past two years, that they could come -- they could jump in. ask, isn't it a bad sign if the company you bought on the open market five
years ago just made it back to idea,ice you paid? the when stephen schwarzman sold the company, i thought, hang on a second. here is the smartest guy in the market. if he is selling, why do i want to be on the other end of the trade? disagree with you. how secure are investors that this is not another blackstone? we are at a pretty high point at the market. these guys are smart guys. they will not sell their stakes unless they think they could get paid for them. qwest they like to go out of the highs. is met the idea? -- isn't that the idea? areone of these guys planned to sell the ipo. .ou've heard it many times the private equity director saying, i will be the right beside you and will be holding the stock as well. he will own about 30% of the stock and the company.
that is his pitch. >> thank you. >> we will take a quick break and when we come back, we will talk to ford. the ford chairman, bill ford. the outgoing ceo in this hour. definitely do not miss that. it has been long building but still a big story. the transition. class we have known about it. definitely a big day. qwest the end of an era. stay with us. end of the era. stay with us. ♪
>> less welcome bill ford. he is the executive chairman of the ford company and they made the announcement today. thank you for joining us. ask you about this transition. it has been a long one in the making. usyann keller was telling she credits you with being the steady hand in the company which is the reason investors have so much faith in the management
shift. will it go off without a hitch? >> i think it will. is interesting. allen is a hall of fame ceo but a lot of them have a tough time letting go. one of the great aspects of this transition is that allen is not having those issues. he and i identified mark as the next guy and we felt really good about it. in theas been wonderful handover and will be great in the next two months while ceo. then it will end. see that with really prominent, high-profile ceo's. most of them cannot let go and alan is. atss i think i heard alan the press conference talking about when he first met you and how quickly he got to know you. i know you spent a heck a lot of time together before and after
he came into the company and the ford family. have you been spending a lot more time with mark lately? he has been running day to day operations for well over a year now. class i have known mark for 20 years. really like and admire him. i am the one who put him in the job in north america. i have a really good relationship with mark. but that will change because it will be at a different level and it will be, in some ways, i hope, very much like my relationship with alan, very formal and very frequent. we always thought on the same wavelength. it was fun that we could finish each other's sentences. he became a good friend in the process and i look forward to doing that with mark. >> a quick question, was there ayone else in the running for
spot? >> yes, always other people in the running. one of the things i feel we have to do as a company is always look not just within ford, but also around the globe and say, where is the best talent and then, importantly, how would they fit here? we did. we looked around the world and at the executives inside and outside of our industry and we kept coming back to the fat we thought mark was the best candidate. that is why i feel so really good about this transition. we did our due diligence. the more we did, the better we felt about mark. class was there a defining knew,, a time where you this is our guide because there are so many stories about how well he did at mazda. hime is the famous story of finally catching on to alan'strategy and the corporate culture and the business planning review. was there a moment for you when you said, ok, it is mark.
qwest there was never really an ha ha moment, it was just -- we started talking about on the first day i met alan eight years ago at my house, where we talked a great transition, but also really having a good management development process. there was not an ha ha moment. for me, the job in north america was really very defining. that was a huge job andthere wa. for it started before alan even got here. mark came up with the way forward plan. was a tough job and he took slings and arrows internally and externally early on. to his great credit, he grew and persevered. i know by the end, he had gained the admiration and respect of the men and women of fort around the world. that, to me, was very telling. then,a lot of people back if you could remember, thought mark woodlief and they thought
he would not stick it out because it was a tough job. they underestimated how much he really loves this industry and also how tough he is. qwest this has been telegraphed for some time but i have to ask the question about, why now. until 2015 and make it a little easier on the new leader? >> because i think alan and i both thought mark was ready. once we both reached that conclusion, there was no point .n artificially dragging it out so, this is a transition. launch got unprecedented activity taking place. we never had this amount. it will still be a good year for us. trajectory is a really good one, when we feel really good about. once we concluded mark really was the person, we went to the board and said, this is our recommendation and we would like to do this.
obviously then, they went along with it. qwest what will we see mark do differently. i know these guys spend a lot of time together. i know mark, a lot of people say is one of bill's acolyte. but they are different people. alan loves the flex, mark loves to drive the taurus special high output. choices. car how will they be different as eo's? ? probably will not hug people as much as alan does. i am not sure that would be possible. but, it is interesting. one of the things we do so well is the company and we really started this under alan, is deal with reality, whatever it is. mark will wake up to a different reality the day he takes the job than the reality today before when allen was in the job. he will have to react and make sure our company can react with
transparency and deal with reality. he will have a completely different set of challenges than allen faced there is some of which we will know now and many of which we cannot even begin to anticipate now. i believe he will do it with the same level of transparency and the same level of teamwork that alan attacked the job. qwest what is the biggest i thinke day one? >> the biggest challenge day one for mark is to resist the temptation that people are going to be saying to him, what will you do differently and how will you leave your mark echo he is very comfortable with the plan and he ought to be. he was the architect along with alan, of our plans. to answer your question, on day that wecan have some of could not anticipate that all the sudden falls right in his lap and he will have to deal with it. but that is why i feel so good about the culture and process we have in place. it will enable him and the team
to deal with it. i do not anticipate him making fundamental changes. qwest what is alan's role going forward? he will not be ceo on the board, but he still owns 6 million in change shares with ford. qwest yes, he will still be a great friend of mine. one of the things i look forward to is hanging out with alan. when this is all over. also, picking his brain from time to time. alan and i have really developed a great relationship, both on the field and in the locker room. so, one of the things that would be really fun is to keep up with alan and also just to get his did -- his advice on things going forward. i know he will be happy to give it. qwest thank you for joining us. bill ford, executive chairman of the ford motor company. they still have alan to do it until july 1. it is not like he is leaving for the day. qwest i think he will be a voice
no matter what happens. does not sound like a lot will change. it sounds pretty wrapped up with a bow on it. qwest we will ask that question because it is the question being asked across the media and in cross investment circles today. will there be any change. qwest you want something to change. qwest may be, although things have been running on all six cylinders, plus wind turbine is. , that is --t engine >> i do not like the delay. >> i do not like the lag either but there is hardly any of that anymore because it is the 90's now. not much. in any case, i will put you in an ego boost during the break. we will talkback, to 40's outgoing ceo. not outgoing until july.
>> it is time for bloomberg to get on the markets and we are there. here, but not much movement in the s&p 500 gaining and the dow is down. just a little bit. really, you are seeing a pause today. yesterday, we hit once again an all-time high. still trading, 16,500 72. eight points short. s&p 500 at 825. real movement on the nasdaq, up 6/10 of one percent. that.much volatility on i have my eyes on sprint.
sprint is meeting with banks to work out funding for its bid with t-mobile. we will see that workout with loss of regulatory. up. the stocks are we have seen that with the buyer and the seller stocks rising to propel the market upward. >> john will be on bloomberg west. to the investment bankers call it t-mobile? yelp is gaining after raising its full-year revenue guidance they're not a small game. helping to put the nasdaq and the big game in general doing well today while the rest of the market languages. >> coming up, keeping an i on putin. russia's his neighbors are wondering if they will be next. -- wel hear lafayette's
country's his neighbors are worried about a spillover. peter, she is looking at the u.s. for support. >> she is here she has been here with a meeting with the vice president among others. counting on the u.s. and nato to provide military support should russia take aim beyond ukraine. one of the countries bordering 100% for natural
gas. i asked whether she thinks the crisis will be across her country. class ukraine and russia is not ukraine andr of russia relationships. it is a matter of bad news. it is on acceptable in the 21st century for one country to annex a part of another country. i think the ukraine and russia, an issue that is a concern for the world that concerns lafayette and we are alarmed and concerned about what is i think the ukraine and russiah. country's his neighbors are worried about a spillover. qwest what do you think vladimir putin's and goal is here? class probably that is what he would like to do. i think it is your reversible --
with our membership, in the eeo andqwest what nato. i was reassured by vice nato,ent biden that article five, is in force and we are extremely grateful to the u.s. government and other nato company. qwest he just welcomed troops into lafayette. >> yes, airborne troops of the ..s. army it is very important to have a u.s. nato presence when the situation is resolved. i expressed the wish to him and
he took it on board. he shares our concern. qwest what about sanctions? and the impact they are having on russia right now. the eeo has imposed sanctions. you confident they're having an impact and should they be stronger? >> i think sanctions are yielding the desired results. sanctions, itfor would be difficult to predict what happened. it has phases and the situation will escalate and go further in economic sanctions. qwest the prime minister says she does not think the russians would shut off the valve but she says it is prepared to deal with the repercussions to implement energy -- energy sanctions.
it is not lafayette's is present -- preference there but it is working to and -- intensify sources. exports to that part of the world. qwest does she think we are headed back? qwest you can sell she clearly hopes it does not happen but the risk is her sense if we go that direction and things work out that way, that is what she is trying to avoid. ift would be a very big deal that were to happen. >> chancellor merkel will be in washington right? who has hade excellent relations with vladimir putin up until this point.
they're going to have ukraine at the top of their agenda and russia the top of their agenda. hear howresting to aggressive she is. qwest thank you. interview with that from washington. the ford ceo is calling it quits. stick with us and we will talk to him next. motoro of the ford company. if you missed any of our interviews, you can watch them both. on apple tv. you can also watch is on-demand or streaming live. the internet is a good place to -- us. here in ♪
>> winning the hearts and the wallets of business, travelers is no easy task. we will talk to someone doing that in just a moment. i believe we will talk right now with drew armstrong first. breaking news. pfizer comparing their $106 billion move. what if you got with this story. it is a pretty hefty price tag. like pfizer is preparing to raise its offer by $6 billion. waiting to go up next week here they will get things a little richer and try to bring them to the table and see if they cannot close a dear for one
of the biggest mergers in the pharmaceutical industry ever. they are crazy with these purchases during where does it is godzilladeal coming out of the ocean. it is making everything else seem like small fry. a lot of the other deals are people trying to do smaller in specific good areas where they think they can be the 12 or three player. it is about scale and synergy. this is a different animal entirely than what we have been seeing, even though we are having all kinds heavy throughout the sector. >> how high could the price tag go? qwest this is the beginning of
the process. pfizer needs to consider exactly what it will take. they said they so far have not seen a firm office -- offer yet. bear in the u.k. china make sure the government feels all right about them taking over a relative story u.k.-based company. innings bute early we know they want to try to get this wrapped up quickly. reporting earnings monday. a lot of questions on this. whileld be going a little longer. assetsght about which they would have to play in the end. correctly always see some kind of investor dear that has to happen. what that looks like we'll have it will take a long hard
look to figure out exactly what they need to do. the focus will be finding a price acceptable to its shareholders. >> bloomberg news is breaking the story. thank you for joining us and we will continue to cover the massive price tag. pfizer raising its big -- it's been 206 million dollars. >> we will talk about them for the rest of the year. get to winning not the the hearts, but wallace. it comes down to location and wi-fi according to international. the ceo joins us now with more. what is going on with your
customers? whether they demand the size location and wi-fi. why is that so different than what we have in before. .> location the reality is, you have to do it the customer wants. second in our survey. view wi-fi as water. it should comment on to be free and it is annoying when it is not. the business travels paying their own way, they know for the most part, they will get free parking and free wi-fi. they will get a quality rooms and will be in the locations they want with the exception of where we are working. we do not have as many urban hotels as we need. customers tells a need to be there. the tough market.
a lot more buyers than there are sellers. a good brand. you're seeing things from time to time but the hotel business is pretty aggressive. what we're doing is building two new brands. those are both urban products. they will satisfy customers really well. it works well all around. >> does air dmv make you nervous? class they are attracting a lot of capital. we think they are doing interesting things. we are probably not interested in running couches or rooms but that business to individual consumers, we are asked are right now in the rental vacation business. we will do rental management companies. the next step would be to work
with consumers who own their own product. security and quality of the room, our customers are not looking for the couch. >> it seems one of their strengths is just the way they talk to another -- talk to her. the social network, if you will. ow important is that for you? >> very important. they have strong people over there. folks who came out of the business and are bringing the skills they brought from the independent business. we are watching them. we think they are interesting. who think they could probably do what they are doing. >> she's in the door that locks and no one else in the other room next door and no one sleeping on the couch. >> thank you. we have an outgoing ceo of the ford motor company next.
question he could pass the u.s. as the world causes largest here. --comes from a world bank michael mckee says it is ridiculous. qwest is one of the sillier stories you will hear all year. is a total value of all the goods and services produced in a year. decided you could apply ppp june -- to gdp. in 2005, china they thought it would pass the u.s. as the biggest pacitti in 2019. now they readjusted the figures and say could happen this year.
economists say that is ridiculous. not even leaders think the economic the distance are any good. you if they were to say cannot use p2p for a lot of reasons caf au lait gdp, everybody imports a lot of stuff in the chinese buy a lot of stuff they reassemble and put back out. interesting statistic. and this is a whole lot of reasons why it is a bad idea. you go back to gdp and china's economy, about half of hours. it is not happening. >> we see general motors sells almost 3.5 million cars a year. it is a big market and it is growing. class it is growing more quickly than the united states. you would expect that. it is a question of if and not one. -- not when. for one thing.
what we have accumulated. they have got the population and we have got the wealth. they are >> we see general20% of the wor. gdp, the problem is they spread what they have over so many more people. you do not care about the company's gdp. doing -- you cannot say this makes a lot of sense to look at it this way. chinese at this point -- >> is it a question of when they surpass us, what do the economists say? 20 meters from now -- 20 years from now? qwest there are school -- slowing down. with past that and they are nowhere near us.
>> we have had slight technical difficulties. we are having the trouble getting the line to detroit. we will bring it to you hopefully throughout the next hour at some point. i will come on set with adam during "lunch money" and get that to you. class steffi's back tomorrow with a great couple of interviews. she had an interview with the ceo of cnn. has anyone ever bumped john skipper before? we will be in trouble for that. espn, probably the second most important news outlet in the world. it is 56 past the hour. christina, thank you for spending two hours with me today.
we will have lunch together. it is time for on the markets and we will go with julie hyman out in the newsroom. class let's get caught up on where stocks are trading. we had mixed economics today. mix earnings, as we tend to have. not seeing a lot of changes in the overall averages. even a 21 hundredths of one percent gain in the dow today does mean is another record. we have a mixed economic data. we are seeing a come down in yields to 2.61% on the 10 year. that is the lowest we have seen this year on the bond yields, particularly for the longer end of the curve. look at weight watchers. shares are searching by the most
in more than three years. the company, endorsed by celebrities like jessica simpson, had better than expected earnings. shares of avon products are falling sharply to a new 50 week low. the company sells beauty products. it will pay $135 million to settle a government bribery case. matt, we have been watching what has been going on with the automakers. class i'm concerned. jessica simpson as a celebrity. is she still? else is aho celebrity, a car company
executive, but he had to eventually start carrying around his sharpie because so many people on the street would ask him for his autograph. talks withously in microsoft about becoming the ceo. that did not happen. a lot of people are now saying, why wouldn't he go on to become a chairman of theexecutive compd then you can see all kinds of possibilities opening up for him. a few questions i will put to .im when i interviewed him live he is only 60 a and he looks 48. he plays a mean game of tennis. regular pastime, i think he will probably stay in the corporate world. class going back to fort itself, it seems it is steady as she goes in terms of strategy. we're on the markets right now to talk about the share prices for a minute.
it was telegraphed so much that the field would be taking over. but also because he is really continuing on the same track that ford has been on. investors think it is a great track. 1776 is not a bad point to hit. a cause for concern is maybe sales. expectations. >> thank you. we will be on the markets again in 30 minutes. ♪
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