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tv   Fast Money Halftime Report  CNBC  December 3, 2012 12:00pm-1:00pm EST

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goldman taking it from a sell, all the way to a buy. talking about how their long-term secular concerns are basically now consensus, they point -- give themselves a pat on the back and say the stock is down 31% since they initiated that sell in december of 2010. that does it for us here on "squawk on the street." let's get back to scott wapner and the "fast money" halftime. ♪ welcome to the halftime show. four hours to go until the close. here's where we stand on this monday on the street. it is a mixed bag. the dow is a fractional loser. nasdaq in positive territory. here's what we're following on halftime today. apple's mojo, the former ceo spg inside the most valuable company on earth and whether its momentum is off track. don't sell dell. a change of heart from goldman sachs as our traders are fired up. they'll debate whether the stock should be in your portfolio.
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but first our top story. the markets and the cliff. >> there's not going to be an agreement without rates going up. >> we're nowhere. period. >> i think we're going over the cliff. it's pretty clear to me they have made a political calculation. >> and so the back and forth continues amid reports that talks between the white house and top republicans have collapsed with one month to go before the fiscal cliff. our traders for the hour, joe terranova, stephanie link, simon baker, josh brown. they're ready with your best plays right now. and joe terranova, play this market. >> 4:00 this morning when i got up, i turned on the screens. looked at where the market was and tweeted directly to stephanie. if you are a money manager, you were asked at 4:00 in the morning, why is the market here, why is it not lower? well, it's now 12:00, scott, and after the ism, the s&p futures trading 14, 15, the same question. why is the market here? it should be lower, given all the fundamentals going on in the marketplace right now. that tells you, there's something going on here
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psychologically that goes beyond the negativity that we see out of d.c. maybe the street is smarter than we expect. but you are seeing a little bit of a lift. and any market that's quiet, you never sell it. >> josh, the market is hanging in. >> short-term traders are really nervous about missing a santa claus rally. so you're seeing this kind of fade. the news reaction. in the absence of us having any clarity as far as when and how this fiscal cliff thing is solved, i think that's really important is we're aware of what's actually happening now, as joe said. one thing i would point out is the ism this morning. this was a very weak report, significantly weaker than expectations. we can laugh it off, but if you look at the fact that 11 of 18 industries that report into this thing are talking about business contraction last month, you combine that with the fact that earnings estimates have been dripping down about 1% a week. we're really not in a fundamentally great climate. so if you're a sentiment trader, have fun. but if you're a fundamentals guy, you've probably lightened up already. >> you make the case though for the last several weeks, if not
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the last several months. it's not like sentiment has been that great. >> there is some seasonality at play and as i mentioned, nobody wants to -- especially if you're trailing the index, you can't afford to miss if they're going to rip high beta small cap stocks into the close of the year with your typical santa claus rally. you have to be there, especially if you've been trailing. so i think a lot of people are just hanging out for that. >> all right, stephanie link, ism, back below 50. josh pointing it out. upbeat data though from china, a place you look at closely. stocks, it's not like we're going down the tubes today. >> i thought we would have been a lot more because of not only china pmi but brazil. there is a lot in the last couple weeks, the data we have gotten has been mixed. particularly on the consumer side as well, because of sandy. so i think in the meantime, until we get a resolution, i've said before, i think you're going to be in a trading range. and i think into the strength of the market, you want to take some off, never bad to have some cash. but on these pullbacks, i think you want to be buying, because i actually think the economy is getting better, particularly
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when you look at housing, consumer, even auto and aerospace, all those data points point to 2013. >> are you buying the market on any pullback? >> i like the santa claus rally with josh and would be raising cash. i think the risk in the markets further on the down side than the up side. but when you see some real pullbacks, buy the stock if you like it. >> morgan stanley's top market watcher has been bearish all year and not ready to change his mind. adam parker joins us live. welcome back to halftime. good to see you. >> how are you, scott? >> 1167 is where you thought we would be at the end of the year. you'll be far short. why aren't you willing to change your tune for 2013, because you're not looking for much next year. >> look, a little bit like the conversation you were just having. we try to forecast earnings. and then we try to forecast the multiple or that p/e ratio you're going to pay for earnings. so if i told you on january 1st you were going to have no earnings growth for the s&p 500 year over year sequentially and the lowest nominal tenure in the
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history of the united states of america, what the work showed you would probably have a lower multiple for earnings. so we were right about the earnings and ten-year but for some of the reasons you alluded to, positioning, melt up policy, et cetera. we're more sanguine if you look if he outlook for 2013. last year we called for 3% down side. so, you know, i think earnings are getting better. in part because of confidence and tighter spreads and things that are slowly improving. >> what proves you wrong for next year? you're looking for s&p at the end of next year at 14.34. we're at 14.16 right now. what makes you get it wrong next year? >> well, look. we have low to mid single digit up side counting dividends. so that's only a couple percent below the long term average for equity returns. i think the key is about the multiple you're going to pay. our thesis is that with a pretty
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big deficit/debt problem, ultimately you'll have to unwind some of the stimulus and that will be bad for the market multiples. i could be wrong for a whole host of reasons. people believing the u.s. economic trajectory is going to be better, acceleration in china, et cetera. i think you know we upgraded our exposure to china last week, and upgraded the industrial sector. so i kind of agree with some of the comments you just made which is the very recent data points look better in china. the u.s. exposed companies have really outperformed the u.s. companies with china exposure and therefore that latter group is cheap. so we like increasing the china exposure. and that could cause a rally overall. but certainly could make some of the china-centric u.s. stocks do better. so i kind of like that trade. >> adam, josh brown. i'm curious. looks like the consensus is coalescing around $113 for s&p earnings next year. my first question is, what multiple is appropriate, given the fact we're going to have these fiscal drags in the form of tax rates and government spending, number one. and number two, are they even
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close to the mark this year? they haven't been in recent years until we have gotten closer to the end. will this be yet another year where they're wildly off. >> yeah, so i'll answer the second question first. our forecast for 2013 is that we're going to have $99 in s&p earnings. the street is now at $113. i guess the good news is, we see the earnings troughing in the april time frame and beginning to grow after that. so you could have some earnings growth, which is i think more optimistic than where it was a year ago. but the problem is the consensus numbers have to come down. so your question is tricky, josh. i think everyone knows the numbers are going to come down. we're not paying for the $113 now. abo but as they come down, will you be afraid they go way lower. that's really the key debate, right? and i think people could be afraid around the fiscal cliff or around supply issues on oil or europe, you know, looking pretty weak. so there's a number of things that could spook people. but i would say the numbers have to come down a lot for 2013.
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>> adam, sounds like you're more optimistic on china. where do you come out on the commodity side? where would you be investing if at all in that group? >> well, s&p mandate, s&p 500 focused. and materials are 3.5% of the s&p, two-thirds of that is chemicals. so i don't have to make a huge bet on the metals and mining side. and as we wrote about last week and again today, i guess i'm a little bit of a chicken china bull, you know. i'm not so far out in the efficient frontier there to go straight to steel stocks. and that bet. because i still think there is some uncertainty. i feel confident what's in the u.s. market is fear about china. but i would rather play it from some of the quality industrials where i feel there could be some other things that helped them whether it's -- you know, u.s. housing and other things, not just pure china plays. >> adam, it's simon. going into next year, i think no one will argue taxes are going to go up at some rate. historically, dividend type stocks have underperformed. do you still feel good about them? >> i do. because it's different this time. i mean, it's been well
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communicated, well documented. everyone knows that that's an issue. in fact, we don't think it's possible the dividend taxes won't rise the amount that's in the law. right? so if you look last week, for example, utilities were the best p performing sector in the market, up 3.35% last week. i think you can get a relief rally if they do change the law. and more over all the the other things that are compelling about them, whether low payout ratios or compelling yield versus the bond market or in fact the most cynical but appropriate reason could be management teams are paying themselves more and more in restricted stock units than options and that is probably for better dividend growth. >> adam, great to have you on the show. welcome you back sometime soon i hope. >> have a great week. >> adam parker from morgan stanley. let's talk among ourselves for a second. he puts out this provocative piece of research. a small number of stocks have driven the overwhelming amount of earnings growth. >> scott, 88% of all the earnings growth in 2012, according to their research,
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comes from ten stocks. of those ten, about half of them are credible currently or previous bailed out poster stocks like aig. it's historic when you look at that versus the rest of the economy. the answer is thank god for apple, number one. and number two, we all have to talk amongst ourselves about where is the next leg of earnings growth? i've made my bed. it's health care. if you looked at adam's graphic, that's his number one overweight sector. jpmorgan, ge among the stocks. ten of earnings growth. does that mean if you get any pullback in the earnings potential of those ten, that's going to lead to this drag? >> apple, specifically. you need continued earnings growth performance out of that name. >> i would look differently. if those ten stocks pull back, those are the ones you want to be buying. i think you want to be focusing on the companies that had good third quarter earnings and who have better visibility in 2013.
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i would also, though, say if he's right in terms of the earnings trajectory for next year, your trough is sometime in the first quarter, and maybe we can actually start to anticipate better earnings in the second half of the year. >> let's talk retail for a moment. a market flash on sears. bertha coombs is tracking that one today. bertha, what do you see? >> strength in retail today. and this afternoon, we're seeing sears take a little bit of a kicks-up. sears, one of the worst performers last month. actually, the last three quarters it hasn't done well. the speculation that it didn't do so well perhaps the beginning of black friday of the season. but getting a tick up here today. the company also today announcing it's going to distribute $1 million in gift cards through the fifth annual heroes at home for veterans. back to you. >> let's get a quick trade. joe, you like sears? >> absolutely not. the presentation of the store is absolutely horrible. the e-commerce strategy has not been good and the marketing costs continuing to rise. today it's up a little bit, heavy short interest in the name. there has been for the last three or four years.
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it really has not been a secular winner in the retail space. i would sell. >> what's the stock done year-to-date? >> well, first quarter, the -- first quarter of this year, the stock did incredibly well. >> monster, right? >> monster move. and again, a lot of that was on short conversation. so for a trade you could file long here on the short covering. but i think overall, it's not a name i want to be in. >> year-to-date, up 36%. >> absolutely. and a lot of that, as i said, was short covering the beginning of the year. up next, dell having its best day of the year. after goldman upgrades the stock. should you buy that rally? we debate whether the computer giant can get back to its glory days. and apple's former ceo john scully joins us in a cnbc exclusive. his take on social media's biggest players, and who could emerge as the next steve jobs. he'll be right here on-set. back in two minutes.
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it's time now for our traders to face off on one of the biggest stock stories of the day. shares of dell having its best day of the year after goldman sachs upgraded the stock two notches, all the way to buy from sell, giving a much-needed boost to those shares which have fallen 31%, heading into today. is now the time to buy? two opinions, one stock. joe with the bull, faces off simon with the bear. let's debate it. joe, you beat goldman to the punch. >> he's wrong, take the other side. >> you upgraded it late last week. >> yes, well, it was in the context of the conversation that we were having about yahoo! in this 2013. what potentially could be a little bit of this unlocking the value and what's not a value trap. i fully believe it is dell. and the reasons behind this really, it has a lot to do with the usages of cash, $5 billion, $3 cash equivalent in terms of itself. you have to expect this is priced in. as a trader, you look and say to yourself, where are the consensus estimates and how much have the consensus estimates
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contracted? consensus estimates on dell are in 30%, scott. so tell me something that i don't already know that there is tremendous amount of headwinds already in the stock. >> i'm not going to tell you, i'm going let this guy tell you. he haven't think you should touch this one. >> i've been making the case five years. here's the reality. pc sales are continuing to go down. profit margins continue to get squeezed. it's a bad business model. you talked about cash, made a flurry of acquisitions over the last 12 months. the case evaluation could be mend up if they continue to do that, a case goldman made this morning. so a risk on it. so if you look at evaluation. i think hp would be a better buy. higher yield and cheaper in terms of price earnings. so stay away from dell. >> not interested in debating hp, because i think hp has many more secular challenges. you mentioned the pc. how much of the revenues are actually pcs from dell? >> how much pc? good question. internationally, i know it's 14%, i think. >> okay. so we're looking at the actually
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figure being 21%. the diversification is what this company has done over the last couple years. and if you look at the actual growth, it is in the service space. you talk about acquisitions. there's some chatter out there right now that they're having conversations with sharp. intel, qualcomm. this contingent collectively going after sharp. that's obviously about display technology and that's also about -- and i'm not trying to get close to you, but getting close to apple. because sharp is close to apple. so it seems as though dell is a little bit more advanced in the thinking than hp is. ultra books. have you ever looked at one? >> i haven't looked at one. >> okay. they about 1200 bucks. that's the ability to move -- the profit margins on it are phenomenal. what's the ability to move from the pc to the tablet. now, it's higher -- >> let me make a last word. >> you did your homework this morning, i like that. but here's the reality. we only have a certain amount of capital to deploy. why wouldn't you buy an apple? why would you put it into dell? i think the nicest thing that can happen, dell earns 14%, a
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bunch of cash, everyone talking about special dividends. a nice christmas present. and then move on from there. putting money -- just doesn't make any sense. >> one reason why. and don't take this the wrong way, it's because i do my homework all of the time, not just today and i've done my homework on dell for five years. and i've recognized -- i bought it last week in the context of what potentially could be yahoo!. that's why i did it last week, doing the homework, and recognizing that consensus estimates have already come down. they can't come down anymore. >> this conversation six months from now, i'll bet you 100 bucks it will be lower and i'll take your money. >> we'll settle this way by going to the traders. josh brown, who made the more compelling argument on dell? >> joe made the more informative argument, but i think i have to agree with simon, where, look, they're already fading this upgrade this morning. upgrades on sentiment and valuation are really typically don't have a long shelf life. so if joe is right and there is actual fundamental improvement here, i would change my minority. but right now if i had to pick a
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trade, my trade would be to fade goldman's enthusiasm and look at it for what it is. hey, it's a cheap stock but one that's been getting cheaper for years now. >> stephanie link, you buy baker's argument? >> i do. i think not only is it pcs under secular pressure, but also servers. and together that's about 40% of their total revenue. i think that, yeah, joe made a great trading call. there is a lot of cash. it's super cheap. but i think actually they're going to have to use a lot of that cash to continue to build out nonpc stuff. so i think that the dividend is -- the dividend potential is nice for an increase. but i think that they're going to have to use their cash to really improve. and it's going to take a lot longer-term. >> we'll close the case on dell and revisit another stock tomorrow. more evidence that chinese -- the chinese economy is growing. the pace of activity in that country is manufacturing sector picked up for the first time in 13 months. steve grasso is the director of institutional sales at stuart frankel. he joins us from the floor of the nyse with his china recovery play. good to see you.
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what are you looking at? >> good to see you. i did buy case steel, i did buy letter x and i did buy mt going into the end of month goldman conference. but i want to turn around. you can't pick the top of these names. i didn't want to overstay my welcome. i locked in about 10% in ak steel. 5 to 7% in letter x. and about 4% in mt. in about a week or so, week and a half. so i'm willing to roll the dice and say, hey, it could go up higher, but i would rather lock in my profit and not worry about what's going on, year-ends with fiscal cliff issues. >> grasso, good to see you. >> by the way, that was an amazing debate you just had there with joe and baker. they look like a presidential debate. that would make you candy crowley. >> funny guy. >> you have a take with what you want to do with dell, before i let you run? >> yeah, i think joe -- first of all, give joe a lot of credit for that apple trade where he was the only guy who wanted to buy in at 505 basically on-air so he called that one trading
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wise well. i think he called this one dell trading wise really well. but, you know, in this marketplace, you have to trade them. so i would say fade the pop in dell. >> all right. see you soon, grasso. >> take care. >> up next from satellite tv to health care, the top three trades paying new dividends and former ceo john sculley joins us in a cnbc exclusive. his take on which tech makes have the biggest growth potential and who could become the next steve jobs. he'll clearly give us his take on what's happening inside apple, as well. and facebook shares taking off over the past week. is this the next chapter investors have been waiting for? answer coming up on halftime. what's next?
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>> the stock will continue to do well with affordable care act, so i think it's nice. hold on to it if you're long already. >> get a look at dish. down 1%, second largest u.s. satellite tv provider announces $1 dividend as well. stephanie link. >> expectations for $3, especially after they did $2 last year at the same time. so i think expectations were a little high. i think there's actually a catalyst in the near-term over the next couple weeks. and that is that the fcc will issue their approval or their recommendation on their spectrum. and if it is positive, i think the stock could really go to the moon. >> and kate, a seller value pricing women's apparel dollars a dollar dividend. stocks up 2%. >> this is an interesting company almost never mentioned on television, at least. not a lot of people know about it. they've got $250 million in cash, no debt. it appears as though their dividend, which is right now 3.5% has been too low all this
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time. so they're accelerating that. they're going to make a big payment before year-end as well. i think this is a pretty solid company. and the fact that no one ever talks about it makes it really interesting to me. >> all right. one of the key questions facing investors today, what's going on with apple? the stock is getting a boost today, but is still down 16% from its all-time high hit back in september. has the most valuable company on earth suddenly lost its mojo? john sculley is the former ceo of apple. joins us right here on-set exclusively. john, great to have you on "halftime." >> thanks, scott. >> we watch apple every day, talk about it every day. what's going on with the company? has apple peaked? you would know it better than most. outside. i know it from the i'm not on the inside. so i'm just looking at it from my experience in high-tech. i think they're going through a very significant change in terms of product cycles. traditionally apple introduces products once a year. now it's introducing products twice a year. the complexity of that from a
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supply chain is i am menls. and apple seems to be doing it well. so i think people are underestimating just how well apple is run. and just how successful the company can be when it gets to that twice a year product introduction cycle. >> the way that the stock has been debated, most recently, as it's pulled back, as we said, somewhat substantially off its highest levels, do you own apple stock? >> yes. >> you do. why do you own it? what do you see that you own this stock for? >> well, i see a company that has always been able to define the future around products that it can create that captures people's imagination. steve is the one who has done that from the beginning. he left a tremendous legacy. steve jobs left apple four years ago, the company might be in a very different situation than it is today. the question is, does it still deserve a steve jobs premium. and i think that bringing johnnie ives in, you've got to have a clear product leader. tim cook is a great supply chain executive, great ceo.
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but he's not the product leader. he had two people who were competing for that. you've got to have clarity, someone who is making clear decisions. apple has that now with johnnie ives. >> do you have any doubt as to whether tim cook is the right man to lead apple to the next level? to take it further than people think that perhaps he can take it right now? >> i think he's example the right ceo for apple. because he's able to build the respect of a team, and if he didn't have a product leader, you know, then he would have a tough time. look what's going on at hp. i think meg whitman is a great ceo but has no product leader in the company. michael dell built the company in the first generation. who is the product leader to take it forward? you've got to have product leaders in had these businesses to be able to reinvent them for the next cycle. >> let's open the floor. guys, joe? >> obviously, you know steve rather well. how would steve jobs feel about the current environment as it is right now at apple? >> well, again, i'm not inside
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of apple. i'm outside of apple looking at it. >> but you knew the way he thought about the world, and -- >> sure. steve jobs lived in a world of black and white. no compromises, perfectionist, he believed that you had to keep pushing the edges of innovation. and apple is still doing that. what apple is doing right now is it's building out the follow-on evolution very successful products like the ipad. now we have the ipad mini. so i think apple has got a few years of being able to do that. at some point, it's got to do something beyond that. >> john, there have been some notable stumbles in apple's past and in the recent past they have been able to surmount them and push them aside. what do you think is the biggest risk, whether product risk or execution risk in china, et cetera. if it you're long apple, what is the one thing that maybe makes you somewhat cautious going into the next year to 18 months? >> well, it's certainly not supply chain. apple knows how to run supply chains better than anyone in the
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world. it's got a real competitor with samsung. it's just amazing to think that samsung was bankrupt ten years ago. and yet samsung today is an extraordinary company in terms of products and in terms of marketing. now, it's a much better marketer than microsoft is. and it's got much better products than anyone accept apple. so i would be watching samsung and can samsung and apple, you know, be able to play off of each other and keep the innovation going? you really need a great competitor out there to keep it going. >> interesting that microsoft doesn't get mentioned in that breath. it's really apple/samsung at this point. >> i believe microsoft has got good technology. remember, microsoft could be a follower when we were back on two-year design cycles. now we're going to six-month design cycles. microsoft is way behind the ball, and we don't know if they can get to that twice-a-year introduction cycle that apple and samsung have. >> john, let me switch the conversation away from apple. another stock we talk about
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lately, groupon, very much in the news last week with andrew mason and talk about perhaps the board is going to throw him out. there was a time where when you were brought into apple, to be the so-called adult in the room. i think it's somewhat fair to say that. what's the deal with groupon? does mason need to go? why is it so hard for a guy to rely maybe when it's time to step aside. ? >> let me say from the start, i just don't get groupon. i don't see how that's a real sustainable business. so i have a bias. i do think that he's actually a very talented individual. the fact you can build a company from nothing to where it is in less than four years is pretty amazing. so i don't know him personally. i don't have a point of view in terms of his personal leadership style. i just have a question about that whole business model. because there's not much barrier to entry and it's not clear to me that it's a sustainable business. >> look at the stock itself, down 80% year-to-date. so there are significant
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questions in the entire marketplace on wall street, about whether this company has the goods to take it further and whether mason is the right guy to do it. >> yeah. and i don't know about mason, but the whole company concept doesn't impress me at all. >> what about facebook? are you impressed there? >> yes, i'm very impressed with facebook. i think that they have a great product leader with mark zuckerbe zuckerberg. that's criteria one, when you're building a company that's pushing the edge of innovation. and i think they will demonstrate they can break into mobile. if they break into mobile in a big way, mobile is the future for everything. facebook will do just fine. >> john, great to have you. thanks so much for coming in, spending time with us. >> sure. >> john sculley, folks -- simon? >> one quick question. if you're a c-level manager coming and looking at facebook, groupon, amazon, which company would you work for right now? >> what i would do -- i would work for a new company. and i think the hot space right now is health care. i think it's the consumerization of health care. i was brought in 30 years ago to -- because steve so you that
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personal computers were going to be about consumerization. same thing is going to happen with health care. that's where i would be thinking about the future. just like bill gates said. he wouldn't be hacking computers, he would be hacking biology. >> thanks, john. >> john, be well. see you soon. market plash now on blackberry maker research in motion. what do you see there? >> blackberry started the day well considering it got slapped with a rating, maybe irrational exuberance over this excitement over the blackberry 10 on january 30th. they don't think it's going to be all that. they don't see as much excitement in the developer community, which is really where you need to see it overall. so they slap a sell rating. but the stock was up about 50% last month. >> thanks, bertha. did you forget, you're just not going to wear your rimm hat anymore or what? trying to disassociate yourself? >> i'm still in the game. and by the way, i look better than a lot of stocks should be surprised about, given the we started the contest in may and -- >> you look a hell of a lot
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better now than a couple months ago. >> over the summer i would get invited on to apologize for. now i'm back in contention. so i guess we'll see what happens. >> next you have on "halftime," what's facebook really worth? we'll get some answers as shares pick up more momentum to the upside. plus, how the latest auto sales numbers are driving the biggest names in the industry. and traders tell us whether to hold two stocks or followed them. we're back in two minutes. lots of prepaid cards
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all the pessimism is eroding, seeing the company committed to driving revenue. a lot of people were overlooking that facebook has to go in the s&p 500 at some time in the next several months. >> all right. that was top analyst michael packtore friday, discussing a 30% rise in november, since the ipo. is the new found love justified or is your best bet to stay away? finance professor at new york university, he's one of the most respected experts, as well on stocks and valuations joins us live from manhattan. professor, good to see you
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again. >> glad to be here. >> nice to have you back. considering what facebook has done lately. what do you make of it from where you sit? >> when you look at a stock like facebook, it still remains a momentum stock. so i could tell you all kinds of rational rah stories about why the price has risen and the lockup ending and the fairly good earnings report. but i think the reality is that it's a good stock now so everybody is piling on. as we have seen in the nine months we have tracked the stock, it could very quickly run in the opposite direction in four weeks. so i take my gains with a grain of salt, which it is it could be here today gone tomorrow. >> what is facebook worth? what's fair value for a stock at $28 and change? >> i value facebook four times in the last nine months, starting the day before the ipo. the range i've had is a pretty tight one, between $24 and $27. and what's happened in the last few months, actually, has not dissuaded me from that basic valuation. there has been no breakout good news. there's been no breakout bad
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news. i think if you look at the company now, it's very much the same company we were arguing about in may of this year. so from my perspective, i think 28 is fairly decently priced. i think it's a fairly priced stock now. i would be buying now. >> you would. do you own it yourself? >> i owned it, bought it and in that moment of weakness right after the first earnings report when i committed to buying it at 18 it $18 it is . i'm glad i've made money. but i think it's more due to luck than anything else. >> what changes the professor's mind? >> i think it's going to be incremental. each of these earnings reports, you're building a fairly long-term structure. i'm not looking for something spectacular in an earnings report. each earnings report, where they move in the right direction, is a good step. so i'm looking for incremental good news. not -- so i don't want them to go out and do something rash, buy another company, buy growth at a high price. so they keep doing what they've been doing for the past few
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months, i think that's good news for investors. >> you would admit, though, the mobile story seems to have turned the page, at least a couple of pages. maybe they haven't come to the end of the book yet on how all that is going to shake out. but it seems to be reading better. >> let's put it this way. if the mobile story had collapsed that would be breakout bad news because that's where the future of facebook is. so the fact there is no breakout bad news is in a perverse way good news. >> let's ask about this parade of special dividends we have seen. it seems like every company -- between now and the end of the year, if they haven't done it already they're going to do it because of the cliff. how should investors be reading that in terms of how it values a company that's paying out a special div? >> i don't mean to sound like i'm hedging, but it can be good news, bad news and neutral news. here's how you can tell the difference. a company that's actually using cash on hand to pay these special dividends, the special dividends are pretty much neutral news. your stock price will go down by
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roughly the amount of the dividend. the company that's borrowing money to pay these special dividends, and quite a few are, the net effect can be positive, if the company doesn't have very much debt now. but some companies, i think, are actually pushing the envelope, borrowing more than they should. and those companies can -- even though the special dividend looks good now, can get themselves into trouble in the future. >> so investors would be doing themselves a disservice making a mistake to try and bet on which company is going to be next and buying it ahead of that, or simply buying it once they announce a dividend. because i think you've probably noticed yourself that most of the companies that have announced a special dividend, the stock ends up going up. >> yeah. and i think in a sense, to the extent that special dividends -- messages about the company, i think that message can be good news or bad news. so i think it's got to be company by company. but i wouldn't go around chasing special dividend stocks right now. i think it's a dangerous game. >> all right. great to have you. thanks so much for coming on again. love your insights.
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i'm sure our viewers do, as well. let jcp, jcpenney, stephanie link, that would be you. >> they lowered their fourth quarter comp. to negative 32% for the quarter. so the key here is can this company drive traffic? if they can, i think the stock will stabilize. and last quarter, the only encouraging data point in their quarter, traffic stabilized. >> joe, what do you see in tiffany? >> in tiffany, number one, i've been long for quite some time obviously, as my wife's name is tiffany. but secondarily, bank of america, merrill lynch down grades talks about the aspirational buyer moving to the side lines. the risk of the fiscal cliff. i point out one thing though, on this weakness, if you believe japan in 2013 is going to be the sleeper equities market that some do, then you want to own tiffany. >> delta, simon? >> singapore airlines in their talk to sell virgin atlantic to delta. richard branson, don't do it. we'll be buying peanuts again in six months. >> southwestern energy getting a pop. >> stephanie brought this to my
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attention earlier. there is some chatter out there this could be a potential acquisition candidate. obviously, never a great thing to chase or a reason to buy a stock but maybe a good reason to do some research. it's about a $12 billion company can. little bit of chatter, little bit of a pop today. something worth keeping on your radar if you like energy stocks. >> and how about unicorns? they're getting a pop today. hold on. north korea says it's found a union core. the state run news agency says that kim jong-il shot is 11 holes in one in a single game of golf says the dwelling was once inhabited by the mythical creatures. the global community says it's just a dog and pony show. north koreans maintain they're not -- >> i used to have that trapper keeper in junior high, the purple one. full disclosure. >> you just admitted that to a lot of people. >> they also said he was the sexiest man in the world. so maybe unicorns do exist.
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next, how do you know when it's time to let a losing stock go? our traders tell us if you should trade in the towel on two popular stocks when we come back. ♪ [ male announcer ] this is karen and jeremiah. they don't know it yet, but they're gonna fall in love, get married, have a couple of kids, [ children laughing ] move to the country, and live a long, happy life together where they almost never fight about money. [ dog barks ] because right after they get married, they'll find some retirement people who are paid on salary, not commission. they'll get straightforward guidance and be able to focus on other things, like each other, which isn't rocket science. it's just common sense. from td ameritrade.
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this accelerated pace? the new ceo of charter communications, thomas rutledge, will join david faber for an exclusive interview. and you'll hear his take on money, media and the fiscal cliff. and would you get a mortgage from walmart? a lot of people would. we will discuss it today on "power lunch." i'm tyler mathisen, and i am "power lunch." now back to scott. >> ty, thanks. see you in 12 months. top of the hour. also want to let you know at 2:00 this afternoon, president is going to answer questions on the fiscal cliff via twitter. @whitehouse #my2k. thus far, we haven't had any sound bites come from anybody today. certainly after many folks made the rounds on the sunday talk shows. nobody today royaling the markets. we'll have to see if anything the president says via twitter ends up moving stocks again, 2:00 eastern time. let's get a market flash on the automakers from, else who else, bertha coombs.
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>> ford and gm driving in different directions. ford with a 6.5% increase in light truck and passenger car sales for the month, also saying it's going to maintain its production guidance for the fourth quarter. mean time, gm, its sales came up shy of expectations, up 3.4%. strength in passenger cars but seeing a headline from "the wall street journal" gm is considering slowing pickup production in the u.s. over to you. >> thanks. stephanie link, you haven't been willing to take a bite on an automaker itself, right? you've been playing the supply chain a little bit. >> yeah, and that's because if you look at 75% of the countries have already reported the sales numbers. and it looks like -- first, gm was impacted by sandy, so i think the headline is a little misleading. but if you look at total so far, you're running 15 million sar and so that's very positive and that meant -- actually is better for the auto parts companies. they've got more leverage because they've got a lot of different customers. and i'm looking at leer, as well. >> i think auto zone is reporting tomorrow -- we've got a short on that stock.
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i think people are going out and actually buying new cars now. so i think the auto zones are going to struggle in this cyber market. >> why doesn't anybody here want to buy one of the automakers? >> i'll give you a trade. take the most speculative portion of your portfolio, the hard you can stand, huge drawdowns for the possibility of huge gains and buy tesla.tesla. that's going to be a much more exciting story to follow. there will be big dips. you can buy. that's the one i would do rather than play around with gm or ford which in my opinion, the story is way too well known. >> what about toyota? ford, gm? no one likes one of the u.s. automakers or toyota? >> toyota potentially but then you have the currency risk attached to that. i think you go to the emerging market story, tata motors in india up on the year. what's your move if the founder can't make a deal to take the electronics retailer private? two stocks at 52-week highs.
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should you hold or fold? answers after the break. americans believe they should be in charge of their own future. how they'll live tomorrow. for more than 116 years, ameriprise financial has worked for their clients' futures. helping millions of americans retire on their terms. when they want. where they want. doing what they want. ameriprise. the strength of a leader in retirement planning. the heart of 10,000 advisors working with you one-to-one. together for your future. ♪
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i think you own best buy on the belief that they will be taken private. >> would you do anything with best buy here? >> i do believe that they're going to be able to orchestrate something so to answer your question, yes.
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>> the stock is down 14% since that last call. now the "new york post" is saying that best buy's founder is still, in their words, a long ways from making a firm bid on the electronic retailer. so what do you do now, joe? >> i think we left out a little bit of the sound bite there that said first you play through the options market. then a couple days later i came back and said i was a lousy call. >> are you accusing us of taking something out of context? >> you would never do that. let me just say, it is a bad call and i actually believed that it would happen by thanksgiving. it has not. i want to credit pete an jerry who completely took the other side of it. he was correct. what do you do with best buy right now? you put it in the penalty box, unfortunately. i heat to use that term again but that's what you do. >> the best thing that could happen for potential buyers of best buy is they just wait and do nothing. it will keep getting cheaper and cheaper. i don't see any urgency. you're probably not in a great place for an imminent deal here if you're long. i think it is something you just watch from the sidelines. >> that means tomorrow a deal
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gets done. because we've basically said it's not. >> if so, you missed one. but -- >> yep. >> sometimes it is tough to buy the losers and sell the winners. let's play a little hold 'em, fold 'em. costco, trading at record levels, up more than 20% over the past year. stephanie? >> i like it. i would hold it and i would lope that next week when the report earnings the stock is weak and i could buy more. because this company's seeing traffic, up 4% in the last six months. the company also has a very good recurring revenue stream with their membership fee business and they are cycling very difficult pricing increases from last year. i thinkly think margins have an up side. i'm hoping the stock falls so i can buy. >> phillips's 66. >> fold 'em. i'm not going to show you my card. that's how i play. just fold 'em. >> hold 'em. i think you have one last thrust higher. a lot of it will be seen in these commodity index funds in
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january. they'll buy brent, widen wti making those gasoline margins blow out. >> seema, what are you working on? >> as we approach the end of the year people on twitter are discussing what they want to leave behind in 2012. skinny jeans, "gangham style." a couple of things being thrown out there. however, on "fast money" we'll unveil your tweets tonight at 5:00 p.m. eastern. >> we will do final trades on the other side of this break. ♪ ♪ [ male announcer ] they are a glowing example of what it means to be the best. and at this special time of year, they shine even brighter. come to the winter event and get the mercedes-benz you've always wished for, now for an exceptional price. [ santa ] ho, ho, ho, ho!
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