A TECH WRECK ON WALL STREET,
MOST OF THE BIG NAMES IN
TECHNOLOGY IN BEAR MARKET
TERRITORY RIGHT NOW.
FACEBOOK DOWN IN THE PREMARKET
THIS MORNING AGAIN, A 5 3/4%.
THE COMPANY HAMMERED BY BAD NEWS
LATELY.
THEY'RE DOWN ANOTHER 1 1/4%
RIGHT NOW, EXTENDING THE DECLINE
FOR THE WEEK.
NEW YORK TIMES DETAILING AN
ARTICLE, HOW CEO MARK ZUCKERBERG
ALLEGEDLY IGNORED WARNING SIGN
THAT'S THE SITE WAS BEING USED
CONTINUE TO FLENSE THE ELECTION.
REPORTS ALSO OUT ABOUT HOW
ZUCKERBERG HAS HIS COMPANY ON
HIGH ALERT AND READY FOR WAR
AFTER THE NEGATIVE PRESS HIT.
HERE NOW IS INVESTMENT ADVISOR
MEDIA DIRECTOR, LARRY HAVERTY IS
JOINING US THIS MORNING.
YOUR THOUGHTS ON FACEBOOK,
WHAT'S YOUR REACTION?
>> I THINK THERE'S THE BUSINESS
AND THE STOCK AND THE BUSINESS
NEEDS A FAIR AMOUNT OF REPAIR,
MARIA.
IT'S VERY, VERY CLEAR THAT THE
TRUST FACTOR, WHICH IS
ABSOLUTELY CRITICAL IN A
BUSINESS LIKE THIS, HAS BEEN
WOUNDED.
THAT'S THE BAD NEWS.
THE GOOD NEWS IS THAT I THINK
IT'S FIXABLE AND I THINK HERE IN
FACEBOOK, BASICALLY YOU HAVE A
SITUATION WHERE YOU HAVE DUAL
CLASS STOCK SO THAT MARK IS
REALLY THE KEY MOVER AND SHAKER
HERE.
IT'S UNCLEAR WHETHER THERE'S A
LOT OF EXTERNAL INFLUENCE ON
MARK'S DECISIONS.
I THINK AT THE END OF THE DAY
HE'S GOING TO DO THE RIGHT THING
AND I THINK FROM THE STOCK POINT
OF VIEW, THE WAY HE'S GOING TO
DO THE RIGHT THING IS TO IN FACT
ADD A LOT OF PEOPLE AND SPEND A
LOT OF MONEY AND I THINK WHEN HE
ANNOUNCED THAT HE WAS GOING TO
DO THIS ABOUT SIX MONTHS AGO AT
AN EARNINGS CALL, I THINK THE
STOCK BECAME VERY, VERY
DIFFICULT TO OWN BECAUSE NO
MATTER WHAT YOU THINK, TECH
INVESTORS DON'T LIKE MARGIN
COMPRESSION.
MARIA: RIGHT.
>> WE'VE HAD A LOT OF PRICE
CORRECTION HERE.
IF YOU TAKE YOURSELF AND PUT
YOURSELF ON A DECEMBERER
YOURSELF ON A DECEMBER -- DESERT
ISLAND, THIS STOCK IS NO MORE
EXPENSIVE THAN COKE COKE LA
EXPENSIVE THAN COKE OOKE LA
EXPENSIVE THAN COKE OR E LA
EXPENSIVE THAN COKE OR PRLA
EXPENSIVE THAN COKE OR PROCTER &
GAMBLE.
IT HAS BASICALLY ZERO COST OF
GOODS SOLD.
THE USERS MAKE UP THE CONTENT.
YOU DON'T GET A PRODUCT WHEN YOU
--
MARIA: WE DON'T KNOW WHAT'S
COMING, RIGHT, LARRY, WE DON'T
KNOW WHAT'S COMING IN TERMS OF
REGULATION, IN TERMS OF NEW
FEES, IN TERMS OF THE PRESSURE
THAT THIS COMPANY MIGHT FACE.
HOW DO YOU HE SEE IT?
>> THE PRESSURES ON REGULATION
WILL BE VERY REAL.
YOU MENTIONED HIRING PEOPLE,
DOING THE RIGHT THING.
CAN YOU GET SPECIFIC ABOUT WHAT
FACEBOOK SHOULD DO?
A LOT OF PEOPLE FEEL IT'S A
TIRED PRODUCT NOW AND SO WHAT
DOES HE DO TO JAZZ IT UP AGAIN,
MAKE IT AN ATTRACTIVE STOCK?
>> I THINK THERE'S A COUPLE
THINGS.
THEY'RE ALL GOING TO BE PAINFUL.
I WOULD LIKE TO SEE SOMEONE
EXTERNALLY COME IN IN A
SUPERVISORY POSITION OF
CONSIDERABLE IMPORT, MORE OR
LESS LIKE WHAT GOOGLE DID WITH
ERIC SCHMIDT.
I DON'T KNOW WHO THEY WOULD GET.
MARIA: YOU DON'T WANT TO SEE
ZUCKERBERG AT THE HELM, YOU
DON'T WANT TO SEE ZUCKERBERG
STAY AS CEO?
>> I THINK ZUCKERBERG NEEDS A
SENIOR COUNSELOR.
HE'S GOING TO STAY AT THE HELM.
MARIA: HE'S GOT VOTING CONTROL.
NOBODY'S GOING TO TELL HIM TO
LEAVE, RIGHT?
>> NO, HE'S GOING TO STAY THERE.
THAT DOESN'T MEAN THAT HE
SHOULDN'T HAVE SOMEBODY BLOWING
IN HIS EAR LIKE ERIC DID WITH
SERGEI AND LARRY TO THE BENEFIT
OF THE SHAREHOLDERS.
THAT'S THE FIRST THING.
MARIA: THAT'S ONE THING THAT
YOU MENTIONED YESTERDAY, DAGEN.
DAGEN: ONE THING I'D POINT OUT
IS ONLY ABOUT A COUPLE OF MONTHS
AGO THE CO-FOUNDERS OF INSTAGRAM
-- INSTAGRAM BEING THE GROWTH
ENGINE AT FACEBOOK, VERY
CRITICAL.
THE CO-FOUNDERS, KEVIN SISTRME
AND MIKE KREGER, THEY LEFT
BECAUSE FACEBOOK WAS TRYING TO
REMOVE THE AUTONOMY THEY HAD IN
RUNNING INSTAGRAM.
AGAIN, MAYBE THEY WANT TO FOUL
UP INSTAGRAM THE WAY THEY HAVE
THE REST OF THE SOCIAL MEDIA
PLATFORM.
BUT LARRY, I DON'T KNOW IF
INVESTORS HAVE FULLY FACTORED IN
WHAT THIS MEANS FOR INSTAGRAM IN
TERMS OF THOSE TWO FOUNDERS AND
LEADERS LEAVING IN SEPTEMBER.
MARIA: THEY'RE GETTING RID OF
THE BAD ACCOUNTS.
>> IT CAN'T BE A POSITIVE.
BUT ALL OF THESE THINGS, YOU
HAVE TWO THINGS, HAVE YOU THE
BUSINESS AND THEN HAVE YOU THE
PRICE OF THE STOCK.
AND THE PRICE OF THE STOCK IS
DOWN AT EXTREME LOW LEVELS.
NOW, THE OTHER THING THAT
ZUCKERBERG AND THE BOARD NEED TO
DO, ZUCKERBERG IN PARTICULAR,
THEY NEED A MASSIVE SHARE
REPURCHASE.
THIS STOCK HAS 27 -- HAS I GUESS
40 BILLION, I DON'T KNOW EXACTLY
WHAT THE NUMBER IS, BUT BILLIONS
AND BILLIONS OF DOLLARS OF NET
CASH.
THERE'S NO FINANCIAL LEVERAGE IN
THE STOCK AT ALL.
THE NUMBERS ARE COMPELLING FOR
THE STOCK TO BE BOUGHT BY THE
COMPANY.
AND THEY'VE NEVER BEEN AN
AGGRESSIVE SHARE REPURCHASER.
THEY NEED TO DO THAT.
SO I THINK THEY NEED SOMEBODY
FROM OUTSIDE TO COME IN ALLAH
ERIC SCHMIDT.
I THINK THEY NEED A MASSIVE
SHARE REPURCHASE.
AND THE LAST THING I THINK THEY
NEED TO DO, A LOT OF THE
EMPLOYEES WHO ARE REALLY
CRITICAL HERE HAVE LOST A LOT OF
MONEY, MARIA, BECAUSE THIS STOCK
IS A LARGE PART OF COMPENSATION
FOR THOSE EMPLOYEES.
MARIA: YEAH.
>> ONE WAY OR ANOTHER, THEY'VE
GOT TO BE MADE WHOLE AND THAT'S
GOING TO COST THE SHAREHOLDERS A
LOT OF MONEY, WHETHER THEY LIKE
IT OR NOT.
MARIA: BY THE WAY, THE P
COMPANY SAID IN THE FIRST
QUARTER EARNINGS REPORT THAT
CASH AND EQUIVALENTS ROSE TO
$44 BILLION.