Closing Bell - Closing Bell Overtime: Salesforce jumps, Pure Storage sinks, rare interview with Chairman of the Joint Chiefs of Staff 11/29/23

Episode Date: November 29, 2023

Stocks finished the day near the flatline after a up and down session on Wall Street, but individual names saw big swings after-hours on earnings. Analyst Rishi Jaluria gave his first take on Dow component Salesforce after those shares climbed on quarterly results. The CEO of Pure Storage discussed his company’s quarter, with that stock pulling back hard on soft guidance. Plus a rare interview with the new Chairman of the Joint Chiefs of Staff, breaking down the connections between geopolitics and the economy, and a closer look at GM’s push higher. 

Well, that is your scorecard on Wall Street, but winners stay late. Welcome to Closing Bell Overtime. I'm John Fort at CNBC headquarters. And I'm Morgan Brennan, coming to you today from CNBC's CFO Council Summit in Washington, where I spoke with the Chairman of the Joint Chiefs of Staff, C.Q. Brown, General Brown, in a very rare interview, his first, in fact, since taking over the role of Chairman. His comments on Israel, China and Ukraine are all coming up. And we've got a big hour of earnings on the way,

headlined by Dow Component Salesforce, along with Snowflake, PVH, Nutanix and Pure Storage. We'll bring you all the numbers and an exclusive interview with Pure Storage CEO Charlie Giancarlo before he talks to Wall Street on the earnings call. But as we await those numbers, let's begin with the market action. The major average is having an up and down session with small caps outperforming today. The yields on the 10-year Treasury touching their lowest level since November, actually finishing down below 4.3%. Let's bring in our market panel. Joining us now is Barbara Duran of BD8 Capital Partners

and Scott Wren of Wells Fargo Investment Institute. Good afternoon to you both. Scott, I'll start with you because you've you've been cautious on the market and you've talked about defensive posturing where equities are concerned in general. I mean, we just saw a roughly 70 basis point move in the 10year Treasury yield lower since the end of October. And yes, we saw a voraciously fast move higher ahead of that. But if we continue to see this move lower in yields, how positive is that to equities, at least here in the near term? Well, I mean, I think, Morgan, certainly the stock market's reacting to positive yields. And as far as the equity market goes, I think the S&P 500, you know, we're at the top of the end of the range now. I think today, you know, clearly we're bumping against the July highs. And I would argue probably, you know, the technical resistance is

really more up at 4630. So from today's highs up to 4630, you know, I think that's going to be a tough road to hoe to get up above that because really the next stop is the record high. But these yields, I would say, you know, we've had a four to four and a half year in range. We actually think at the end of next year rates will be closer to five percent because we expect a recovery in the back half of the year. But, you know, your previous guest talked about normalization and there's a lot of that going on. And, you know, if you think historically, I mean, four.5%, 5%, 4% to 5% 10-year yield, I mean, that's nothing to get worked up about. It's a lot higher than it was two years ago,

but certainly not, you know, some death knell for the stock market. Yeah. I do want to note that we have blue-chip sales force. Those results are out. We're going through the numbers. We're going to bring those to our viewers as soon as we can. In the meantime, Barb, the Waller comments perceived as pretty dovish yesterday, really helping to move the markets, both the bond and the stock markets here this week. But I want to play a soundbite from

Barkin, who was here at the CFO Council and spoke to our Steve Leisman earlier today. Take a listen. If you believe, as I believe, that inflation is going to be stubborn or that I would like it to be, then I think talking about reducing rates at this point is just premature. All right. So that was Fed President Tom Barkin. Barbara, I want to get your thoughts on that, because you could argue that we're starting to see a divergence in terms of how different Fed officials are viewing this hiking cycle, where we're at in it, and what that's going to mean to actual cuts next year at a time where the market's aggressively pricing that in. Yeah, well, I think you're going to see a divergence of opinion, as we have all along.

I think when you heard Powell at the last Fed meeting, he said they've pretty much got it right. And so I think that I would discount his comments. I mean, I think the market is clearly telling us the Fed has done hiking rates. And right now, the market is the Fed funds futures are discounting about a full percentage point cut. And in fact, if you look at June, the probabilities are about 92 percent for a cut. And in March, it's already up to 44 percent. So I think that you look at all the economic slowing and wages and jobs, that sort of thing. I think that there is it's clear that things are slowing. And so an inflation is coming down. And you saw this morning, you know, with the revised third quarter GDP showed growth and real productivity and a slight drop in the core pricing inflation.

So we're going to see tomorrow when we get inflation numbers in. All right. Hold tight. We are ready with those Salesforce numbers, with the shares moving higher in overtime after hours up about 4 percent. Julia Boorstin has the numbers. Julia. John, that's right. Shares are up about 4%. Julia Boorstin has the numbers. Julia. John, that's right. Shares now up about 4% on better than expected earnings. The company reported adjusted earnings of $2.11 per share. That's better than the $2.06 that were estimated. Revenues for the quarter were very much in line, $8.72 billion.

But looking at the company's guidance, revenues also in line with estimates guiding to revenue range of $9.18 to $9.23 three billion the estimate is for nine point two one billion but we see guidance here fourth quarter earnings per share guidance of between 225 and 226 the estimate is for 217 so it's earning strength in q3 and better than expected earnings guidance for q4 that is sending that stock up higher four%. Back over to you. All right, Julia, thank you. Also, don't miss Jim Cramer's exclusive interview with Salesforce CEO Mark Benioff. That's coming up tonight, 6 p.m., Mad Money.

Barb, you're a shareholder in Salesforce, and I know Scott was saying time to be defensive in equities in fixed income. But, I mean, when you've got numbers like this from Salesforce, if it were the regular trading day, this would be new 52 week highs. How does that make you feel? Not just about Salesforce, but also about the Dow? Makes me feel pretty good. I mean, if you've been looking at the action in all the big tech growers and whether you saw, you know, Palo Alto recover, you saw the stock market action today. Microsoft, all these names. And I think Salesforce, it's been a question because their whole thing has been the last year or two restructuring, really focusing on profitability, which is still below their peer group. And they've had a little decel and revenue growth, but they have huge potential going down. So their guidance is very important. They have not even begun

to tap in the AI opportunity. Some would argue they're a little bit behind there, but there's huge potential in so many ways for them, not just cross-selling into their existing base, but also a new business. So we also have to see their guidance on what they see with their customers. Okay. I also want to mention Pure Storage numbers are out. We'll bring those to you in just a moment. That stock is moving down about nine and a half percent at the moment. Can we can we do those now? OK, I'll bring those to you in just a moment. Scott, you're the one who is a little more defensive here. What does this what's the impact you think of the CRM numbers on the broader market? Well, John, I think you have to look beyond, you know, earnings season is what happened before and we're trying to look ahead.

And, you know, today's the Beige Book today. I mean, I think it just showed exactly what we've been thinking. And if I could look at my list, consumers are pulling back. They're more price sensitive. The labor market's easing. Credits tougher to get. Delinquencies are rising. Inflation's moderating. That's good. Pricing power is waning. I mean, I think all of those things suggest we're going to see a slowdown here and it may be we're looking for even possibly a moderate recession as we move through the year.

So I think there's some headwinds out there. I think it's it's not all clear. I think I can say with quite a bit of certainty, if this core inflation hangs up in this 3.5% to 4% range, I mean, the Fed might watch it for a few months. But if it's hung up there, they're going to raise rates again. I mean, they're not going to put up with 3.5% to 4% core inflation. So is it going to move down over the course of the next year? You know, we think it will, but it could hang up there for a lot longer than some people think. All right. Makes sense. Let's get to those pure storage numbers now. Let's see the chart. Yeah, it is down about 13 percent at the moment after hours. Revenue came in about in line at 762 million for Q3. Subscription services revenue about in line at 309.6 million. Earnings per share, 50 cents adjusted versus 40 cents expected. So all of

that is good. The guidance is where there have got to be some questions and concerns here. The street was looking for nine hundred nineteen million dollars if you're round higher in Q4 fiscal Q4 revenue. And Pure is guiding to seven hundred eighty two. Also to operating margins, Pure is guiding to operating margins of 19 percent. The street was looking for 21.6%. That could be why the stock is down. Once again, Pure Storage's CEO is going to break down these results with us in just moments later in the show before he speaks to analysts on the earnings call. And Morgan, we've got a lot to talk about.

We really have a lot to talk about. And in a day that is very much defined by tech and retail earnings, we have another mover to tell you about in the meantime, and that's Snowflake. Those results are out. Steve Kovac has the numbers. Steve. Yeah, Morgan, and it's popping here on a beat on the top and bottom lines and strong guidance. So let's go over these results. EPS coming in at 25 cents adjusted compared to the 16 cent expectations. Revenues coming in at 7734 million versus $713 million expected. And this is product revenue guidance that they're giving, not the full

guidance, but it is mostly product revenue. That is also beating expectations between $716 and $721 million. Street was looking for $702 million in product revenue for the current quarter, Morgan. And we see shares up about 8% now. I'll send it back over to you. Okay. Steve Kovach, thank you. Snowflake CEO Frank Slootman will discuss those results during an exclusive interview tonight on Mad Money. To bring this back to our panel, Barb, just want to get your thoughts on what we've heard, particularly on the tech side. I know you've continued to be pretty bullish in terms of the tech holdings in your portfolio. Looking at both of these reports, or all three of these reports that were just broken down, your thoughts as we start to look to 2024? Well, it'll be interesting

to hear what Snowflake, I mean, that they really did have a significant beat. And there had been lots of talk and channel checks that the optimization, you know, in enterprise software was pretty much over. And that was where everybody was pulling in, elongating their sales times, all this. So it looks like things are changing. And that's a real positive. But if you look at all these names, it's really about the longer-term growth rate and what people are seeing next year, particularly with interest rates coming down.

Also, if Scott is right, and we really are in a slowdown, it's a question of how much, you are going to be in names that have real growth. And certainly, the AI is part of all the three stories that we talked about. Salesforce is probably 18, 24 months out. Snowflake has already about 10% of their sales in AI, and that's going to be an interesting update on the call, how much and how fast that is going. So I think tech is still, things we're hearing that this AI is early on

is going to be very powerful. Scott, I mean, to go back to the slowdown comments you did make just a few moments ago, when you think defensive, whether it is in stocks, whether it is in bonds or fixed income, I should say, what does that look like? Well, for us, our portfolio, Morgan, we've we've the last time we're up in this zone in stocks, we pulled money out of equities. We put it in short term and fixed income. We still like that when rates anywhere north of four and a quarter, we think

is a good place to lock in some of these longer term rates and fixed income. We've liked in terms of sectors, we've kind of gravitated towards some things that have been underperformers, healthcare, industrials, materials. Those are some of the things that we've become more interested in. We had been overweight technology, but when the last time the market was up here, we pulled back on that as well. Now, would we be looking for a place to reestablish some positions lower? Yes. We had a little bit of a chance to do that. Didn't really quite make the move, didn't get quite as low as we thought. But I think right now, you know, we like bonds more than we like stocks, particularly at these levels. And I think really, Morgan, for us, you know, we're optimistic. We've got a 4700 target out there for the end of next year.

We just think we're going to have a better spot to buy some equities. It's going to be a bumpy ride between here and the end of next year. And we want to be ready to take advantage of it while playing defense right now. Okay. We'll see if you've got another good chance to do that. Scott Wren, Barbara Duran, thank you. Thank you. Now let's bring in Senior Markets Commentator Michael Santoli with a look at which stocks have outperformed in this month's rally. Mike? Yeah, John, a bit of a bit of a stampede back toward

the riskier parts of this market. One way to gauge that is the, quote, higher beta parts of the S&P 500, the stocks that move the most relative to the overall index. So this on a month to date basis, you see them really racing ahead of the quality basket, which is not 100 percent opposite to high beta, but it's the more stable, big cap, consistently profitable type companies. So you see, this shows you a bit of a risk on tone to the markets. However, it is really a catch up move. Look at the same relationship on a year to date basis. And you see that the quality trade is still outperforming by quite a bit.

And in fact, when the market has gotten a bit frothy, it was both at the very beginning of February, there was a real kind of junk rally to start the year in January. And that high beta really raced ahead. Similarly, at the top of the market for the year in July, you had that situation. So here it's not quite at any kind of extremes, even though some of the speculative stocks are starting to run. Now, in terms of sentiment, you see the investors' intelligence bull versus bear spread has recovered a bit. Now, this goes back to 2015. So you see, when we're in bull market mode, it's kind of up here. There's a lot more bulls than bears. And we were even higher than this back in July as we did peak in the market. So we're rebuilding confidence, but not yet, to my mind, at an over-optimistic spot where you have to start worrying everybody getting a little bit reckless. And as you can see, too, if we are in an uptrending market, as we were in, for example, most of 2017,

then it's not that weird to have a lot more bulls than bears. So it's not purely a contrarian indicator when we get to those points, John. Well, how large are these bulls, though, Mike? I mean, just in terms of size around some of these stocks, we're talking about high quality. And, you know, weeks ago, we talked about the correlation between quality and size. If we were to look at the Russell 2000 over the same period, how has it fared versus the other indices? I mean, it's lagged terribly. In fact, at a record pace, it has trailed behind the very largest stock. So

I agree with the tone of the question, though, which is, sure, people are saying they're feeling better about the market. Maybe there's some more upside. We got some seasonal strength. But it doesn't seem as if people have really high sights in terms of how far this can run or wanting to grab for sort of the riskiest, most leveraged plays on any further uptrend. Maybe that's to come. Okay. Mike Santoli, thank you. We'll see you a little bit later this hour. Nutanix earnings are out.

Steve Kovac is back with those numbers. Steve. Yeah, Morgan, and the shares are up better than 5% here after beating on the top and bottom lines. EPS coming in at $0.29 adjusted versus estimates of $0.17. And revenues beating by about 10 million bucks here, 511 million dollars versus the 501 million dollars the street was looking for. Also giving some strong Q2 revenue guidance and strong full fiscal year revenue guidance. We're seeing shares up now just under 5 percent now, Morgan. Interesting moves, Steve Kovac. And Morgan, I want to point out this is another multi-cloud play. I'm going to speak with CEO Rajiv Ramaswamy after these results and bring

the viewers insights tomorrow on overtime as warranted. We're looking forward to that. It's been quite a day for tech earnings and to your point for some relatively strong guidance, although mixed picture with pure storage, but some relatively strong guidance speaking to the uncertainty around the macroeconomic environment and what that spending is looking like and how some of these tech companies, these cloud players, are navigating right now and continuing to grow that demand. So looking forward to that. Well, after the break, we're going to talk much more about earnings from Dow Components Salesforce, which is getting a boost here, touching post-market highs.

It's up just about 8% right now. Plus, we're going to hear from the CEO of fellow cloud company NetApp, leading the S&P 500 today after a strong quarter and also ahead. Elon Musk one-on-one with Andrew Ross Sorkin. The Tesla chief speaks at the Dealbook Summit this afternoon. We're going to bring you that interview live when it starts. Overtime. Costco's November same-store sales are out and reporting a 3.5% increase compared to last year. That includes gasoline and any impact from foreign exchange.

E-commerce sales were up 9.9% and U.S. sales rose 1.8% during the month. We're going to get the full earnings from Costco in a few weeks on December 14th. The CEO also commenting on the death of board member Charlie Munger, saying, quote, No one loved Costco more than Charlie. The company benefited greatly from his wisdom over the last quarter century plus. We at Costco extend our deep condolences to his family. And PVH earnings are out. Julia Borson has those numbers. Julia. That's right. We see PVH shares plummeting about 6% in after hours on revenues that missed estimates $2.36 billion versus the $2.41 billion estimated. Also want to point out here that the

company's guidance for fourth quarter revenue and earnings both lower than expected. PVH is, of course, the parent company of Tommy Hilfiger and Calvin Klein. The company guiding to fourth quarter earnings of three dollars and forty five cents adjusted versus three fifty one estimated and guiding to revenues down three to four percent in the fourth quarter versus an estimate of an increase of 4% in revenues in the fourth quarter. Earnings for the third quarter did beat estimates coming in at $2.90 adjusted versus $2.74, but the stock is down 5%. Back over to you. All right, Julia, thanks. Back to Salesforce now. Wow, shares in the green pretty much at their overtime highs, more than 7% higher on better than expected earnings and better than expected earnings guidance. Joining us now to talk about it, Rishi Jaluria from RBC Capital Markets. Rishi, this is, I mean, it's mainly about the bottom line, right? The revenues

to me look about in line as does the revenue guide, but there's a lot of successful belt tightening at Salesforce. Yeah. And thanks so much for having me. I think that's exactly right. I mean, it was a pretty in-line quarter, pretty narrow beat on the revenue side. And if you look at the guide, pretty much in line, they are actually guiding to close to single digit CRPO, constant currency, which is the best leading indicator we have. But we're seeing a lot of margin expansion. We're seeing cash flow grow faster than expected. And I think it is this new discipline that Salesforce is bringing

and investing a little bit more cautiously, being smarter about where they're putting their money. And I think there's, by the way, a lot more room to go in the margin expansion story. Right now, they're a little bit above 30% margins. I think this thing could get to 40% margins over time with the right amount of discipline and cost control. Yeah, but Rishi, it takes a special kind of market to continue to get excited just about margin expansion and not about top line growth. So is this operational discipline buying Mark the kind of credibility that he's going to need to get back in the M&A game if that's what it takes to grow the top line? You know, look, I think the balancing act that

Salesforce really has to do right now is show this margin expansion without dramatically compromising growth. Yes, growth is decelerating, but that makes sense given the macro environment that we're in. The fact is, they're still showing double-digit growth when everyone is worried that they may not be able to do that. So I think as long as they can demonstrate even 9%, 10% growth, but show that dramatic margin expansion, which won't be easy, I think that's enough. In terms of your question on M&A, look, when I'm having conversations with investors, that's the last thing people want to see. Yes, some of the acquisitions are starting to do better. MuleSoft, especially, I would call out accelerated against a tougher compare.

However, there's a lot of work to be done in integrating these assets. Marketing and Commerce Cloud are still not fully integrated, and they bought ExactTarget, what, 10 years ago. So I think investors, and I would agree with this, would rather see the work put in integrating all of these acquisitions rather than going out and buying something new outside of small technological tuck-ins or acqui-hires. Yeah, I mean, we talk about cost-cutting with Salesforce. When you talk about the focus on margins, how does AI fit into that picture from an investment standpoint and integration and

deployment standpoint? What does that mean, not only in the near term, but in the long term in terms of Salesforce's ability to compete in that landscape and how investors should be thinking about that with such a focus on earnings right now? Yeah, absolutely. Look, I think the level set, we're incredibly bullish on generative AI's technology. I would say AI is a little bit of a mixed bag for Salesforce right now. On one hand, they have the data and distribution and use cases that they should be a major beneficiary from generative AI. On the other hand, I haven't you know, we haven't seen quite the killer apps that we want to see out of Salesforce. Right. We haven't seen the equivalent of GitHub Copilot or Microsoft 365 Copilot that would be followed by monetization. So I think that Salesforce has an opportunity to

show us more. But so far after their AI day, after Dreamforce, we just haven't seen enough to get super excited about an AI story for Salesforce yet. Okay. It's a top performer in the DAO this year. It's up more than 70% and it's up another 7% right now in after hours. Do you still buy the stock here? Yeah, look, I think there's still, like I said, there's still room for margin expansion from here. Right. If we think about best in class software companies, they should be at 40% margins. You can't fire your way to that. You have to overhaul the go-to-market. You have to

integrate the products, make a lot of changes. But if this company can get to 40% operating margins and still show even high single-digit growth, I think the stock is probably undervalued at current levels. So as long as you believe they can execute and still continue to grow, the stock, I think, is worth holding on to. All right. Rishi Jaloria, thank you. We're just talking about margins when it comes to Salesforce. Margins also an important story on the hardware side in the cloud, helped NetApp outperform expectations. It reported yesterday in overtime, delivered a beat and a raise. The stock traded up, let's see, more than 14% today, making 52-week highs. I spoke with CEO George Kurian today about how flash storage, specifically NetApp's AFF

Series C, drove the beat. A big part of that was due to the mix being towards the higher margin flash products, which have a lot of software intelligence and are at a cost structure that are perfect for this economic landscape. And so we're really excited. It's the fastest growing product in the history of the company. He mentioned some challenges in demand, though. Maybe that's what we're going to hear from Pure Storage. Of course, we're going to be speaking with the CEO, Charlie Giancarlo, in just a few minutes before he talks to analysts on the call. Morgan. All right.

When we come back, the highlights from my rare interview with the new chairman of the Joint Chiefs of Staff, America's most senior military officer. His first comment since taking that post in October, his take on China and the dynamic between the military and the economy. It's coming up right after this break. Let's get a CNBC News update with Contessa Brewer. Contessa. John, an American citizen is said to be among the hostages released from Gaza today. That's according to Qatari government spokesperson. The sources tell NBC News there, there were two American women who meet the criteria to be handed over by Hamas during the truce, which is set to expire in just hours.

The White House says it's hopeful another two day extension can be achieved. Rosalind Carter's family and friends celebrated her life today in Georgia, in the same town where she and President Jimmy Carter were born. The former first lady died earlier this month at the age of 96. Her intimate funeral today included the 99-year-old former president, who currently is in hospice. She will be buried today at the home she and her husband have shared since the 1960s. And Uber announced today that London's famous black cabs will soon be available through the ride-sharing platform. Taxi drivers can sign up for trip referrals today, and the service goes into effect in 2024. The move is the latest in a series of taxi expansions. Last year, Uber reached deals with taxi companies in New York City and in Italy.

John? Contessa, thank you. Yeah, those London black cabs were among the staunchest opponents of Uber for a long time. So that's a moment to mark. If you can't beat them, join them. Eventually. All right, Contessa Brewer, thanks. Meanwhile, the Fed saying in its beige book release this afternoon that hiring activity was dialed back noticeably in some sectors. Up next, a closer look at the employment picture in America and what that means for the Fed's rate path.

And check out Victoria's Secret. You know, not that kind of checkout. In the red, in the post-market session, the company missing on EPS and matching on revenues, but fourth quarter revenue and earnings guidance are slightly above analysts' estimates. We'll be right back. Welcome back to Overtime. Michael Santoli is back with a look at what we really think about the job market. Mike? Yeah, John, and it really fits in with a lot

of these data points that the market wants to see, which is conditions softening up, slowing down, but not so much that they really bring on a recession. So this within the Consumer Confidence Survey that was reported yesterday is the measure of the labor differential, as it's called. So it's the difference between those saying that jobs are plentiful and those saying that jobs are hard to get. So we've really come off record levels of labor market perceived tightness up here, down to what you would consider a still healthy but lower level. So basically softening up of labor conditions. And this has actually largely been about jobs hard to get being perceived at a higher rate. And so it brings us back, as you see right there, toward the mid

2010s type of levels. Nothing to be alarmed about, but maybe enough to get the Fed backing off to some degree. But like consumer credit gauges, you know, like even retail goods spending, people are wondering if it's just going to be normalizing or if it's going to overshoot to outright weakness. We just don't know yet, John. Mike, you've got that chart there showing 2006 before the Great Recession. I remember that being a pretty good job market. And it looks like we're feeling better about this job market, even though it's come down a bit than we did about that one. No, that's exactly right. I mean, I do think you might have to go back to right around the year

99 or 2000 when you had record levels of labor market participation and low unemployment to get something similar to right now. But yeah, there's demographic structural tightness in the labor market. It's hard to find people for a lot of jobs. So it's a good thing. We're working from a very strong level. We'll see if it lasts. Late 90s, that was a crazy market. Even I got hired out of college back then. Well, for me, it was early 90s, but yes. Okay, who's counting?

Mike Santoli, thanks. Pure Storage shares are plunging. Still down even more. Boy, 16.5% on week full-year revenue guidance. The company's earnings call doesn't start until 5, but you don't have to wait for that. CEO Charlie Giancarlo is going to join us next to break down those numbers. We'll be right back. We have a news alert on Disney.

Julia Boorstin has it. Julia. John, Disney announcing two big appointments to its board. James Gorman, who is chairman and CEO of Morgan Stanley, as well as Sir Jeremy Derrick, a veteran media exec and former group chief executive of Sky. Their appointments effective January, February 5th and January 9th, respectively. Now, this all comes amid speculation that Nelson Peltz would resume his proxy battle against Disney and push for a board seat. Disney emphasizing the expertise of these two appointments. I have to point out that this comes right on the heels of Bob Iger saying to our

colleague Andrew Ross Sorkin today that if Nelson Pels were to push for a board seat, it's not necessarily a sure thing that he would get it because there's such an emphasis on having people on the board who have valuable expertise. The company is saying James and Jeremy are both, and this is Mark Parker, chairman of the board, saying James and Jeremy, both widely respected leaders in their industries and their expertise will complement the talents and experience of the Disney board as we continue to focus on delivering for consumers and shareholders alike. So, John, seems like a pointed response getting ahead of that Nelson Peltz push. So that's how we should view this is kind of like a tight end move trying to block out

Nelson Peltz from getting on the board by saying, look who we have now. Well, look, this is certainly these are two certainly experienced men who would add value to the board, especially if you think about who else is on the board. But I think it's notable if you think about the timing. Next week is when the call for nominations would begin for any potential activist investor to nominate someone for the board. So that's the date that we were watching to see if Nelson Peltz were to nominate himself or someone else to represent him. So this is getting in right ahead of that.

OK, we're about to see. Julia Boorstin, thank you. Let's take another look at Pure Storage. Shares down about 15% after hours after providing guidance that disappointed the street for the current quarter. Joining us now is Pure Storage CEO, Charlie Giancarlo. Charlie, thanks for coming on. Let's get right to it. What did the street and maybe Pure itself get wrong about Q4? It looks like it's about in line with what the previous quarter was, but the street was expecting a big surge in revenue.

Right. Well, what's really happening, and I think as the street analysts and investors pour through the numbers, what they'll find is it's actually a good story. Our accelerated transition towards a consumption and subscription model is really having an effect. And what we're seeing is that as we move to the subscription model, of course, that means that near-term CapEx revenue is substituted by longer-term and richer subscription and consumption revenue. And most of the change in the forecast is really due to that accelerated approach towards the consumption model. Even with that, though, if I could add, we're still the only storage company that is growing in this market. The overall market is declining. All of our major competitors, their year-over-year growth is negative. Our year-over-year growth continues to be positive, even with the headwind of an accelerated consumption

model. It's an expectations game for sure. Also looking at operating margins projected for Q4, I think you said 19 percent. The street was expecting 21. Does the does the switch to subscription? It does. It does because of the deferral of the revenue. And so your costs, you know, your costs are your costs. The deferral of the revenue changes the margin profile. What are you seeing in Flash? I was just speaking with a rival in the space net app today. It had a report last night. As you mentioned, it wasn't so much a top line story for them, but bottom line was stronger than the street expected. And they got some benefit from their flash pricing. What are you seeing there? Well, we have record gross

margins this quarter. So flash pricing, that is flash product pricing, remains strong in the market. So overall, that was good. What we are seeing, though, is the transition from disk to Flash. As I've said in the past, I think within five years, Flash will replace all disk, certainly in enterprise and increasingly in the hyperscalers as well. So this is a trend that we continue to pursue, in fact, lead, and believe that the wind is at our back in that sense. Charlie, it's Morgan. You mentioned the fact that you're the only one growing in the storage market right now. What do you attribute that growth to? How much of this is the impact of AI on

your customers' spending and what that means for storage requirements versus other things? Yeah. Well, we had a double-digit number of AI wins this past quarter. But frankly, AI is still overall a relatively small portion of the overall storage market, which is huge, right? Over $50 billion. And, you know, our success really springs from several things. One is we bring to our customer for the first time in storage, really, a single operating environment that really manages all of their different types of storage, block file and object at all the full range of price performance, whereas competitors generally have multiple different products to address each specific use case. And the second thing is we've really brought what we call a cloud operating model to operating the storage. It is far more reliable. It operates completely through a set of APIs. It can be consumed like the cloud, which is our growth of the Evergreen One consumption-oriented business model. It can

operate both on-prem and in the cloud. And our entire suite of capabilities can be managed like the cloud, that is, as a pool of storage, as a cloud of storage, rather than as individual arrays. So these are really firsts in the industry, and it really accounts for our growth and success. All right. The stock coming further off the lows as you've been talking to us. We'll let you get ready for that. Analyst call, Charlie Giancarlo, the CEO of Pure Storage. Thanks for being with us. Thank you, John.

Yes, bye-bye. Up next, we'll hear from the chairman of the Joint Chiefs of Staff in his first broadcast interview since taking on that role. His thoughts on Israel, China, the budget, Ukraine, when Overtime returns. Welcome back to Overtime. Just a short while ago, I sat down with General C.Q. Brown at our CFO Council Summit. He is the new chairman of the Joint Chiefs of Staff, America's highest-ranking military official, and the top military advisor to the president.

This was his first broadcast interview in the position. He was sworn in October 1st. Hamas attacked Israel just six days later. I asked for his assessment of that conflict as it has been unfolding, even amid this recent ceasefire of the last few days. When you look at what's going on in the Middle East is the aspect of what we've wanted to do is make sure that we support Asia's right to defend itself, at the same time think about minimizing civilian casualties, humanitarian assistance, how we protect our forces, and then also looking at not letting this conflict expand broader in the region. And this is part of the reason why you saw shortly after 7 October, we moved in a fair amount of capability. One was to show our support

to Israel, but also to deter a broader conflict within the region. Will we see more U.S. forces deployed to the area? Well, over time, I mean, this is something we talk about all the time in one of the areas, and without getting ahead of, you know, decisions, but we look at our force posture, not only in the Middle East, but we also, that's one of my responsibilities as a chairman, is I'm not just looking at, you know, one crisis. What I'm looking at is really across what's happening around the world to ensure that we have capability and options in my role as a chairman, providing advice to the president, the secretary of defense and security counsel. I want to make sure that I've looked at all the options.

Now, we also discussed U.S. troops in Syria as Iranian proxies have launched attacks on U.S. military outposts in the region. And we've seen U.S. counter strikes in response. We also discussed Ukraine, where the senior military official there has used the word stalemate recently in an interview. And we discussed, as the U.S. runs out of current funding to send weapons and other aid to Ukraine, we're waiting on a supplemental to pass in Congress, what he anticipates in terms of that conflict over the coming year? In order for us to continue to support not just Ukraine, but ourselves, is to get in a budget on time. And continuing resolutions do not help us actually provide predictability, not only for us, but also for the defense industrial base. If you have consistent, steady funding, it's easier for you to

write contracts, bring on workforce, build out facilities to bring capability, not just for us, but also for allies and partners. I think the one thing that I've found is that a lot of our allies and partners like U.S. equipment. That depends on the U.S. defense industrial base, and that's also dependent on constant funding. Of course, that has raised the question about stockpiles and whether the U.S. industrial base can keep pace with the demand it is seeing right now. He said yes. And about how the chairman is balancing the readiness and modernization of the military for the future versus the needs of the current operational force, given this current geopolitical landscape, which, of course, brought into focus the pacing threats, that is China.

Your assessment of the dynamics between the U.S. and China right now? Well, I would say, you know, the president just met with Xi Jinping. The fact that there's a, they're open to military to military dialogue. Is that happening? What will it look like? Well, it's yet to be, you know, it still needs to be, the details need to be worked out. But I expect at some point that that dialogue will occur. I think that dialogue is important because it helps to prevent miscalculation.

But I also think through the aspect, it's not just what we do as a military, it's what we do across what I would say all the instruments of power, what we do diplomatically, what we do economically, how we play in the information space. And, you know, the economic piece plays a key role in deterrence and how we work with allies and partners. And if you think about the Indo-Pacific, how much activity goes, how intertwined we are economically with the Indo-Pacific, any type of military conflict will really disrupt the world economy. I'm not an economist, but I'm just kind of thinking based on what I've been able to study, is that has an impact. And that's why it's so important that all those play together. And we think about it more holistically,

not just from military. So we play a role as a military. But we want to be the, you know, a small M to a capital D, capital I, capital E. Now, I did also ask John if the risk has risen about China making a move on Taiwan, whether it is by force or the possibility of a blockade. To that, he said it depends. His response is to be ready as a joint force to pay attention to all the factors that are going to play into the forefront and noted that the fact that President Biden and President Xi of China were able to sit down and have a conversation recently helps to bring down the potential tension around that dynamic and that island. But the full interview, which was a wide ranging interview, it lasted more than 25 minutes, almost 30 minutes, is on CNBC.com.

You can find it there, CNBC.com slash CFO. An important interview. The very first for this chairman of the Joint Chiefs. Thanks for for bringing that to the viewers. It's a rare perspective, Morgan. John, thank you. I will note we're going to have more from the defense sector tomorrow when we're joined exclusively by the CEO of Aerospace and Defense Giant RTX. That's Greg Hayes. He's going to join us exclusively ahead of the Reagan National Defense Forum this weekend. I'm headed there next in California. So we have much more to bring on this topic geopolitically

and what it means for that defense industrial base over the next couple of days as well. Well, continue to travel safe. Speaking of moving, GM shares revving higher today because a huge stock buyback is making it a top performer in the S&P 500. Find out what CEO Mary Barra says about that move when overtime returns. Plus, Elon Musk expected to speak with Andrew Ross Sorkin at the New York Times Dealbook Summit this afternoon. CNBC will bring that to you live when it starts. We'll be right back. Welcome back.

GM, one of the biggest winners on Wall Street today after announcing a massive stock buyback and a dividend hike. Phil LeBeau has the details with the stock finishing up 9% today, Phil. Yeah, you get a stock pop like that when you say we're doing an accelerated share repurchase, where they basically go to an investment bank and they say, buy it back, do it quickly. And that's what's going to happen. Take 17 percent of the shares off the street. That's why you see the pop in shares of General Motors. They also issued new guidance for 2023. And they also talked about having greater efficiency and greater execution, not only for the remainder of this year, but into 24 and to 25. What about Cruise, a program that has had a number of issues over

the last couple of months? The Cruise CEO resigning within the last couple of weeks. Mary Barra was asked about that today by analysts. They are doing an independent review. They have an outside firm doing a review of Cruise. Once that's done, they'll make some decisions about how much they invest in Cruise, what the future is for Cruise. And the other focus for Mary Barra and the GM board, bring out more lower priced EV models. We have the Bolt there that's done very well as we get more and more of our Chevy Blazer EVs and Chevy Equinox EVs into the market. I think we're going to be hitting a sweet spot with a vehicle that has no excuses.

There's no sacrifices that someone has to make. Quickly take a look at shares at GM, the $10 billion stock repurchase program. Again, that is taking 17%, roughly speaking, of their shares off the street almost immediately, Morgan. And they also are raising their quarterly dividend by 33%, going up to $0.12 a share in the first quarter of next year. Guys, back to you. All right. All right. Phil LeBeau, thank you. I mean, John, PCE tomorrow.

We get more earnings, including Dell, Marvell, Alta tomorrow. But really focused on Salesforce and what Mark Benioff is going to have to say on CNBC later. We know it's been the comeback hit of the Dow this year. Also, Nutanix, it's taken another leg higher, up 8%. It's tripled off the June lows back in the $10 billion market cap territory. That does it for us. That money starts now.