Motley Fool Money - Amazon's Secret Weapon

Episode Date: April 24, 2015

Starbucks serves up a new all-time high. And Amazon and Microsoft find big profits in the cloud. Our analysts discuss those stories and delve into earnings news from Chipotle, Google, and 3D Systems. Plus, CNBC journalist Becky Quick previews the upcoming Berkshire Hathaway annual meeting. To get a copy of our e-book on Warren Buffett, just email [e-mail].   Learn more about your ad choices. Visit megaphone.fm/adchoices

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I'm Chris Hill and joining me in studio this week from Million Dollar Portfolio, Jason Moser and Matt Argusinger. And from Motley Fool Deep Value, Ron Gross. Good to see you was always, gentlemen. Yo, you do. Earnings Palooza rolls on. We've got the latest results from Wall Street. Becky Quick from CNBC will give us a sneak preview of the upcoming Berkshire Hathaway annual meeting. And as always, we'll give you an inside look at the stocks on our radar.

But we begin this week with one of the biggest companies out there, and that is Google. First quarter revenue came in north of $17 billion. And that was still, Ron Gross, lower than Wall Street was expecting. But shares still up around 7%. What's going on here? I think there's a lot to like about this report, actually. I was encouraged. Paid clicks up 13 percent. Expenses under control. It's very important. you still continue to see the cost per click come down. I think we're at the 14th consecutive quarter where we've seen that happen. Now, what's important here is that the company went out of their way to say this is not just

because of the move to mobile that we've been seeing over the last several years. It's also the direct result of the growth in YouTube, the really tremendous growth in YouTube, and ads on YouTube costs less than they do elsewhere. So the average cost of an ad comes down. But it is exciting to see that growth in YouTube nonetheless, and it's going to be a very big business at some point. They could be profitable right now if they wanted to be, which is a funny thing to say, but they continue to invest in the business, so we're not there yet.

Yeah, we're not there yet, but I think we are at the point where, you know, Maddie, when they first bought YouTube for, I think, about $1.6 billion. That's just obscene, by the way. There were some people sort of skeptical of the business model. I don't think anyone's skeptical, but I think we are at the point now where people are saying, okay, what's next? What's going to be next with YouTube? Are they going to go in the direction of Netflix and Amazon Prime and start rolling out some series of some sort of their own version of House of Cards? Are they going to go after live sports? What are they going to do?

Well, that's it. I mean, they need something because I feel like, I don't know what you guys feel, but I don't really go to YouTube just to go to YouTube. I know people do, but there's always some kind of draw. Someone shares something with me. I see something, and then it directs me to a YouTube video. And then from there, I kind of explore a little bit more. But I do think YouTube, like Yahoo, like a lot of these other businesses, are going to need a draw. And there is the rumor about them, you know, maybe doing an NFL game at some point or something like that. But I do feel like eventually if this business is really going to take off, they're going to need premium-owned content. The subscriber version of YouTube will be interesting to see who's willing to actually

pay for that. I don't think I'm there personally yet, especially with the option you have now to click off an ad after the first, you know, four seconds or so. To me, that's good enough. I can wait four seconds. I don't need to pay up to bypass that. But as they develop more content, as they have more to offer, then maybe the subscription makes more sense. But, Jason, they've proven they're willing to lose money on different initiatives. And it wouldn't surprise me if they decided, you know what, we're going to lose money, but we are going to go after live sports. Yeah, perhaps. I mean, that's something we know that. I mean, Netflix, for example, that question was brought up in the quarterly call. And we know they're not going to be pursuing something like that, at least for the near future.

I think to Maddie's point there, there is a dynamic to that. I mean, I think you don't, not a lot of people, well, maybe a lot of people, I don't go to YouTube just to go to YouTube. And so I think that, you know, that's one thing we're going to see more and more video coming out on Facebook, for example. And Facebook has obviously got a tremendous number of eyeballs on it on a daily, weekly, and monthly basis. So, you know, I think that Google has got to be at least patting themselves on the back for this acquisition. Seems very shrewd in hindsight. But by the same token, it's not. like YouTube is the only player in town. This is going to be a very competitive space here

in the coming years. And I think we'd be remiss if we didn't mention their new wireless initiative, Project Phi, Wi-Fi, Project Phi, yes, which is in its pilot phase. It's really in the infancy. It's going to be really interesting to see where this goes. They're teaming up with T-Mobile and Sprint to kind of resell their wireless network. You'll be able to switch from cellular to Wi-Fi with seamlessly. So it will be very interesting to see. Some downsides for Now, coverage is limited. You have to have a Nexus phone, but it's just the beginning. I'm sure AT&T was thrilled when they saw that announcement.

Shares of Amazon up 15% on Friday after first quarter revenue came in higher than expected. Sales in North America were up, and Jason, you know what else was up? The cloud biz. Yes, sir. Yeah, you know what? The market loves clarity, right? And this quarter, relatively speaking, we got a lot more clarity in regard to Amazon and its business model. So clarity good, profits bad. Clarity good.

That's the new thing right now. They're bad. I think, you know, you look at the Amazon Web Services business. We now have an idea of how big and how profitable it is. You know, looking at a $6-plus billion business, it's going to bring in somewhere in the neighborhood of a billion dollars in profit for the company this year. It's the fastest growing segment in the business.

I mean, this AWS grew 50% over last year versus 24% North America segment and, you know, excluding currency, about 14% for the international segment. So, you know, this just goes to show that we've always, always known, Amazon has a lot of pokers in the fire, and Amazon Web Services is a very big one. You know, it's interesting to note they've seen 48 price decreases since the inception of Amazon Web Services. So they are a very compelling price point for the consumer out there. But management was quick to note on the call that the primary factor customers choose Amazon Web Services on is based on its ability, customers' ability to move around quickly, be nimble, and be agile.

So what they've done, I think, very astutely here is they've made it such a compelling, you know, such a compelling price point that it brings people in to give it a shot. And then what they're finding is that they're able to do a lot of different things with it. And because it costs so much, they stick around. And then management learns more about what their customers really want. And they make the product better. And it seems to all be really paying off. When you look at the stock up more than 50%, just over the last six months,

and it's now trading in an all-time high, do you buy at this price? This is going to be more of the same. I mean, listen, in 2005, when they launched Prime, they have 13 distribution, 13 fulfillment centers globally. Today, they have 109. They have more than 15,000 Kiva robots helping work those distribution centers. So when everybody asks, where's all that money going? Why aren't they profitable? That's where the money's going. It's going to continue to go there. But you know what? It builds out a tremendous global footprint that's just getting more and more difficult to encroach. And I think, you know, this is a business still with its best days ahead. Yeah, and I just, we've said it, I've said it before. I don't see what prevents this from being the world's, his company, just because, and it's not really because of, you know, e-commerce or, you know, AWS or anything in particular. It's just the fact that the way, the culture, Jeff Bezos, going after every market where he sees either significant margin or a relatively poor customer

experience. And he just wants to just roll over that. And I just, I fear for competitors. I just think there's nothing stopping the train. The only thing I can add is I'm a value guy and I own the stock. Boom. Boom. Starbucks reported record sales for the second quarter and global same store sales were up 7%. That doesn't seem like a big number, Matt, but when you consider how mature this company is, that's pretty strong. It's huge. And so along with those 7%, you know, your traffic was up 3%. The average customer purchase was up 4%. Overall revenue up 18%. I was surprised about the headlines around Starbucks. I mean, some of the headlines I read were like, well, race together initiative fails, but Starbucks

traffic grows. And as if that sort of that social media hiccup or whatever you want to call it was going to prevent people from getting their daily Starbucks, you know? And so that was interesting, but I think, again, tremendous quarter. What they're seeing right now is the food options, which we know they struggle with for so many years. People are going in there and their average ticket orders going up because people are not just getting a beverage. They're also getting a food item, a baked good or an actual sandwich or something. And that, so the average ticket size per customer is also up nicely. And interestingly, the biggest grower in that food segment was breakfast,

sandwiches, which I think that's really easy. That's just low-hanging fruit, right? Those things are typically prepackaged. We know that everybody's out there. It's a land grab for that breakfast market right now between Taco Bell and McDonald's and now Starbucks. So I think there's a tremendous opportunity for a company that never has really quite gotten that food park. And they're good. I mean, I think, you know, I have to say almost every sandwich that I've tried, I think I've tried them almost all of them. Not as good as their rice crispy treat, but nevertheless good. Global comps up 7 percent, but when you break that out

by region. Comps in China and Asia Pacific up 12 percent, and I think I have some insight into why we got an email from longtime listener, Jordan De Jong, in Tokyo, who writes, today at Starbucks I saw a banana and bacon sandwich for sale. Of course, it was made with whole wheat bread to remain a healthy snack. I knew I had to report this news to those who would appreciate it. So let's memo to Howard Schultz. Let's get that over in the States. Microsoft's third quarter profits and revenue both came in higher than expected. a lot of parts to the business, but the cloud business and the server business, they're both looking strong.

Yeah, as we heard with Amazon. So Satcha Nadella's shift since he became CEO, his shift to making this more of a cloud and mobile software business really seems to be paying off. We saw the commercial cloud business. Their revenue doubled. That's the seventh quarter in a row where that happened. We're probably at about a $6 billion run rate for that company. But you saw strength in other sides of the business as well.

server business, their corporate software. Windows was the bad part of the business, not surprisingly. We did see some strength earlier from the XP refresh cycle. We'll see what happens when Windows 10 comes out this summer. A lot of people are excited. A lot of people don't care. Is it going to come in the summer? Because one thing we've seen historically from Microsoft is whenever the Windows release date is coming, it gets pushed back. We'll see. I'm not going to make prediction there. One thing I do want to mention, we're seeing this across the board with multinational companies. The strong dollar is hurting all of these companies. So when you're looking at results, you're perhaps seeing companies with profits that are down from last year or is not as robust as

analysts had thought. A lot of times, that's because they're losing these foreign currency translation dollars, and it's not necessarily indicative of the health of the business. Nadell has been CEO for about 15 months. The stock is up more than 30 percent during that time. You're a value guy. Where is this stock right now? Stock's at 47. As with Amazon, I'm an owner of Microsoft. I continue to hold it. I continue to like the execution of the business. It's not screamingly cheap as it was back a year or two ago. But I still like the stock. Coming up, a reminder that not every company had a great week. Stay right here. This is Motley Fool money. As always, people on the program may have interest in the stocks they talk about and the Motley Fool may have formal recommendations for or against. So don't buy yourself stock. based solely on what you hear. Welcome back to Motley Fool Money, Chris Hill, here in studio with Jason

Moser, Matt Argusinger, and Ron Gross. 3D Systems is set to report earnings in early May, and it's probably not going to be pretty. On Friday, the company lowered guidance citing, among other things, the decline in the euro, the decline in the yen, and the aftershock of lower oil prices. Maddie, did I leave anything out? No, no, I mean, you know, anything else they want to blame? They didn't say bad weather, but I mean, I guess that could be out there, too. Just a way. Well, I mean, no. Let's see. Listen, I mean, really, the bottom line is, they could have just come out and said, you know, people are just buying our printers. And that would have probably told the story right there.

You know, this is a company, I mean, every time I think of 3D systems, I go back about 15 months, our producer, Macriere and I are at CES, and we're walking around. And, you know, we kind of had a bad experience trying to interview the CEO 3D systems at the time. But there was just, it was just a concafony of 3D printing companies. I mean, there was so many of them. And I remember at the time saying myself, this just feels a little bubbly. And, of course, 3D systems at the time was trading for about $95. It's well under 30 today. Of course, going back, hindsight is perfect 2020.

But really, the quarter here is them talking about the fact that, you know, hey, our consumer business is okay. But all of these factors that they cited, it's really hurting our commercial and industrial buyers. But that, to me, the reason that's really disappointing is because that, to me, is where the business should be going. That's where the service and the margins are going to come from, not from the customer 3D printing business, which, you know, those are getting cheaper all the time. And I think customers in general just aren't interested in buying a paying $2,000 for a device that prints them, you know, little plastic choshkis. I mean, let's be frank. So really disappointing that they're coming out with guidance. The stock is down tremendously. To me, 15 months ago, it was probably at max optimism. I don't

think it's quite at max pessimism right now, but it's one that, you know, you could be getting interesting fairly soon. Chipotle's first quarter profits came in higher than expected. Same store sales were up more than 10 percent, stock down around 7 percent this week. Jason, Chipotle, officially in the really good isn't good enough category. Well, in the face of the market's pessimism, Chris, I actually had Chipotle for dinner this week to celebrate. You're welcome, Sheryl.

You rebel. Wonderful quarter, because when you look at these numbers, it really was a wonderful quarter. And this is a wonderful story in my mind. You look at investing in management's expectations versus the market's expectations. And we want to pay attention to management's expectations. As long as they're doing what they're setting out to do, let's not really worry about what Wall Street's thinking about, because they're usually off-base and much more short-term-oriented anyway. The numbers really are just astounding.

I mean, top-line growth of 20 plus percent, again, earnings growth of 47 percent, comps of 10.4 percent. Those just don't happen with many of these restaurants out there. And Chipotle continues to do something right there. Now, the comps number was made up a little. more than 6% of the price increases that they've passed through here over the past few quarters. We'll see those anniversary over the coming quarters. So we'll see that comps number come down towards that mid-single-digit range that management has been guiding for for 2015. So it'll be very interesting to see how the market reacts to this because management has communicated this very well. We know what to expect. They know what to expect. And if, you know,

the surprise on the upside, then we know it's because the traffic is on the up and up. And that wouldn't be terribly surprising because they continue to stay on message. They continue to keep those stores full. And they continue really to just serve up a consistent and good product. Before we get to the stocks on our radar, we love our dozens of listeners. We love our dozens of it. But my favorite listeners on the other side of the glass this week, and that is my sister, Mary Ann, who is visiting from Massachusetts. With her son, Michael Dober.

Newton South High School, Go Lions. They're going to have a big football season. You know it? I'm calling it right now. So thanks to them for coming in. And also on the other side of the glass this week, Steve Broido, back from vacation. Steve.

He's going to hit you with a question. Ron Gross, what's on your radar this week? Just a radar stock. Not a recommendation yet. Caviotech security, STRT, a microcat manufacturer of boring auto parts, such as locks and handles and latches. A nice little company, profitable, solid balance sheet. Looks cheap less than six times, EBITDA.

But boy, the customer concentration's a bit scary. General Motors, Ford and Chrys are basically the whole business. But I think it looks really interesting. So I'm going to be jumping on that a bit more. Steve, question about Stratac? If I'm a high-end car manufacturer, don't I want to make these parts myself? No, typically a lot of these OEMs will really contract out for some of these smaller, less consequential parts of the car.

I think it makes more sense from a cost perspective to do that. You just get a 3D printer. Did you just call the door handle not consequential? The locks are consequential. The handle, you know. Matt Argusinger, what's on your radar this week? Sure. One company I know I brought up at least once before, and that's Proto Labs, ticker, PRLB. Look, I spent, earlier in the show, I was ripping 3D printer, 3D systems. This is a company that I think is on the right side of 3D printing, which is they're actually buying those printers, which are getting cheaper over time, and selling high-margin services using those printers.

And I think that is the right way to play 3D printing, I think, over the long term. So, Proto Labs, Stivo. Steve, question about Proto Labs? What would I use protolabs for? Give me a case study for me. Sure. If you had a great idea to build a new seat or something like that to sit in front and watch TV, and you had this great design of your mind, you submit it to Prolabs, they'll come back, they'll actually do a prototype for you and send it back to you. Jason Mozer, what's on your radar? Yeah, I'm going back to the well with Twitter this quarter. Tickr is TWTR. Earnings are coming up on Tuesday the 28th, and that's what I'm keeping my eyes on here. I think that they did a wonderful job last fall.

during the investor analyst day, reframing sort of the expectations of this business of this company and what they're doing, looking for them to surpass the 300 million active monthly user mark, but more so, I'm looking for them to continue to communicate how that content is reaching beyond that core Twitter platform. Word on the street is that they are getting a lot of advertising spending in this quarter in the coming year, and the numbers appear to bear that out. It looks like the percentage of U.S. ad executives that used Twitter, Last year, over the past year, it was 35.2% based on feedback from that industry. That number is going to kick up closer to 50% this coming year.

So I think that there is genuine value being seen on that platform, and I expect we'll see that play out on the stock. Steve? Is Twitter profitable, yes or no? It is, if you look at it from the longer. It is, Steve. Twitter, ProtoLab, Stratac, you got one year. I'm going to Protelabs. There it is.

All right. Ron Gross, Matt Argusinger, Jason Moser. Guys, thanks for being here. Thanks, Chris. Coming up next. CNBC host Becky Quicks, going to give us a sneak preview of the upcoming Berkshire Hathaway annual meeting.

That's next, so stay right here. You're listening to Motley Fool Money. All the best things in life are free, but you can keep them for the butt while money. Oh, that's what I want. Welcome back to Motley Fool Money. I'm Chris Hill. Tennyson wrote, in the spring,

a young man's fancy turns to thoughts of love, but also in the spring, investors of every age turn to Omaha, Nebraska for the Berkshire Hathaway annual meeting, the highlight of which is the Q&A session with Warren Buffett and his right-hand man, Charlie Munger. One of the moderators for that session is our guest this week. She is the co-host of CNBC's Squawk Box. Becky Quick, good to talk to you again. Hey, Chris, great to talk to you.

I want to get into specific parts of the business in a minute, but let's start with Berkshire Hathaway in general because more than 40,000 people are expected to be in Omaha for this event. And obviously they are fans of the company. But I'm wondering, from your perspective, if there is a big question heading into this meeting or any level of skepticism, either about Buffett or the business in general. You know, I think people are going to be looking at this as kind of a special go-round. This is the 50th anniversary. And I think they have some big things planned just because it's the 50th anniversary gathering. I wouldn't even surprise me if there's more than 40,000 people who show up. And as you know, these are the

Berkshire faithful. These are the people who really look at this as the Woodstock of capitalism who are going to be showing up. But sure, there will be some questions. And, you know, some of them may come to do with some of Buffett's investments. He himself picks out stocks. So do Todd and Ted, who are the two deputies when it comes to investing that he's kind of picked up on some of these things. And some of his investments have raised some questions, things like, IBM. In the past, Buffett had never invested in technology stocks. As a rule, has tried to stay away from it. And that's a stock that is a technology stock that seems to be struggling. It's in the midst of a turnaround. There are plenty of people betting that it will be able to do well through that

turnaround. But there are others who are taking the other side of that bet. So that's one investment in particular that people have raised brows about. When you're moderating the Q&A session, obviously you have your own questions. But for any anyone who hasn't seen it, this goes on for hours and shareholders get up. They get to ask questions. Is there one question or topic in particular that Warren Buffett just really doesn't like it all? A question that as soon as someone starts to ask it, you're thinking to yourself, oh, no, this is not going to go well. Actually, no. That's kind of the amazing thing about it. I'm there on stage in the position of asking shareholder questions that have come in.

So actually, none of the questions that I'll ask while I'm on stage are my question. We'll be joined by Buffett and get to interview him later, and those will be my questions. But on stage, I'm really there just taking the questions that shareholders have sent in and trying to find ones, honestly, I look for ones that might stump him, ones that might give him a little bit of trouble. He is very clear that neither he nor Charlie want any advance notice on any of these questions. And it's kind of part of the game, just to see if you can get one that really, really either stump him or make some think or, you know, maybe something I hadn't thought about

before, too. Those are the questions I really love getting. And we do take email for all those questions. I think Berkshire Questions at CNBC.com is the address where we're collecting a lot of those questions. So if you've got one that you think we'll stump them, I'd love to hear it. And that's the kind of amazing thing, because in most interviews, and Chris, you know this from talking to people all the time.

In most interviews, you can walk into it and think, okay, here's probably the one or two subject areas that they're not going to like and won't respond well. to. And that's the amazing thing about sitting down with either Buffett or Charlie. They will talk about anything and don't mind making their views known. In terms of dealmaking, obviously Buffett has pulled off plenty of deals on his own, but recently he's teamed up with 3G Capital, first on the Heinz deal, then with Kraft. Those are two really big fish right there, are there other consumer goods companies that they have their sites on? Yes, I would say. You know, I spoke with him recently, maybe in the last three weeks or so. He was on air with us,

and he said exactly that. This is something that they're going to be using for roll-up potentials, and they do have their sites focused on somebody. He didn't say who. When I asked him, he said everybody. But, you know, these are companies that he knows their, their filings, their quarterly filings, reads their quarterly filings, reads their annual reports, and has for probably 50 years in the case of some of these companies. So I couldn't get an answer out of them very specifically on which ones he'd be looking at, but I would say anybody in the consumer goods product arena is a potential target. Because they're teamed up with 3G, they're talking about much bigger market capitalizations

that they can go after than either one of them could do alone. So do you expect we're going to see more deals like that, and by that I mean more deals where they're teaming up with 3G, or do those type of deals also wet his appetite for pulling off solo acquisitions? Yeah, I'd say yes on both counts. I think the partnership with 3G has been very productive. Both sides of the partnership seem to be very happy with how it's working and how it's progressing. So I think anything that 3G comes to him with, he'd be very eager to listen to with an open mind. But I also don't think that it has replaced that kind of long, buying streak and spree that he and Charlie have gone on for years. I mean, recently they've They even bought Burlington Northern, and that was a massive purchase for them to take on their own. But, you know, he surprises me that he and Charlie both kind of surprised me with their interest in things. Just this past year they also bought the Van Tile Auto Group. So now they've gotten into the auto dealership business and have explicitly said that they are looking to buy more dealerships to add to that group. I think just about any business they get into that they decide they like, they are always on the lookout for other companies that they can wrap up or roll into that, other acquisitions that they can make to add to those portfolios if they think the price is right.

Yeah, Van Tile Automotive, obviously not the household name that Kraft or Heinz is. That's also a very traditional business model when you're looking at the automotive space as opposed to what Tesla Motors is doing. with the direct-to-consumer model, my hunch is that they are either unfazed by what Tesla Motors is trying to do, or they think it's going to take a really long time for direct-to-consumer to really disrupt the business model that's in place right now. Yeah, I asked him that. He and Larry Vantile were both in town for the New York Auto Show just a couple of weeks ago, and I asked him that question myself.

Yeah, they seem non-plussed by it. I don't think they think it's going to be replacing the existing framework for most auto sales anytime soon. Tesla is a unique sort of creature, but they kind of shrugged it off, and it didn't seem like they gave it much thought at all. You're listening to Motley Full Money talking with Becky Quick from CNBC. Last year, I asked you who you thought would succeed Buffett as CEO, and you said your guest would be Greg Abel, who runs the Energy Division at Berkshire Hathaway. And as you mentioned, this is the 50th year that Buffett has been running Berkshire Hathaway. And this requires a little bit of setup.

Buffett is obviously famous for his annual letters this year for the 50th anniversary. One special thing that Berkshire did was Charlie Munger wrote his own letter to shareholders. And it was a letter that he did not clear with Warren Buffett ahead of time. So when we all read it, it was also the first time Warren Buffett read it. And one of the things Charlie Munger did in his letter was he went out of his way to praise Greg Abel in addressing the topic of who's going to succeed Buffett. First, do you think Buffett would have preferred that that was not in the letter? Because it really, I mean, it really does, it is the clearest signal I think we've seen to date that Greg Abel is going to be the guy. Yeah, I mean, it takes some of the speculation away, I think.

that was clearly Charlie saying who he'd like to see. Now, I will say that Charlie's pretty clear that he always speaks his own mind, so he's not necessarily speaking for the board when he does that stuff. But Charlie, as you said, went way out of his way to single out Greg Abel. But he also heaped a lot of praise on Ajit Jane, the head of the Berkshire Insurance Companies, or reinsurance companies and outside insurance companies that don't include Geico and the like. But he went out of his way to take those two individuals and really praise them. And I think it would be hard for any board to ignore that. You know, maybe it is a reflection what the board already thinks, too.

But I think it's a good way of making sure that anybody who's making decisions down the road about who would be in leadership positions that the company look at those two very, very seriously. And it clearly gives them, you know, a huge lead ahead of anybody. else with what's going on. So yeah, I thought Greg Abel last year, I think Greg Abel even more this year. And it's also very clear that Ajit Jane is going to play a big role in any leadership of the company in a post-Charlie and Warren world. Coming up more with Becky Quick, stay right here. You're listening to Motley Full Money.

Welcome back to Motley Full Money. I'm Chris Hill talking this week with C&BC host Becky Quick. whether it's Abel or Jane or someone else, what do you think the Berkshire Hathaway annual meeting looks like 10, 15 years from now when someone else is running it? Because obviously there are events associated with the meeting beyond the Q&A session, but that really does seem to be a big part of the focus for people who fly in. Do you think they're still going to be drawing these crowds when it's other people up on the stage running the company and answering the questions? Well, you know, I have a hard. time thinking of anybody else taking questions the way Charlie and Warren do, which is completely

unscripted. You don't know what you're going to get from any microphone that's around the floor because it's not just there are three journalists who are up on stage asking questions. There are analysts on stage who are asking questions, and then there's open mics throughout the entire arena, which holds 40,000 plus people, and anybody can walk up to a microphone and ask a question. I can't think of another. And by the way, they take questions for six and a half hours. I can't think of another public company where the CEO and chairman would put themselves in positions like that, the vice chairman. But I do think that whoever takes over is going to be in a position of having to make sure

that they open the kimono fairly regularly because that's something that Berkshire has done, that is the Berkshire culture, that both Warren and Charlie have built. And I think it would be hard to get drastically away from that and move. to some sort of top-down, very centralized management where they don't tell people quite as much as this has done now. Again, I don't know how you recreate what Warren and Charlie do without Warren and Charlie, but I do think that whoever takes over next will be in a position of a kind of feeling like they have to disclose quite a bit.

I don't know if it's going to take the same forum if they would take questions like that, but you would expect some sort of openness, which is, which is a kind of, interesting because if it's someone like Greg Gable, he doesn't do interviews very frequently. These are not necessarily people who are quite as comfortable in front of crowds or quite as comfortable in front of journalists and shareholders as Warren and Charlie are. But again, having said that, I can't think of another S&P 500 company where I would think they'd be quite as comfortable because this is what these guys do. It's how they built the company.

It's how they thrive. Thank you for planting the image in my mind of Warren Buffett and Charlie Munger wearing kimonos. That's one that's going to be tough to get rid of. Earning season is starting to heat up. Is there anything that has been surprising to you at this point? Any themes that you're starting to see develop? Yeah. What surprises me is how well-telegraphed all of these changes were. Obviously, there were macro events like the strength of the dollar and the collapse of oil prices. It was so well telegraphed that now you've got companies that are beating all of these,

granted, lowered expectations all the way across. We've already seen the massive delta, the big changes in both the dollar and oil. I can't imagine that we're going to see a repeat where oil prices are down 50 percent or the dollar's up another 25 percent or something crazy. So maybe it gets easier from here on out for companies, and maybe we're going to be getting better earnings than anybody was thinking a month ago for the remainder of the year. That's something that's kind of jumped out at me. Things might be better than we thought they were going to be for the rest of the year.

You mentioned the oil industry, obviously, with what's happened with the price of oil and the price of gasoline, a lot of people are looking at that industry in particular as the one to watch in 2015, not just for what happens to the price of those two commodities, but also possible mergers and acquisitions and that sort of thing. Is that the industry to watch, or is there another one out there that you think, no, this is also one to keep your eyes on, if only for the sake of activity? You know, one of the sleeper areas might be just consumer-related companies, you know, especially ones that have more focus in the United States. but you do have this consumer, a huge boom of lower gas prices. And it doesn't seem like it's shown up all that drastically in places like retail sales. So maybe consumers have been paying down some debt.

Maybe they've been saving a little money. But maybe as that, you know, extra $20 a week adds up over a period of months and months, if these levels continue, then you're going to maybe start seeing consumers start to splurge a little more. We saw it even today with six flags, had earnings that were out. And, you know, it's a smaller market cap company, but they reported stronger sales of these season tickets sort of things. You know, I figure what they call it the fast pass or something where they, you know, these are the people who are not just paying at the gate when they show up. They are buying monthly subscriptions or summer-long subscriptions. And it's been helping already, even though for the

first quarter, most of their parks are closed. They're seeing it in the very early numbers. And I think that's the type of thing where you might start seeing some of these companies that are consumer discretionary items where people feel a little bit better about things and they feel like gas prices aren't going to immediately skyrocket. We also had Auto Nation. Mike Jackson, the CEO, was on the show today, and he talked about how his sales were so strong. They've seen it in massive sales of trucks because of course when gas prices go down at the pump that immediately translates into consumers thinking, hey, this is great, let's buy a big truck again instead of the really small gas-efficient car that we've been favoring up to this point. So they've been doing well for

a while with it, but if you start to see other consumer discretionary places pay off, like in maybe some of the casual dining places, six flags, like I mentioned, we talked to an AILS today who thought that would be not just six flags, but also other theme parks that would benefit from things like this. Maybe you see people going back to the movies, but if they've got a little more money, maybe in their pockets, maybe they'll eventually start spending it again, and we will see it in even places like retail sales. One more thing, and then I'll let you go. The last time you and I talked, one of the things we talked about is how much you read for work, and I have to believe that's even more so during earning season, reading stuff before you go to bed at night, and then you're up

before the sun and just reading everything you can get your hands on. I know you're busy. You have a family, so I know you don't have a ton of time to yourself, but when you do, what do you do to relax? Is there stuff that you read for pleasure? Are you binge watching stuff on Netflix? All right. I'll admit a guilty pleasure. I'm still not completely caught up, but I love AMC's Walking Dead. I only have the last episode, so I'm behind on that, but I've been binge-watched that when I can. And I'm reading a couple of books. There's one that, actually, Dick Parsons gave me a book one summer, America in 1927. I gave him a book about these shark attacks from back in 1917,

so we're kind of trading off on books that have caught our attention. I like stuff that is historical in nature, even sometimes historical fiction, but this book is more historical in nature, and it's going to take a look back at what happened in 1927. I like learning about things that happened before, but I like it when it's done in a way that tricks me into thinking I'm not reading history. It's the best way to get a jump on the business news. the day. She is the host of CNBC's Squawk Box. Becky Quick, always good to talk to you. Have fun in Omaha.

Thank you. I love talking to you, too, and thank you so much for taking the time. Hey, we've got the perfect thing to help you get ready for the upcoming Berkshire Hathaway meeting. It's our free e-book entitled, Advice from the Oracle, 50 Warren Buffett quotes that will make you a better investor. It's free, and all you have to do to get it is just drop an email to Warren at Fool.com. That's all. Just send one email. to Warren at Fool.com, and we will send you the free e-book. And by the way, there's a whole lot more to this book than just 50 quotes from Buffett. We put a few of our folks to work analyzing Buffett's investments, his strategies over time, and what we can all learn from them to become better

investors. And like I said, it's free. Advice from the Oracle, 50 Warren Buffett quotes that will make you a better investor. Just drop an email to Warren at fool.com. Speaking of the upcoming Berkshire Hathaway meeting. Steve Broido, are you doing anything in early May? I'm just wondering if you and I should maybe road trip to Omaha for this. I am not, but I don't know. I think it sounds like a lot of fun. What if I told you that in the greater Omaha area, there's not one, not two, but three Olive Garden restaurants. Does that sweeten the deal for you? That definitely is inspiring, and I would love to attend all of them on separate evenings. Wait, we're going to hit Olive Garden every single night. Every single night? Yes, every night. Can we at least order different things from the menu?

Definitely not. Chicken palm all the way. All right, that is going to do it for this week's edition of Motley Full Money. The show is mixed by Rick Engdal. Our engineer is Steve Brodo. Our producers, Matt Career. I'm Chris Hill. Thanks for listening. We'll see you next week.