9AM HOUR: After the Sell-off: Marvell and Lumentum CEOs on Massive Deal, Anthropic's Amended IPO Filing, Kimberly-Clark CEO 11/2/26

0:00This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Schwab Market Update, an original podcast from Charles Schwab, provides an information-packed daily market preview on stock updates, U.S. and global economic news, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash marketupdatepodcast or find Schwab Market Update wherever you get your podcasts. At Jared Jewelers, we know it's about more than fine jewelry. It's the moment they open the box. That smile they can't hide.

0:38Knowing you chose exactly right. Because the right gift can bring a lifetime of meaning. A promise. A milestone. A memory in the making. Make every moment unforgettable. Find great gifts starting at$250. Jared, make the holiday last forever. Shop Jared Jewelers. It's Jim Cramer here. You're listening to the opening bell of CNBC's Squawk on the Street. Don't miss a minute of the action.

1:11Good Monday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, David Faber at Post 9 of the New York Stock Exchange. Kicking off the month of November, looking for some stability after Friday's 3 % Nasdaq decline, the worst day since June. Big week ahead, midterms, jobs numbers, Apple and Palantir tonight. Oil is cooperating, Brent below 107. Some more diplomatic hopes with Iran. We do flip to a new front month contract. Our roadmap begins with the first trading day of the month. Tech trying to bounce back following the worst monthly performance of the year. Plus, Marvell is expanding its data center capabilities.

1:44It's buying Lamentum. It's an all-stock deal. And we will speak with both CEOs in just a few moments about one of the larger deals we've seen in a long time. We're also continuing to watch Binance, that company allowing withdrawals again following a multi-billion dollar breach. Let's begin with the markets kicking off a new month. The AI trade looking to rebound from Friday's sell-off, especially Intel. As David mentions, Marvell and Lumentum agree to one of the biggest tech deals of all time. How big a story is this going to be, Jim? I think it's huge, in part because we haven't had a tech deal this size, but also because I think both gentlemen are going to say, look, this business is on fire.

2:24Whatever you're thinking, whatever you're thinking about the data center and the pause or the finance, it's all nonsense that they can't do enough business. Lamentum in particular. I think business was incredibly strong there, David. And I think the way you're going to hear is the data center story is still the greatest story ever told, despite what we heard on Friday. Yeah. But what is it on Friday that you would say that we heard that that was it was non that was anti data center? Because Intel was about mostly about PCs. Intel was just take Intel off the table. OK, I think that please I think that what we started realizing last week was when Microsoft got rewarded because they spent within their means.

3:11And we no longer like the companies that spent beyond the reason. Well, then we're not going to like those companies for a while because it's not like they're going to positive free cash flow anytime soon. Oracle doing a$10 billion equity issuance. By the way, they had said during their big day last week they would do$20 billion in additional capital raising at Oracle. $10 billion in equity,$10 billion in debt. And then they would be done, remember. Again, cited as a positive in the narrative from last week. their projection of$30 billion plus in free cash flow for fiscal year 29. That said, I don't think many thought they were going to come to the market quite that quickly, Jim, with a$10 billion equity offer.

3:50I sort of knocked down four on the tape on the crawl, and I said, oh, my God, they're doing it now? Well, maybe now makes sense. Maybe you want to get ahead of Anthropic. OpenAI, by the way, apparently didn't get ahead of Anthropic enough because they seem to be struggling a bit based on reporting, Carl, in terms of their ability to raise money. what they were targeting. Yes. Okay. I thought, if you want to know the Achilles heel, because I always thought, what's Achilles heel? I mean, how many times this weekend did I hear from people, be careful about the Anthropic not coming this year? I said, well, how do you, like, who did you talk to?

4:27Oh, everybody knows that. I said, well, everybody, who is everybody? I'm willing to speak to everybody. Yeah, you said the Bears have an interest in not having it clear this year, and then you said it could be the straw. Well, you can't have. They are the unlock for, they owe a lot of people a lot of money, and it would really be great if people started getting paid. That would be something, David, I think that would surprise people if Anthropic didn't come public this year. I think that would be a significant surprise and not a positive one. In a world in which we have now been discussing the fact that access to capital is a key differentiator for your company, it would only exacerbate the fears of companies that are not able to access capital.

5:08Right. And look, all the research has gotten positive. I'm saying that was positive. It's gotten negative. It's like, wait a second. Maybe they don't have enough money. Maybe the price target should come down. Maybe we should invest in Walmart. Well, again, on Anthropic, guys, we are still just waiting for that October, that October number. Now, by the way, we know the third quarter number, as reported for Anthropic, was$16.8 billion in revenue, Roughly the equivalent of what they had for the first two quarters combined of this year. But we didn't get September broken out from that 16.8 billion.

5:43And we are now also, remember, it's blank on the S1 as far as we have so far. Carl, that October number, which conceivably they may fill in very soon, given October's over. How soon? Is going to be really soon. Like 9.35? Is going to be important for the market, I think, to say the least. To your point, Jim, I mean, we'll talk to Ben Reitz at some point, Amelius. Who cuts numbers all over the place today. Yeah, that was brutal because he had been high, man. Look, I'm not saying he got people excited. I'm saying he read the excitement of the market. And we had some numbers last week, like Keogh said, this company, Japanese company, that is being interpreted as saying that Flash has gotten weak.

6:22Well, that's not Flash. I thought Flash was severely limited and you couldn't get Flash. Right. So we have a lot of things where people suddenly said, whoa, Microsoft. Now, there's a company that knows how to run business. Well, because they did still manage to generate$18 billion in free cash flow. Although, reading an FT story today, they're questioning the free cash flow number as well, because how much was it actually stock-based comp and all that stuff. Microsoft typically has done a very good job, actually, of keeping GAAP and non-GAAP very good. Yes. Or reporting GAAP. So I don't know if I buy that.

6:54But to your point, yes, they were the lone survivor in terms of free cash flow. Meta negative, Amazon negative, Alphabet negative. And, of course, we saw what happened to Alphabet last week. By the way, what a horrible month for the multi-stretch firms, for so many of the hedge funds out there. I don't have all the numbers yet. We're going to start getting them. They are not going to be pretty. October was brutal. Everyone's writing off Gemini, but there's a brand new Gemini edition came out. People are playing with it. They like it. In the meantime, I'm watching Musk and Grok's too expensive.

7:26What? He said that Grok's too expensive. It won't, as the joke online today is, it won't matter because they're not going to need money in the future. I like that. In the meantime, David. Yes, what? What can I do for you? Echo Star. That was the greatest company on earth. I didn't know they had Rocket Mojo. I mean, what is that? 300. Did you see that? They cover the whole country. Yes, you're referring to the Washington Post story that talks about some sort of an agreement between Starlink and Boost Mobile. Yeah, Boost Mobile comes out at 530. One of the key questions there is what the deal will actually look like.

8:03and then whether Charlie Ergen will ever actually sell anything. He's one of those guys that's also motivated by not wanting to pay taxes to the government, a la John Malone. I think it's in the water there in Denver. But we'll have to wait and see if and what the actual agreement looks like between the two. It doesn't mean they're buying Boost Mobile the actual energy. All right. The Washington Post story, I would think that they'd probably not want to do that. But it did. Once again, the T-Mobiles of the world, which had just started crawling back and just smacked down. Smack down. And those are tough stocks to be in.

8:36Yeah, both of them down about a percent or so pre-market. We do have Deutsche today, Binky, bringing tech back to an overweight, saying the spring is recoiled. Look, Mike Wilson, you've got to buy it. Don't worry about midterms. Mike Wilson being very contrary. Mike Wilson is now, I think he feels that. He's so the strategist of Morgan Stanley, right? Well, I don't know. Just making sure. Well, yeah. Just making sure. just reminding people who he is. It's good to triple-check these things. Reminding people. Well, I know that it's not Adam Jonas. There was a time when his market call was what we would have led the show with it a number of years ago.

9:12Not anymore. I think Mike Wilson's very good. I apologize for being an acolyte. Although he did warn Jim, be prepared for 7 ,100 before a rally ensues. Yes, and that's why when we first heard that he's bullish, I said, wait a second, he's bearish before he's bullish. And if there is a lot of tumult over the Democrats being vetoed by the president, if they win, that one is going to make it so that it's going to be a little bit harder to figure out on, say, Wednesday, whether the data center haters have all taken their seats. Right. We're dealing with a lot right now. I think it's fair to say. That's what I think is right.

9:53Of cross-currents, whether it is capital constraints being one of the key differentiating mechanisms in the market right now and or just the overall concern about it. Not to mention the midterms and data centers and what happens in Texas and on from there. And Ohio, if Sherrod Brown wins, I think he'd take a sledgehammer to a data center. And Anthropic and getting an MDS-1 from them at some point. I mean, everything. I mean, it was not. Thank heavens, Eagles are so horrible. I can just focus on business. Meanwhile, could I come back to Intel for a moment? I don't want to ruin your morning. Are you going to bring up Intel again?

10:28Yes, that was a historic decline in the stock. Just take it. Hit me over the head as hard as you can. Crush people. I won't hit you hard. Why not? That was Marvell, by the way. That was the Intel file. Where's the Intel file? I didn't bring one because I want to try to have a semblance. I want a semblance of level-headedness. What happens here? What happens here? It goes lower. Because you know why? Why? Because on Wednesday, the Redoubtable Lisa Sue reports. And I think we'll hear that it wasn't PCs alone. It was market share loss to AMD. Well, we've already talked about how in the last six months, AMD versus Intel, it's not even a contest.

11:05True. I think it's just going to be when you say that the PC business has gotten weak, it makes it sound like that it's gotten weak for everybody. I'm sure that it's not great. You know, Best Buy was only down 6 % PC. I'm sure it's not great for anybody, but I don't think that we're going to hear from Lisa Su that they lost share to Intel. No, but these moves, I mean, put that chart back up. It's one of the worst moves ever. ServiceNow also was last week. ServiceNow, I got to tell you. I mean, you had at least two of those top moves for very large companies down in one week. Is IBM on that list?

11:37Yeah, there's the IBM. Did you find out? IBM was right when they pre-announced this summer. But I was checking all over for service now because I had Bill McDermott on. I know this is going to sound like I didn't check hard enough, but I couldn't find a single thing. Anybody noticing two of those other names on there from 2000? What, now? Oh, you're going back to 2000? That famous Lucent Circle. Oh, my God. You're going to October of 2000. AOL. See, that's the kind of stuff that scares people. Well, that's why they took action and sold things. Now, look, do I want to buy Intel here? I said, wait for the quarter to buy more.

12:11Now I feel I've got to wait until what Lisa Sue says, because Lisa Sue is a killer, remember? I will remember. She's a killer. She's a killer. She's also a very nice person. She's both. Killer, nice person. You can be both is great. You know, that's a great thing. Rocky. That is a lovely tie. I got it. My daughter went to Tulane, and this is a tie from New Orleans. I just love the colors. I really appreciate that. It's just beautiful. You know, I thought it was high risk to wear. I've never worn it. She graduated 10 years ago. It's from my closet. I said, I'll take a shot. I'll take a risk. Why not?

12:39Take a shot. I figured David's going to take a shot on me, Marvell, or my tie. But it turns out so far I'm one for one. Thank you. You're welcome. When we come back this morning, Kimberly announcing it has completed that acquisition of Kenview. We'll talk to the CEO later on this hour. First, though, as Jim and David mentioned, the CEOs of Marvell and Lomentum on this massive$115 billion stock deal. Stay with us. Legacy Credit Scores only look at a brief snapshot in time, and that limited view often leaves millions of qualified credit seekers out of the picture. Vantage Score is changing that by modernizing credit scoring.

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14:49Let's get to the deal of the morning. some would say the deal of the year. That's Marvell buying momentum. And both CEOs join us now. First on CBC, Matt Murphy and Michael Harlson. Matt, I'm going to start with you because you are the acquiring company. Please tell us why, what is the rationale behind this deal? Hey, good morning, Jim, and great to see everybody. Yeah, this is a really interesting time in the AI data center semiconductor world. This combination takes Marvell, who's a leader in semiconductor technology for AI connectivity. Michael runs Lumentum, which is the leading company in optical technology for AI data center connectivity.

15:28We're putting the two together to create the category leader in AI connectivity. Jim, this is a trend that's been happening for some time where optics is moving inside the data center in a more meaningful way. And now in the scale-up world where you want to connect hundreds and thousands of GPUs together, in compute systems. You need scale-up technology that needs semiconductors and optical working seamlessly together. And we are going to create a new category of company here. Okay. And so, Michael, let me go to you. We had you on recently, and I was thinking your company is on fire. Matt's is too.

16:09How are the numbers, and why would you want to sell with the kind of trajectory that you have created. Hey, Jim, good to see you. You know, first, yeah, the numbers we just reported are a quarter, and it was probably some of the best numbers that we've put up. Incredible growth, $350 million of incremental growth on the quarter, driving our gross margins now to 53%, which is the best we've ever seen. So our numbers are super strong. Why now? Well, Well, we think that the time is right. Matt talked about a previous acquisition that he did with Enfy, where he saw around the corners and figured out that there was a trend around optical.

16:54And we think that the similar trend, seeing around the corner, the similar trend is here, where we have a convergence between the semiconductor world and the optical world. And if we aren't the first mover, we're going to be left behind. So we're moving quickly, acting decisively, and really trying to catalyze this new category that Matt talked about. Matt, it's David. You know, in speaking to a couple of your shareholders this morning, they mentioned to me this question they have, and obviously I'd love to hear you answer it, which is, do you view Lumentum's key products as sort of differentiated technology, or is there a concern, at least they seem to have, that it's really just a commodity that's in short supply supply and it may not be in short supply by the time you actually get this deal done, which could be over 18 months from now.

17:46Right. Hey, David, thank you. Yeah, that that we've heard that narrative. And I think it's a great opportunity to correct, correct the narrative. So first of all, this indium phosphide and laser technology that Lamentum produces is highly differentiated. And while there's a there's a discussion of a supply shortage today. There's a supply shortage across the entire global semiconductor and optical industry. Lasers is one of those. The reality is these light sources and lasers coupled directly with our proprietary semiconductor technology. So you're taking Michael and the Lamentum Seam proprietary technology.

18:25We're actually going to create solutions around those that are highly sticky. And the reason that they're sold out is because the demand is exploding. And we don't see that changing anytime soon. But through cycle, the differentiated and proprietary nature of these products is going to be lasting whether we're in a supply shortage or not. And I have a lot of experience in these types of technologies at my prior company. I worked for 22 years at Maxim, where we had unique bi-CMOS technologies, bipolar technologies, silicon germanium. We fabbed them ourselves. This is very unique. This isn't like just laying down regular CMOS.

19:02These are very esoteric, black magic process technologies with special people to develop them. So highly proprietary. And by the way, we also see we were able to cross check their demand as well versus ours because we're all in the same systems. And gave us a lot of comfort in the growth rate of Lamentum because we're both in the same sets of designs. Now we can go faster together and enable our customers in a much more meaningful way on time to market. OK, well, you say not changing anytime soon. And, you know, soon could be. I mean, again, I'm curious as to why you believe that. And then beyond that, can you comment at all on the regulatory front?

19:45Not here in the U.S. as much, but concern around China and China approval. It is notable that you don't see closing this deal until the first half of 2028. Sure. Yeah. Yeah. On the first one, again, you know, the transition with what we call the copper wall going from scale out optics to scale up optics. By the way, five years ago, as Mike mentioned, we acquired a company called Infi, which was doing about 700 million in annualized revenue. It was at the dawn of the scale out optical transition. That business looked expensive when we bought it, quite frankly. and now that business has grown something like a factor of 10 in revenues over a five-year period.

20:27That's on the scale outside. So something that looked expensive back then turned out to be one of the most compelling acquisitions we've ever done. When scale up hits, the end demand, David, is what's going to drive this because all these systems need to come together for optical connectivity on scale up and inside the rack. That's going to continue agnostic of any kind of supply demand perturbations. On the regulatory front, we're very well versed with how to go through that process. The first big acquisition that we did was announced in 2017. It was a company called Cavium. We went through regulatory at that time and closed it in about seven or eight months.

21:04And that was during the beginning of a lot of the rhetoric and kind of concerns about U.S., China and how to get things approved. Got that done very efficiently. We went and got infi done in about five months, which was very efficient as well. So we have a good sense of what it's going to take to get the deal closed. The businesses are highly complementary, and there is no overlap between the two. So from a substantive basis, it's a very clean deal. We just need to work efficiently as we always do and constructively with the global regulators and get it closed. We did allow, as we normally do, and you see this in semi-deals, David.

21:47You want to allow for more ample time to get it all done. But we're going to be off to the races very soon here. But China can be a black box, Matt. China can be a bit of a black box. You're confident, though? Yes, very confident. Okay. Now, I do want to ask, Michael, we see the stock down, and I think people at home might say, wait a second, are we going to be losers long term? I understand Matt's record for all the deals he's done, but are you confident to just create value for your shareholders from this level? Yeah, Jim, look, we're not playing for the share price today, for tomorrow, for next week.

22:26We're playing for the long term. And as Matt correctly said, the opportunity, I think, in front of both companies is enormous. We think there's incredible revenue synergies, obviously COG synergies that we think we can extract. So I'm not overly concerned about how the stock price is reacting today or has in the last couple of days since this rumor started emerging. I feel really, really good about where Matt can take the combination over the next three, four or five years. Now, you were on our show last when you got a big stake from NVIDIA. NVIDIA,$2 billion structures convertible preferred. Matt, you've taken money from NVIDIA, too.

23:05How does Jensen, what has he said about this deal? And do you think this is the beginning of the end of Jensen doing so-called circular deals? Because to me, what he's done is create an ecosystem that would not exist and may not even lead to such an extraordinary deal. What's Jensen's role in this? Yeah, well, what I'd say is within a short period of time, both Michael and I struck very different deals, by the way, with NVIDIA in terms of what we can go do together. They're both highly strategic in nature. Michael's was more on the supply side. Ours was more on the strategic cooperation on a bunch of new technologies, but both similar levels of investment.

23:51And the way that we're looking at this and positioned to the NVIDIA team, which has been extremely well received, is this is a double down on supporting NVIDIA, who is the ecosystem leader in this area. We're very committed to that partnership. And I think having two of the key suppliers come together that support that ecosystem is going to be a big benefit for them and then the NVIDIA ecosystem around it. So I think it's going to be a great deal for them. Michael, finally, I mean, Jim referenced this as well. Obviously, the stock is not, you know, even near where it was a week ago when the rumors first came out.

24:30You talk a lot in the releases, I think, about extreme co-design. A lot of extreme. I'm just curious, can you give our viewers a sense right now of a concrete product that a hyperscaler would get that they don't have today that would be reflective of what you're talking about? Yeah, we talked about quite a bit on the call that the puck is being moved toward what we call co-packaged or near-packaged optics. and in co-packaged and near-packaged optics, you have a lot of Matt's electronic technology, semiconductor technology, and you have a lot of our optical technology. And what we expect to do is work together with the Marvell team to bring a complete solution where we're not selling just our bits, our optical bits, and the Marvell team is not just selling their semiconductor bits.

25:24We're going to actually go to market with a complete solution. we think that enables faster time to market, more differentiation by understanding each other's side of the fence. And we think that that's going to really propel our customers and propel the customer opportunity forward. So a lot going on on that front. I think that's really the value of the deal is this extreme co-design and bringing together both sides of the fence in that fashion. Well, I want to thank both of you. Matt Murphy from Marvell, congratulations. and congratulations to Michael Hurlson from Lumentum. Appreciate you coming on CMBC First.

26:01Thanks, Jim. Thanks, Jim. Super to see you. Thank you, guys. We'll get the opening bell in just a few moments. Don't go anywhere. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Schwab Market Update, an original podcast from Charles Schwab, provides an information-packed daily market preview on stock updates, U.S. and global economic news, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash market update podcast, or find Schwab Market Update wherever you get your podcasts.

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27:45Welcome back. We are just here at the desk looking through this new anthropic filing, which gives us a little more granularity. on the quarter ended September 30th. Yes, but it's not clear, Carl, at this point that we have that important blank filled in. That blank being the October revenue number. Even though the month has ended, I think there was an expectation and we will get a series of amended S1s from now till when they go public. There was an expectation we might have gotten. Let's get the opening bell here at the big board on Wall Street at the aluminum giant Alcoa. celebrating its 10th anniversary of listing at the Nasdaq and Times Square PRA Group, an acquirer and collector of non-performing loans celebrating 30 years.

28:32And at CBO in Chicago at ZeroHash, a crypto and stablecoin infrastructure provider. Jim, did you see anything in the filing that's struck a few notes? I just saw that loss that seemed to be, I know. Yeah, I mean, the difficulty is, if you don't know going in what you're looking for, You've got to compare the S1 versus the amended to see what's been changed. So we might want to take a moment. I would assume we'll get into maybe Leslie Picker as well. But again, right now, from what I'm hearing from my producer is the blank is still blank. Blank is still blank. The blank is still blank on October.

29:06And that is a number that the market will respond to without a doubt when we get it. But it doesn't appear that we have as yet. So it's funny that all we end up really trading on after all this that we've been talking about is that oil's down six. Maybe on rumors, Supreme Leader, OK's talks, oil down six, then gives us a fantastic tone to the bond market, which resonates again. But we'll find out midday whether it resonates with the Johnson and Johnson and Merckx or whether it resonates with I'm not going to say Intel. That would be a bridge too far. OK. Amazon and Alphabet. You're right. Rubio is on the tape saying that the president prefers diplomacy over additional new military strikes.

29:51If that can take that off the table, we're almost at the elections tomorrow. And then I think that it could be in a Mike Wilson clearing moment. It's just that we've got to find stuff that we like. I mean, we've had earnings, and the earnings are OK, not great, and vary. I mean, I use Caterpillar as the example. Caterpillar's got everybody all bowled up because they've got these fleet of, you can use Caterpillar engines and turn them in with that gas and then boom, and a lot of pollution. West Virginia. A lot of pollution. Okay. Once the Dow's best stock of the year, I think now maybe number 10 as we're working with that.

30:34Leslie Picker's been looking through the amended filing as well. Morning, Leslie. Hey, Carl. Good morning. Yeah, as you mentioned, they kind of lay this out basically in the nine months ended September 30th. So in order to get that Q3 number and see what the most recent numbers are, you have to do a little bit of math here. So kind of eyeballing it. So forgive me because we're working with some breaking news here. But it appears that the revenue came in for Q3 around$17 billion. They say that's up 1 ,127 % year over year, which kind of matches the growth rates we've seen on a year over year basis.

31:12In terms of adjusted operating income, pretty sizable margin there. That is, you know, something that we've been looking at. Sorry, I lost my page there. There we go. About$2.5 billion, decent margin. It looks like those margins are increasing from the first half of the year, an adjusted net income of about$2.9 billion. Another thing that I was kind of looking for with regard to this amended S-1 is the amount of commitments that they have with regard to future spend. That's important because the cash load of about$131 billion is very sizable, but they do have commitments to spend on CapEx in the future.

31:56And so the updated amount for that is about$900 billion for compute and infrastructure. Of course, that is over the course of anywhere from one to 20 years. Some of that is cancelable. Some of that is non-cancelable. But again, a sizable amount that they are committing to spend on CapEx, which kind of helps put into context what we're dealing with with regard to the cash for this company, guys. The third quarter number we already kind of knew, right? Sixteen point eight billion. So we we right. We don't know October number, correct? No, and I wouldn't expect that we would know October numbers before the S1 unless it's something that is discussed in kind of one on one sales meetings between the bankers and the prospective investors who are trying to get a sense of what the future might look like or, you know, what they've seen.

32:50But it's unlikely that we get essentially audited numbers for October before this company goes public, unless it does postpone or kind of go on a more stretched timeline for it, for its S-1 that would give them time. Oh, so there's not an expectation we ever get that number filled in is what you're saying. I thought that was I thought we might have expected that given October is over. They won't fill it in. Yeah, no. October is over. I haven't heard that we would expect an October number in the filing per se, but it could be something that's discussed with investors. OK. OK. Right. So you're going through like we are trying to figure out what what changed.

33:31So that nine hundred billion dollar number or eight or ninety five billion in compute commitments is is it higher than the number we got when we saw the original S1? It is. Okay. Yeah, the original S1 had that number around$820 billion. Some of that is leases. Some of that is capital expenditures that they're expecting. Some of that is cancelable. Some of it's non-cancelable. Some of it would be spread out over the course of a year. Some of it up to 20 years. So we're still kind of going through. Hopefully we get some sort of timetable that explains what the commitments look like on a year-by-year basis.

34:07But that's important just in terms of their future expenditures, because right now they're, you know, operating income looks pretty good relative to revenue. But the question is kind of what that looks like over time as those expenses start to really get recognized and start to hit both the balance sheet and the income statement. Yeah. I can't stress enough, guys. You know, again, that October number, maybe we don't get it. I don't know that how important that will be. And that's part of the narrative of overall demand and fueling so much that's going on. So obviously not getting it this morning.

34:45It's still not clear whether we will or won't before the IPO. Leslie obviously saying we may never see it until they go public. Look, I would have felt far more comfortable. We had a lot of these stocks going up. I kind of needed that number. But I also feel like Michael Harlston, when he speaks to at Lamentum, come on, it's not today. No. Matt Murphy from Marvell painted a very positive picture for the future, and certainly the reason why he feels so confident doing this deal. Right now, the market reaction to one of the largest technology deals of all time, certainly in the top 10, is negative.

35:20Marvell shares are down. Momentum shares are down. Remember, it's 4.5 times what is now$184,$185 stock from Marvell. So that gets you the price. There's no change in that. Let's remember, Matt's five for five. He's done five deals. You're up big in every single one. Well, light is the worst component right now on the NDX. Maybe to David's point about regulatory concerns. When you see first half of 28, you're like, okay, it could be a long time. The world can change a lot in 18 months. You got it. I thought that was a great point. I think the viewers know that well. And I think that may be just time, value, money and everything else.

36:03You're going to have a significant spread here to what that's worth. But yeah, trading 747, obviously. In the press release, they talk about it being an almost 24 % premium based on where the stocks were right before the first reports, which I believe were on October 29th. But that number is not particularly helpful to current shareholders. Yeah, it was a long time ago. Yeah, the stock was almost$1 ,000 before Halloween. Yeah. Well, they had a great analyst meeting at Marvell that really boosted Marvell's son. As for this amended filing, let's get to Kate Rooney with more. Kate, these roundtables with us and Leslie and you are getting to be a habit.

36:41I know. It's the way we love to start a Monday, start a week with these roundtables. I want to point you guys to page 138 in this amended filing here. Adjusted operating income did increase for those three months we're talking about for the quarter, going from$2.5 billion to compare that to$2.2 billion. But the important thing here is margins. So they talk about operating efficiency that drove margin expansion. This chart got a ton of interest and buzz, I would say. Last week when the S1 came out, looking at their operating efficiency, it looked like that adjusted operating margin fell. It was 19 % down to 15 % in this current quarter.

37:23And then it also looks like here, there is a compute and infrastructure expense in the quarter that did rise. It was about five and a half billion. It's now closer to 10 billion, at least in the current quarter that we're talking about. I guess this was the third quarter, I should say. And so higher compute, higher infrastructure expenses. And we talk about what rates are doing to the cost of the buildout, some of the supply chain here, Anthropik paying more for that, or also as part of this is just trying to get access to more compute. So margins still double digits and they look profitable on an adjusted basis, but it got a little tighter in the quarter.

37:56So I think that's something that investors will be watching. We'll keep digging through this, guys, live. I don't think anything else. Yeah. Okay, thanks for that. Jim, it does feel like the market at the moment is responding more to oil with the airlines and the cruise lines leading. Look, I look at Delta going up and look at the double whammy of Marriott. But Tony Capiano, again, just delivering an amazing, amazing quarter. And we have to remember that the backdrop is still controlled in many ways by Kevin Marsh, the Fed chief. He raised things a quarter point. He's getting some oil relief. Start feeling that.

38:30Remember when we were thinking about the 30-year going to 6 and how cataclysmic that could be? Well, you have to say when it's going the other way, hey, it's darn good. And it's darn good for every stock. So let's not lose sight of that. No. That's an all-time high on Marriott this morning. Marriott is just such a great company. The consistency of that company is extraordinary. And by the way, across all divisions. Guys, I did want to note that shares of Amazon are having a nice rebound after really what was not a significant decline. It started off from the pre-market. Remember, the net interest income, if you looked at that 28 bill, and I know that Andy Jassy wanted very much to have that number be the central.

39:06And so Amazon shares up almost 4%. Yeah, that's a big deal. And then after a very significant fall, SpaceX shares are rebounding a bit as well. Fall below the IPO price as well last week. And there's a lot of, wait, how many private vehicles are coming right now? That's the next one, right? You have a lot of wealthy people who had these vehicles that owned SpaceX. You mean the special purpose vehicles that are now going to be allowed to sell. And those tend to be people who are not must devotees. They're people who are profit devotees. Very big difference. Yeah, without a doubt. But we are seeing a bit of a bid there.

39:44Even your beloved NVIDIA is showing signs of life today. Yes, I mean, thank you for that. I'm glad you made it sound like they're the Eagles, and I like them. But it's the Sixers, remember that. It's the Sixers. The Sixers. That's the new kid? We've got a lot more games to go. We've got a lot more games to go. I like the Eagles. BC has never played this well. Okay. Look who's here. Who? Michael Schiff from Kimberly. Oh, my God. Can you believe it? Why is that? I can't believe it. Did they close an important acquisition? I think they closed a deal that is so important that we've got a new colossus in the consumer package goods.

40:19Michael Hsu, welcome aboard. This is a long time coming because you have to do a lot of approvals. But you are now, I think, going to be the favorite way to play this industry. Great. Well, thanks for having me on, Jim. And gentlemen, it's great to be with you all. It's a great day for Kimberly Clark. I would say our second most important day after our founders day. But we're excited to be here. Well, okay, so tell us the rationale and give us the synergies and the weaknesses that you saw at ChemView that would be made much better by what you do. Yeah, I think maybe the headline for us is extraordinary science, extraordinary engineering coming together to provide extraordinary care for people around the world.

41:02And that's kind of our mission and something that motivates our organization. And, you know, we're bringing great products to market. I think Tylenol just got FDA approval last month for Tylenol with naproxen, which has, I would say, the painkilling effectiveness of much stronger painkillers without any of the side effects. Yeah, I want to talk about what I thought Kenview was lacking, that I don't feel you were lacking because I think you made a great study of things. I was not particularly impressed by their club strategy nor their e-com strategy, in part because that was previous J &Js, not their strength.

41:38Those are your strengths. So a synergy and the ability to be able to get into those two channels and crush it. Yeah, I think the big thing is, and we've been really focused the last 10 years at KC, to kind of fundamentally build what I kind of term world-class CPG capability. And that would be in the go-to-market with customers. that would be digital, that would be advertising, and that would be the innovation side. And I think we've systematically built that. I won't say we're perfect. I still would say we're in the early innings of developing that capability. But I think we're further along than Kenview.

42:10And I think combining, we can bring some of those capabilities together and help us accelerate growth. And the big thing, Jim, is it turns out these categories that Kenview operates in are, from my perspective, very, very underdeveloped. And so there's a lot of growth left in those hills. Now, it's a member of my travel trust. Obviously, we like the position very much, but I can't help have to bring up last quarter. Mike, it was not your best. There are a lot of things that went wrong. Everything put to bed? I would say we're progressing in the right direction. You know, I'd say the last quarter reflected on the Casey side, I would say, some discreet events that kind of impacted us.

42:46The biggest one being a social media crisis that was false in China. And so that, you know, I think our China business declined. We're the market leader in diapers, and I think we declined 70 percent based on the fears. That went on for the full quarter. I think at the end of the quarter, the PRC government and the ministry, you know, declared our products safe. And so we're going to recover that volume over time, but it's going to take a bit. So I think we've been faced with some of these executional challenges. They come up. I think we have a very resilient organization, and we're moving in the right direction.

43:20And I would say also 10-fuse training in the right direction. Michael, concern, to call it that, around Tylenol, whether founded or unfounded, founded on facts or not, may have helped you buy this company at a cheaper price than otherwise, but it's still around as a concern. And I would love your response. I think it was an appeals court in Texas just revived another 500 Tylenol autism suits. A Texas judge let the attorney general case go forward. How concerning is that? And how do you view it from a liability perspective for this company? Yeah, well, great question, David. And certainly, you know, from our board's perspective, it's an issue that we had to understand very well.

43:59We brought in, you know, probably all the best advisors that you might want to hire in the world to kind of give us advice here, including the former chief medical officer of the FDA, you know, obviously great, I think, litigation counsel. And I think our perspective is the science supporting the efficacy and the safety of Tylenol has been proven out, I think, consistently, even with multiple new studies coming out over the past year. And so we feel really good that we stand on kind of the right side of science. You know, David, I think the world knows that, you know, most global health organizations, governmental, would say Tylenol is the only, or acetaminophen is the only really painkiller that's safe for pregnant women to use.

44:45And so we feel a big responsibility there. We feel great about our position, and we're really solid behind the brain. Yeah. Does it still impact? I mean, you've got the president out there telling pregnant women not to take Tylenol. I'm just curious as to even if you were to prevail in all potential litigation, does it still impact the brand? Yeah, I would say this time last year in the quarter, it did affect, I would say, a modest amount. But just to give you a sense, and I was looking at the consumption last week, and I would say for multiple periods, time has left double digits this quarter so far, you know, and so and that was published in the well as part of 10 views 3Q.

45:23And so I think the brand's robust. Again, there's been new innovation with this time on with the products, and we feel great about what the product is, what it delivers for consumers. Do you expect commodity pressure to be a material headwind next year? Well, Carl, I think with the war and all the knock-on effects of that, we have seen some inflation this year. Obviously, it's been fairly significant. Maybe I'll give you a perspective, though, Carl. is, you know, I would say it's significant, but we know how to manage through this. And, you know, for perspective, back in post-COVID, the inflation that we took on just in Kimberly-Clark was about $3.4 billion over two years.

46:05You know, we're talking at this point between the two companies combined, a few hundred million, right? And so I think while it's significant, we know how to navigate. And is there room for more price to be taken? Well, we'll see. I mean, again, our Our approach to pricing has been, you know, over time, we want our pricing to offset commodity inflation over time. It doesn't mean, but I will tell you, we don't always do that. I think the balancing part, I think you're going to be very familiar with, Carl, is, you know, we're very sensitive to the plight of the average consumer. And I think we know middle income and lower income consumers are cash-strapped, trying to make difficult choices.

46:46They're very discerning. And so for us, making sure that we're disciplined on price. More importantly, I think we're really focused on reducing our cost so that we can afford to provide great products at an affordable price. In fact, I think Jim knows this. I think we rolled out this new and improved diapers technology in the U.S. We brought it over from our China business last year. But we put our best technology into our value-tier diaper. And why do we do that? Because we know consumers really value performance, and they're very discerning about it. And that's where we want to earn the trust of the average consumer.

47:25Michael, I know that we want growth. And I said that to you from the day you came on, when you first took over. I also, for club members, really love the dividend. And you've been a dividend aristocrat. It's one of the great things that why Kimberly can be owned. Can you say, look, that dividend saved you? Oh, yeah. Jim, I would say from the overall transaction perspective, you know, we believe we're going to create generational value creation on shareholder friendly terms. You know, I think by year two, we expect earnings to be accretive and to reduce our leverage back to about 2.0. And so our goal, Jim, is we're going to maintain our dividend aristocracy.

48:11Is that the right word? Is that how I say it? Plus, we want to be single A. And we're going to maintain our single. Mike, thank you so much for coming on the show. Congratulations. It's been a long time, but I think it's such a great deal. You know that. Thank you. Thank you, Jim. How are you feeling about the setup going into, let's say, tomorrow and the election? Well, look, I am a huge believer that rates are still number one. I know that we think that data center and how it infiltrates into 30 percent of the S &P are really incredible. But when I see rates going down, I say to myself that there are some things in place, maybe inflation.

48:45We listened to Mike. I didn't think he said it would take a lot of price. But if we can see any break in inflation, any break, then I think America would be much more inclined to own stocks than they are right now. Yeah. We got the 10-year below 4.9 for the first time since September 9th. Let's remember that when it breached that level and went up, we sat here and said, well, woe is me. So we've got to be able to stick with the narrative which says no longer am I as concerned that we have a runaway bond. No, we talked a lot about potential crowding out as well. Yes, we continue to be part of the narrative.

49:19Also, given the huge issuance coming from these enormous companies to help fund the build out for AI. But I don't that hasn't abated. But I guess the concern around it has in terms of at least even though the numbers are going to be larger than I think what the U.S. Treasury actually raises. Well, it would be nice if everyone stopped their ATM. They're at the markets and just jammed them on and moved on. And I would tell every one of these people, having done this stuff when I was in the business, that you got it all wrong and your brokers are not serving you and your investment bankers are not serving you.

49:48And I'm going to save you a lot of money. Sell it now. Bang it down. If they listen to me and I've got more experience than every single person that they're paying millions for, they'd save a lot of money and they'd say, you know what? I watch Squawk on the street and they know more than you do. Well, Oracle, to your point, did that. They're just issuing$10 billion straight up. But stock is down about 6 % this morning. It's OK. It bounces back. And the brokers are telling you and the investor bankers tell you, listen, do it over time and you don't worry. They're quite wrong. But you know what?

50:17They're paid a lot more than I am. So what do you make of that? Are they really paid a lot more than you? No. Yes, they are. Come on. Really? You see their houses. They're the guys that cause all the prices to go up. Houses? You've got houses? They have houses. They have beach houses in Manhattan. They got 40 million beach houses here and there. I know the amount of wealth is absurd. They're on June Road. I can't help. Let their houses get taken over by it. What kind of insurance is going to cover them on June Road? It's true. Insurance is tough. Yeah. As we mentioned a moment ago, bonds getting a little bit of a bid here.

50:52Ten year below 4.9. Dow up 550. Maybe two-thirds of that are just Goldman and Sherwin-Williams. We'll be back in a minute. Let's get to Jim and start trading. Deutsche Bank with a timely upgrade of CrowdStrike. If you read Binance, you say to yourself, OK, I'll take any cybersecurity I can get. Binance, I thought, was quite frightening. And I think you need every bit of protection. And George Kurtz, along with the cash flow of Palo Alto, those are the two you buy. Period of story. Yeah. A new partnership with CoreWeave as well this morning. We'll keep our eye on the cyber names for sure. I think these stocks should be up, obviously.

51:30I can't turn the market, but whatever. It's a great time to be in Croster. Got a lot of wood to chop this week, Jim. Yes. We'll see it tonight. Apple. Yeah, Apple and Palantir after the bell. Two of my favorites. For now, holding on to 76-24. Don't go anywhere. You've been listening to the opening bell on CNBC's Squawk on the Street. All opinions expressed by Squawk on the Street participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet, or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion.

52:13Such opinions are based upon information Squawk on the Street participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Squawk on the Street disclaimer, please visit cnbc.com forward slash Squawk on the Street disclaimer. Hey, Fidelity. What's it cost to invest with the Fidelity app? Start with as little as$1 with no account fees or trade commissions on U.S. stocks and ETFs. Hmm. That's music to my ears. I can only talk.