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tv   Bloomberg West  Bloomberg  April 23, 2014 1:00pm-2:01pm EDT

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you are watching "bloomberg west," i am emily chang. is selling the iphone growth hurting apple? we will find out if apple is in danger. and the real winner or loser in the apple-samsung patent case, maybe google. check of your top headlines, charter is near a deal to acquire one .5 million subscribers from comcast. it will get a 40% stake in a new company with another two point 5 million customers according to people familiar with the situation.
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bestst is going to do describe her is to acquire time warner cable. customers to acquire time warner cable. disney already agreed to be part of the service last month and this has held talks with other networks. dish is trying to become the first company to sell a full package of streaming channels over the internet. e storage has had a foundation of $3 billion, triple what it was worth eight months ago. this new valuation comes as the company raised $225 million and is the fifth u.s. company to raise around above $200 million this year. the ceo says revenue grew 700% last year. he will be joining us later this hour. first, to the lead story, apple opened its books as it reports second-quarter earnings and for
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the first time in a decade, revenue is projected to be flat according to data compiled by bloomberg. apple is facing a slowdown in the markets of mobile devices. another competitor announced plans to enter 10 more countries. it outsells apple in china. cory johnson is in new york today and also with us is paul kedrosky from san diego. you, what areith you expecting today? >> we are looking for in-line results for the march quarter. as far as guidance, we are looking for sequential decline and lackluster to know growth for apple. >> this would be the first to klein in revenue in 11 years. theore and more it has been case we are entering uncharted lacklustern terms of
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performance. this has been something that has been the case a couple of years now. one of the things we would like to see his better innovation out of apple, better movement into new markets. amazon now did it in terms of over the top ip tv. if we would see more innovation, some new drivers, that would be something that could change this relatively neutral stance on the stock. was 30, apple's revenue times higher than it was 11 years ago. >> and on the heels of two devices, the iphone was one of the greatest successes in the history of technology to be followed by the ipad. it is hard to imagine a company doing that again. especially when we hear the stories about lack of innovation. we did not talk about this, he had this amazing comment about what he is hearing specifically from people who are leaving apple. listen to what he had to say.
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>> i have heard from people at apple that engineers i have tried to recruit and are recruiting that is difficult to get a new project excepted. in the job zero, if jobs believed, you got the resources. you have to put together a spreadsheet that shows how much be business is going to worth. >> you can connect that statement with the revenue the first or fourth quarter was 70% two years ago and now we are looking at zero percent. quarter percent of last really shows who declined because of those new drivers he -- speaking about. >> our alarm bells going off for you? >> yes, they are. this has been a disappointing period. we talked a year ago about what was going to happen in 2013 in
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terms of new product launches and nothing happened. this has been a black hole in terms of new launches. i do not think they are working on anything. they are repeatedly stepping up and decided to hold products back and say we are not going to do tv or a watch product. as a result, you have had this giant hole in terms of new product launches. you can't operate on those cycles because your competitors are introducing products faster. leave aside it keeps you out of new markets where you can have growth. i think it is a very nervous time for apple and for tim cook in particular. >> tim cook did promise new categories this year. has not happened yet. what are you expect in terms of new products? largere going to be a phone, a watch, something on tv? >> we talked about this. >> we are still talking about it.
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>> that is one of the problems. we are going to see a larger phone and in i-watch. is it enough? moreed to see something transformative and innovative. something along the lines of what amazon is doing or even netflix. original content. all of these things that could be done with apple's tag and balance sheet. -- titanic balance sheet. >> it is not enough. with the watch product, it is a sustainingmple of innovation. it is over obvious. it is an extension of what you have been doing. into a marketplace that most of which does not care. the example over the top programming, television, where there are paying customers who hate everything. these are the places apple should be going. not into these minor tweaks. >> cory, talk about the
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marketplace for us and put it into context what apple is up against. we were talking about the other company, they want to go global. they are outselling apple and china. they are not the only one. >> one aspect is apple is a victim of its own success by comparative numbers. the first quarter of the ipad is in $2 billion in revenue. apple was only doing about 15 billion in revenue. it had an impact from the bat. now the company is doing $60 billion in revenue last quarter. so to billion dollar might be lovely, but it is a drop in a bigger bucket. so then add to that the decision about what to do in the competitive environment when they are looking at companies with lower margins and smarter phones. is willing to take a loader is willing toomi take a lower margin.
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they lose their ability to define what is going to happen next. be all over apple earnings after the bell today on the late edition of "bloomberg west." cory johnson, paul george ossie -- paul kedrosky, alex gauna, thanks so much. amazon strikes a deal with hbo to bring more exclusive content to prime subscribers. find out which shows are included and what it means for netflix when "bloomberg west" returns. ♪
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>> i am emily chang. this is "bloomberg west." the patent battle is underway in san jose. know just what google's stake really is. it condemned if i samsung against some claims. we are joined by ryan who covers google. cover anyeed to
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losses samsung incurred if they were sued by a certain party. >> we do not know all of the details, but it looks like there is a financial relationship there. it is fascinating because this trial has been a separation, apple has made the point where this is just about samsung. we are not trying to go after google. suddenly we see this connection between samsung and google on a financial basis. >> is coming out of video testimony. what exactly did he say? has google already paid samsung? >> that is the big question. we know there is some kind relationship, but we do not know the details. reports, there are there is other indemnification's for other providers in the android ecosystem. hereng is a key partner for google. >> and samsung's lawyers have called this an attack on google.
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what does google have an stake? an attack on android, i should say. >> google has had this huge proxy battle all over the world. it has been dealing with. and google wants to see android protected and stay safe. it dominates the world. it has beat back the iphone. obviously apple is not going to go down without a fight and so google wants to win every battle it can and this is an important one. >> what is the next phase of this? >> that is the big question. some say no matter what happens it is a pr battle. apple wants to show we are the good guys. i think no matter what happens, it is going to be even more interesting because we've got a billion dollars or so from samsung in the first trial. if they get close to what they are getting, that would be really interesting. we do not know yet. it is very early. this could be big. >> we will continue to follow it
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closely. thanks so much. amazon prime subscribers consumed a binge watch episodes of "the sopranos." received jail to stream select tv show starting may 21. jon erlichman is in new york today. what is the significance of hbo, which is very protective of its shows, cutting a deal like this with amazon? >> i think it is significant. they have been protective of the content in the streaming world. instead of partnering with others, they said let's do it ourselves with hbo co., which has been successful for them. i think they're going to position themselves as a syndication deal. hbo has given the rights of older programs to other players. in the case of this, we are talking about content that is three years old. &e.e sopranos" on a
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this is a streaming version of this with programs like "true blood." if people look at the list of shows and say my neighborhood -- my favorite show was not there, a lot of that has to do with what is available, what rights are available. "curb your into zs him" -- your enthusiam" are not a part of this announcement. -- one headline said it is good for everyone for netflix. are they sticking it to netflix and does this mean they consider netflix as competition? >> i think so. when we talk about the rivals of netflix you think about hbo. it is a reminder of what amazon's does this is. and the fact amazon is the supermarket of the world than the content side of it is a piece of the overall puzzle. for hbo that means they have
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been a partner. hbo has been able to sell digital versions of a lot of his programming through amazon the same way it sells those episodes or those seasons through itunes and then on top of that they have announced hbogo will be available to this new tv box amazon has, fire tv. they have a relatively rich partnership and they have these connections to amazon that hbo would not be able to have to netflix. >> jon erlichman, thanks so much. ading up, is facebook's business growing as mark zuckerberg had planned? we will get a status update when "bloomberg west" returns. ♪
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welcome back to "bloomberg
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west." i am emily chang. a shoppings been on spree, buying whatsapp for $19 billion and oculus for $2 billion. this week we also learned it is planning a mobile ad network. what is mark zuckerberg's vision for the company and how does this fit together? how much will we learn today? usy johnson is back with from new york and also from san diego paul kedrosky and sarah frier. paul, mark zuckerberg has some explaining to do. what do you want to hear from him and what do you think we will hear from him today? >> yeah, he does. he is in a box, if you think about it. they do not want to increase the ad load in the newsfeed, they don't want to materially change
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the instagram experience with expect to loading it with ads. they have walled off whatsapp. of facebook running ads on twitter, it is not exactly where they are going to run the ads. this is the box i would like to hear how he is going to get himself out of it. that is his explanation today. >> what about the bigger vision, buying whatsapp, oculus, messenger and paper and doesn't messenger compete with whatsapp? >> as usual, paul is wrong. what he is talking about in terms of numbers, you might say they're not putting it ads into these new things and they don't know how they're going to monetize these acquisitions. the revenues they are getting has been increasing dramatically. $2.83 now. up to what you see is this amazing turn facebook has accomplished
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over the last year. which is really creating this mobile business and creating a lot of value. is reallye accelerating. >> there is a reason for that. the reason is the scarcity problem. because they've got scarce go up so, the rates you get more revenue per active user, which you can only go so far down that path before advertisers balk. a trulyve not seen effective method of monetizing advertising when it is measured online. we know when it goes from billboards to magazines and televisions, places where it is not measured, when it goes online and is measured, the cbm's go way down. maybe facebook is figuring out ways around that where they are seeing them increase closer to google territory and maybe beyond. this layout when
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we saw google earnings last week, the impact mobile is having. sarah, what are the most important things to pay attention to today? >> we have seen facebook or with mobile advertising effort from nothing at the time of its ipo into a majority of its business here the main thing investors are worried about is whether they can keep up this amazing growth. and so this will be a quarter that will determine, is that going to continue on facebook's man application and facebook excel for our these efforts to mannd outside facebook's application with whatsapp in the standalone apps, are those going to be the drivers of all of the growth in the future? >> you guys are focusing on the business today. what about the bigger picture that zuckerberg is working on, the drone companies, the idea of connecting people using satellites and hiring nasa? explain thatto
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stuff yet, or should we give him time? does have to explain it. it frightens the crap out of me. google has gotten away with it for years. these rocket science projects and all sorts of things. as long as the core business delivers, and outperforms consistently, people will give you a pass for wandering around and having a great vision. the issue when it comes home to roost when the core business is not delivering and then you have creatingn how this is the core business. a pass, butgets eventually it will come back. i expect no explanation from him. >> a lot of these deals are being done with stock. >> i wanted to ask that question, are you worried about facebook's cash pile? they didn't pay for these
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companies mostly in stock. any concern? >> acquiring cash is probably a very prudent thing to do with all of the discussion of valuations and tech bubbles. mark zuckerberg is using his stock to do a lot of these acquisitions. stock andlso a ton of he recognizes the value of his stock is such he can use that to do these acquisitions and he might need the cash later when rainy days will return. >> a standalone app strategy between paper and messenger, this has been billed as the future of facebook. how is it going? >> facebook looks at things in terms of 2-3 years than the five year range. is 10 years old now, this is something that is going to materialize the next 2-3 years. it is still in the early stages. paper i have not heard much about since it launched. messenger, they are forcing people to use it as a separate app.
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whatsapp has not closed yet. these are all very early and i think it will be interesting to hear what dr. bergen sheryl sandberg have to see him a call mark zuckerberg and sheryl sandberg have to say on the call today. than advertising is more $60 billion. >> a lot of open questions. we will have the update for you in the late edition of "bloomberg west." cory johnson, sarah frier, and paul kedrosky, thank you. hackers from spying through the connected devices in your home through your refrigerator and coffee maker? a security expert weighs in in the next edition of security 101. ♪ tv is on the market, i am julie hyman. take a look at stocks right now, we have a decline today, a pullback after a six-day winning
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streak for the major markets. that is the longest we have seen since september. being extended today, the nasdaq taking the worst of it ahead of the tech earnings you guys have been talking about. ♪
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you are watching bloomberg west where we focus on technology and the future of business. i'm emily chang. your technology means new security threats. social media sites push us to share more personal information than ever before. coffee makers and washing machines are constantly looking get about our daily habits. how can you be security savvy? brian white joins me here in the studio with his tips for protecting yourself when using social media and smart devices in your home. this is a personal curiosity of mine because i also want to try out the latest in technology. ,hen it comes to social media
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are we less or more secure? >> we have to be careful in what we do. you're putting so much information about yourself available to the public. people look for that information and they're looking to hire you and some people post where they are, when they go on vacation and you are basically putting a dossier on yourself out to the public. >> once a photo is posted, it's always online. >> it is always online. it is very difficult to ever take away. >> what about in private social networks? >> it indicates it is going to be better, but it's going to be very difficult for you to ever the truly confident that something you post online is removed. >> never take your location. why? ofcamels can take advantage you being a way to go and steal goods from your house. -- criminals. their home in san francisco is empty and they have an open invitation to steal.
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>> every app asks for your location these days. >> they wanted you locate you to give you direct advertising. you have to be careful with where you automatically check in. my personal habit is, there are very few apps that need to know where i am. maps needs to know because and taking advantage of directions. yelp, it is not need to know where i am. >> beware of shortened links. easier to put into a #. the problem is, they are difficult to determine which ones are real. back into a browser and then see what comes up that way. link, that may a introduce malware into your system. >> but it into a browser before you click on. always logout. that seems standard, but people forget. >> their systems that want you to stay logged in.
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when you get into a social media site, log out and then log back in. they tracksomething more closely or do we think they care more than they actually do? >> actually think that they develop a lot of their information based on targeting individuals. they can determine your password, can determine other key characteristics that may give them indication about how to take advantage of you. >> what about the internet of things? .rist bands to glasses everything has a chip in it these days. does that put us at greater risk? >> it offers great promise. we have to be careful about what is connected. there are a lot of cases of saying, ok, my perpetrators connected. -- my at connected refrigerator is connected. they can jump into your network. >> how much can someone learn
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from your connected refrigerator? >> very little. mess withan perhaps the system and change the cooling and temperatures. they have the ability to escalate privilege and move onto your home system. >> what about nest? >> nest has great promise. what i'm concerned about is how much data that is starting to collect on you and your home. it enables people to get more of a dossier of everything about you. >> is it any more data than is being collect a buyer from? >> not necessarily. but it tells you the temperature you like to sleep and when you are away because people set up a system on nest to increase temperature when you're out of the home. >> how do you protect yourself? to have these conversations and leave scared. the best thing is to be prudent. be cautious in what you do online. most information and be professional and responsible.
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realize that everything about yourself that you post on a social media site will be there for quite some time. when comes to connected devices, determine what needs to be connected and do you really need to take event of that ip connection? >> if you have bitcoin, how do you protect it? block chain has great computing promise, but it's too early to determine if it's going to be more secure. many would suggest that it is more secure than the existing currency system. at the same time, we have seen people take advantage of bitcoin for legal -- for illegal activity. go to a trusted provider of a bitcoin bank -- >> not mt. gox? >> that's for sure. it is difficult to determine who is a trusted bitcoin bank right
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now. this is really the early stages. it is the wild west. as the next internet. it is too early to tell. i will try to not walk away too scared. music videos have come a long way from the days of trl and mdb. we will talk to the ceo of vevo. ♪
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i'm emily chang. this is "bloomberg west turco not our special series, wiring the world. where we look at how connected a connected world is changing independent business. dominant streaming service for music videos with 5.5 billion views worldwide. their viewership has increased by 50% from last year. how is the company keeping up that momentum echo jon erlichman
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is in new york with more. mtv and one of channel. in the world of vevo, it's kind of like channels everywhere. joins us now. how are people watching music videos today? >> there watching them everywhere. on apple tv on youtube, xbox and roaku. vevo is all about putting them anywhere to give people music where they want. >> let's say you are on the go and you are on your phone. how much traffic are you getting from people watching on mobile? >> it's amazing how much it has changed. today, about 50% of our total streams in the u.s., well over half a billion streams are happening on smartphones. 40% of our streams around the world are happening on
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smartphones. that did not even exist two years ago. the audience is shifting very rapidly to video on mobile. >> you also want to get their attention in the living room. that's why you guys have all of these deals on different platforms. ku, fire tv or amazon. how do people watch videos in the living room versus on their phone? >> people are watching more videos on tv than any other platform. roku, 400 minutes per month. compare that to 40 minutes on an iphone or ipad. what it means is that people want to lean back and be live tv ando watch just have a sea of music and videos. >> let's get to one particular
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partnership. you want to be everywhere, so you have partners to do that. you recently expanded a partnership with yahoo! >> they have been a big partner of ours for a long time. we looked at the deal and said, how can we make this bigger? .e need to be on new products we need to be on more platforms and we reengineered the deal to attract more skilled. we want to get to a point where we are doing billions of streams yahoo! now we are embedded into their new screen product and this will drive more volume for videos. >> you talked about possibly other investors coming into the company. there was a report recently about dreamworks animation may interested third >> we've been talking for
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a wild to interested investors who want to help vevo become a bigger company. what a great more programming and launch more countries. we want to build better products and generally be a lot bigger than we are. we think the time is right to bring in some new investors to help us achieve that. we are with a number of companies and starting the ball rolling. we are not going to talk about any and -- any specific investors. >> you are not looking for somebody with a lot of cash that will sit and watch you guys. people who can bring something to the table? >> it's all about what they can do to help vevo become successful. what can they bring together in terms of distribution and marketing and content production? you guys are making videos available everywhere. the while, you still have this interest in traditional music-based television. ddy making a huge push in
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that area. are people actually sitting in their living rooms and turning on a channel to watch music videos for a long time? mtv love having the music videos because they do not have to pay for them. >> the world is clearly converging. more people are watching -- tv viewing is not going down. people are watching more tv than ever before. we would love to be paid per subscribers from the cable operator. but we're kind of bigger out how to get to the tv in any way possible. more people are using connected tv boxes, game consoles, smart tvs and apps on tvs to get video. channel through your cable operator, we don't think that is where people under 34 are watching videos these days. >> a lot of stuff going on. thank you.
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>> thank you, john. vevo is keeping music videos relevant. you have also been looking into how studios are keeping the movie going experience relevant as well. a lot are not going to the movies these days when things are on demand. >> it's true. we wanted to look into this because you're hearing a lot about international audiences that are enjoying this 4d experience. they wanted to go down this road , bringing cents and smokes and wind into the theaters and the in the u.s. welcome to the movie theater of the future. if you thought three was cool, try adding moving chairs, bubbles, water jets, strobe lights and smoke.
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let's do it. my seat is shaking. the company behind this technology is korean theater chain cj. their l.a. live venue is retrofitting one of its theaters. the process can cost $700,000. >> to be competitive and relevant in the movie business, you have to constantly be evolving. >> all of movie theater magic can basically be controlled through a tablet. >> you have this total environment will control. you're not just shooting the movie out. you have these effects that are timed on the movie. >> effects that engage four of the five senses. smells like freshly brewed coffee are stored in canisters
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and piped in at the right time. rubber.l of burning it's raining. the 40 experience costs around six dollars more than 3-d movie tickets. an up charge exhibitors like aig hopeful payoff. will pay off. >> you get a sense of loading a bit. floating a bit. >> that was crazy. emily, there you go. >> maybe i'm more convinced. i love going to movies. it's all about time. i want to conserve it. jon erlichman, thanks so much for bringing us that latest installment.
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another multibillion-dollar valuation for a silicon valley startup -- should investors be worried about another tech bubble? ♪
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>> welcome back. i'm emily chang. that's the latest skyhigh valuation to hit silicon valley. this time, for flash storage company pure storage. the company has raised an additional $225 million in mr. bolden value since its last round in august. joining me now is the ceo. you guys are trying to transform the way businesses store their data by using flash memory. why is this so transformative? >> we put flash into the phones because it was much faster and much more power efficient and
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space efficient. which mattered a great deal inside of those mobile devices. the same thing matters inside of data centers. $15 billion is going to be spent for workloads that need great performances but are put on mechanical disks. been around for 30 years. it was really getting flash into the mobile phones and into the tablets -- it's been deployed in scale inside consumer data centers like google and facebook. the technology has been proven out there. the thing that pure crack was we figured out how to get the cost of flash down to where it was price competitive dubai with mechanical disks. >> how do you justify your valuation? has grown atss that pace. we have more than tripled over the same amount of time. we are averaging 50% sequential quarterly growth and we do 700% year-over-year. >> do you worry about a too high valuation?
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doesn't that put more pressure on you for an even bigger exit? >> we don't worry so much because this is a very ambitious company. that a $60 billion market we are chasing and we aim to lead the industry transformation from a chemical to solid-state storage. if we achieve those goals, this is a very small mark. >> more people are concerned that we are in a bubble. einhorn said that there is a clear consensus that we are witnessing our second tech bubble. do you agree? >> i may be partially great grade the good news is, the disruptions that are coming today, there is something happening at once. cloud, mobile come of flash together, every incumbent ecology vendor is getting disrupted in fundamental
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ways. there are existential threats to these businesses. there is a lot of opportunity for a nurse. fundraising is a lot more conservative for this round than it was for the round we already raised. >> you are already seeing a pull back? great appetite for fundamentally healthy businesses that are growing explosively. the valuations have been pulled back a bit in terms of the multiples we're compared to give you. >> give me some color there. when you say you saw more conservative funding appetite, what do you mean by that? the level of enthusiasm was very similar, but there was a lot more diligence done in terms of tying our business to reality and how this business is going to grow and perform in the months and years ahead. >> the plan going forward, ipo versus acquisition. fendaid you are trying to off potential buyers. what is next for you guys? >> we do want to build the next great storage company. there is so much staggering
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growth potential in front of this business. we think we are worth more as an independent company because nobody is telling us which mechanical disk customer we can talk to and which one we can't. if we were part of one of the big incumbents, they would want to constrain which markets and which customers we could go after. as an independent, the whole world is our potential marketplace. we have much more opportunity. one or does careers? -- ipo in one or two years? >> we have more work to do. in the very near future. in aey thing is to be up i position to do it ipo when the market is favorable. we never want to do it with a gun to our head because we need money. >> thanks so much for joining us today. the bwest now for byte will refocus on one number that tells a whole lot.
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corey and john are palling around new york together. bite is a twitter , the number of posts with the #nypd. their favorite moments. they shared things that look like stop and frisk and suggested police brutality. bad eerieren't all but i did see the #epic fail. thanks so much. be sure to catch "bloomberg
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west" tomorrow. the former president of the rhode island school of design. ♪
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>> from bloomberg world accord is in york, i'm mark crumpton. this is "bottom line." today, new home sales in the united states take a plunge. as the ukraine crisis continues, u.s. troops arrived in poland for joint military exercises. the technology that makes 3-d look boring. our viewers here in the u.s. and those of you joining us around the world, welcome. we have full coverage of the stocks and stories making headlines today. peter cook tracks president


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