tv Bloomberg West Bloomberg February 3, 2015 6:00pm-7:01pm EST
♪ >> live from pure three in san francisco, welcome to "bloomberg west," we recovered technology and the future of business. i am cory johnson. oil prices on the rebound, brent crude continuing to bounce off the bottom, and brent crude rallied from their low last month, and the head of capital management on the impact of oil. >> good news about the oil side is it is good for the economy. there are a lot of consumers who have more money in their pocket today than they had six months ago. and the economy even before the
gas prices went down was doing pretty well. >> they gains across the board. and smucker buying a pet brand company, a deal valued at $500 billion. the cash and stock deal boosting debt. kibbles and bits, meow mix, and other classic pet treats. 2.4 billion dollars in sales for fiscal year 2016. and apple has raised six point $5 billion in its latest bond sales, taking advantage of lower interest rates, and the 30-year deal has got a 3.45 coupon. $158 billion of overseas cash without having to repatriate it and pay taxes. apple has now raised the equivalent of $39 billion in the bond market in less than two years. and sales of "grand theft 5" up,
and that is helping take two interactive. doing quite well. millions in digital sales tied to that one game "grand theft a uto," alone. all right to the lead. the fight is on for the future of transportation, and who go up against one of the companies it has invested in, huber. -- uber. they are also looking to set up a lab in the carnegie mellon home of pittsburgh, pennsylvania, and google is developing its own right share service. so which company has the leg up? earlier i asked what google might have learned from its investment. >> it is really an exciting
time. i got a chance to speak to uber when they visited m.i.t.. they were making the rounds and getting some perspective on self driving cars, so i think it is clear that part of the excitement here is part of the data that uber has. they can map all of new york city every five minutes dynamically, so there is this interplay about getting and using this data to better understand the transportation system and get more efficiency out of it. cory: yes, the data is one of the things that brings these companies together. do you think that uber is inspired by the google self driving cars? >> i have to think that they are. the google project, none of us can predict the future, and i see a lot of the challenges, like making people interact driving in snow, things like
that, and there are a lot of challenges, and they are hoping to roll something out. so it is something that could disrupt the uber model, if you suddenly remove the drivers and someone else controlled that these, so my personal opinion is that it is a good hedge strategy . don't be surprised in this area and invest in it and see if they can't get a piece of the technology pie in this area. cory: should we think of this more of google adsense in junior and pool of talent? can huber --uber come close to this by throwing money at a bunch of college kids in pennsylvania? >> they are not just college kids. i think of this like the wright brothers.
it may take a long time. at least five key members of the google team actually came from carnegie mellon. dave ferguson, nathaniel. they are really rock stars. like in the soccer world. there are not many of those folks around but they were all trained in pittsburgh, so by going to cmu, you are getting the mentors of those folks and you're also getting the next generation of students. a few weeks ago there was a seminar at the robotics institute with 100 bright young grad students really excited, so they are sort of going to the place where google got its talent and maybe that is the best place to find it. cory: ok so i was at the google campus yesterday and saw the google car, which looks like a volkswagen bug, and it has no steering wheel, and there is a
heart attack moment whenever you get in there. i think it is kind of automatic these two companies, number one, that have never made a vehicle ever, but also this is not how car technology has advanced. why hasn't it been fischer automotive or some guy making a windshield wiper in western michigan or an alternating pattern or delphi doing whatever delphi does? a company doing some innovation, not one company trying to do the whole thing under one roof? >> at google, it has been said they are looking for automotive partners, and it is interesting that coming east for some of this technology i think it is really such a hard problem that you need a variety of talents and industries. >> that was john leonard an
♪ cory: this is "bloomberg west." i am cory johnson. a look at the headlines. for the first time ever, raising fears that the european economy could stagnate for years following the pattern of japan's economy, which, of course, suffered through decades of falling consumer prices. and one board has not yet formally following the pattern of japan's economy, which, of course, suffered through decades consulted with finding
a replacement of the ceo, but they are seeking candidates to run that company, the shares rallying, retro broth -- petrobras. meanwhile, fitch cut them to triple be negative and warned of further cuts to junk. and you can lawmakers have just voted to legalize some technology where the goal is to use a third person's dna to minimize the risk of some with finding agenetic is eases to a condition that two parents may be predisposed to. it may become the first country in the world to allow three parent babies. and sales and profits keep growing at the world's biggest entertainment company. at disney, first-quarter revenue up, 13 point $4 billion, profit up 19%, $2.2 billion in the quarter. during the holiday quarter, sales were particularly strong for consumer products as they snapped up "frozen"-related
gifts for christmas. and earlier, "street smart" anchor trish regan spoke to bob iger and about the measles outbreak that started at disney. guest: we had a great quarter from eases our consumer products and the studio and just as stellar quarter for parks and resorts, and i think it speaks to focusing on our brand and our franchises that we now have 11 different character franchises that would drive over $1 billion in retail sales this year, and that clearly is a contribute in factor in a significant factor to the success of the company in the quarter we just reported. trish: yes elsa had something to do with that, with the incredible success of "frozen" at the box office and what comes out of it.
is this the kind of dual revenue stream that you are looking at? for example, into the "star war s" franchise? mr. iger: they are leveraging this in motion pictures and television and into all different kinds of consumer products, and i think that the job that our consumer products division does sets us apart from all of the other movie companies, all of the other media companies. we are very purposeful in many respects in terms of what we create and how we leverage the success of the creation of cross not just consumer products but other businesses, like parks and resorts, so we're clearly seeing these results, the results of very strong consumer products a unit that is great not only indirect retail with our disney stores and his name.com but with licensing and with big-box retailers across the world. you will see a lot more of this
as we see it today with our actors. mickey mouse, for example, the disney princesses, and you also see it with marvel and then there is a movie coming out at the end of 2015. trish: yes, and there's certainly a lot of excitement out now about the new "star wars " movie. what do you think? can it take down "avatar"? with the become the biggest movie of all time? mr. iger: we do not know pb cannot wait to show it to the world, and i think it is best to stop right there. trish: how are you going to incorporate "star wars" in the parks? mr. iger: we are talking about plans and we are talking about
an increase in the star wars presence including at disneyland and anaheim and disney world and orlando and in all likelihood you will see it in shanghai and possibly tokyo and hong kong as well, so we have got big plans. our imagineers art doing hard work and we will have specifics. it is safe to say you will see a lot more "star wars" at disney and at disney parks. trish: that opening has been delayed into 2016. any idea about when we can go to disney shanghai? mr. iger: well, when we signed the deal and when we broke ground for disneylanddelayed into 2016. any idea about when we can go to disney shanghai? shanghai we were targeting the end of 2015 as an opening date, but we
made a decision after we broke ground, in part because of how excited we worked about the market and bringing disneyland to that market that we should expand. in other words, build something larger, and we added approximately 800 million dollars in advancement, which obviously adds to the size of the build. that said we are saying today that principle construction or major construction is going to be finished at the end of calendar 2015, and we are shanghai, we were targetingtargeting an opening in the spring of 2016. we are not being specific about when in the spring, but i am sure that is a decision that is going to be made as we get a little bit further into the construction cycle. trish: bob, let me turn to something that has been making a lot of news, and that is the vaccination issue. what kind of impact do you expect the measles outbreak in december will have at your theme park over the summer, if any? mr. iger: >> -- well, clearly,
there has been a lot of attention to measles, and certainly some people who visited disneyland in anaheim game down with the measles. clearly there haswe take that seriously, but we have not discerned any real impact to date. in fact, if you look at our business in this quarter, not the quarter we just announced, but this quarter, we are running ahead in terms of attendance and in terms of advanced bookings so we conclude there is really no impact from this. trish: bob, we have to that you go but we haven't two little girls at home who are hoping that there will be a -- have two little girls at home are hoping there will be a "frozen" sequel. mr. iger: along with a live-action version of "cinderella" there will be an action sure that will bring back all of the great characters and voices and introduce another great song, so get ready, but they bobby increased in lopez.
just the beginning of the google transition into the space preparing to offer an uber like service. google chair and -- chairman eric schmidt hosted anthony foxx at the company's mountain view campus, and i caught up with foxx to hear about his view on the future of transportation. secretary foxx: we are looking at what is way in front of us, because what is way in front of us will be more impactful in terms of defining our future if we are not careful, so we would like to be in the position of defining our future rather than letting it defined by things that will make it worse for us. cory:foxx to hear about his view on the future of transportation. secretary foxx: so what is the biggest sort of most difficult read with the current planning that policy is not addressing? secretary foxx: i would say
there are two things. one is that their funding approach is not budgeting towards outcomes. if we want to have this done what it will mean investing at a much higher level than we are doing today. across the board, not just the federal government, but state and local governments. secondly, on policy, it is not just a question of having more money. it is also how that money is being spent, so looking at the mix of transportation needs that we have as a country, between highways and transit and rail, both basinger and freight, we have got some significant challenges at levels about what will optimize us in the next 30 years read we will have to breakdowns in silos to do it. cory: fundamental changes. you have got millennials not consuming or owning as many cars, doing things like uber, using public transit, moving to urban areas, and then the growth in urban areas and the organization of america, like
what we have not seen in 150 years. echo terry foxx -- secretary foxx: there is a suburban ring around the core and there is a ring around that, and that is what we are referring to. cory: people thinking of preindustrial areas like boston, but you are talking about places like charlotte and albuquerque. secretary foxx: yes, a wider swath, and it is moving west into the areas like you are talking about, so it is not just the big cities. it is also the medium-sized cities across the country. cory: so are self driving cars a remedy to this, or is this dealing with an issue that is already out there? secretary foxx: there are a lot of pros with the self driving cars on the safety side with
accidents and for consumers, and the challenge we're going to have is developing regulatory systems and processes and policies that are more adaptive and flexible that can actually take a brand-new technology and be able to assess it correctly and help the manufacturing get into the marketplace. cory: we will have the ceos on quite a bit, and they talk about winning to approach the regulatory hurdles in their businesses at the local level. they can overcome the local level, but they cannot do it at the federal level. what are the biggest federal issues that companies like uber and left have to conquer? secretary foxx: they are in a different category because many of the regulations that govern taxi up in these, which is where most of the issues are, are at the state and local level, but i think the federal government has an interest in, for example,
ensuring that the service that is being done by, for example, somebody who is driving a uber car, we do have an interest in making sure that that person has been background checked and things like that so that folks can be assured that they are going to get where they are going. cory: so are you thinking that if the local authorities do not take care of this, the federal government might have to? secretary foxx: i believe we have a role to play in urging states towards that. i am not saying we should necessarily pass laws that do that at the federal level, but i do think that is an area that state and local areas are going to have to address. cory: that was u.s. transportation secretary anthony foxx. coming up, what is ahead for radioshack. the company is talking bankruptcy. a couplecory: of the names in tech.
♪ cory: you are watching "bloomberg west" will refocus on the future of business and innovation. radioshack has more than 4000 stores in the u.s.. that is four times as many stores as asked by. on the verge of a bankruptcy filing radioshack in deep, deep water. could amazon be coming in to throw them a life raft? glamorous long beach california, joining us from there is michael.
this radioshack story, it really is a technology company focused on bringing technology to the masses and has been for a long time, story and they have just fallen on their face. michael: the emphasis is on the masses, and radioshack has morphed into more of a convenience store, so they are a rate place for a hobbyist to go, so if you want to build a ham radio, of course you go there but they really have you devolved into the place where grandma abbas hearing aid batteries for grandpa and the problem i think that they had with that is that they got kind of competed away by the rite aid s of the world and others of the world that offered a lot lower pricing, so it has seen its decline forever and the very
company that put them out of business, amazon, stepping in and throwing them a lifeline. >> selling batteries, selling cables, selling headphone jacks, and then they do ok with that business, and then there was getting into feature phones and cheap wireless phones. that market in the u.s. just schrock in favor of the smart phone. michael: the other thing is that the same time they were growing tom at best buy decided to go all out for that share, and best buy has done very, very well. i think that we were up against your much competition, a declining market, and the margin in handsets has been hit away, as well, and the plants are far less lucrative. this is more of a prepay customers in a postpaid customer, and those plans are not as lucrative.
cory: meanwhile over 4000 stores, and you have sprint and reportedly amazon and possibly brookstone and even some subset of radioshack looking at salvaging some of those? is any of that real estate worthwhile or worthwhile for that kind of business? michael: i would guess that about half of the stores are productive, and i would imagine that half of the stores are generating positive cash flow and i think that those assets make a lot more sense for brookstone and certainly not 4000 maybe 500. i am baffled why sprint would be looking for more real estate although there is the new aggressive pricing promotion. i recently moved my entire family to spread because they really did cut my bill in half so maybe, you never want to put
anything past amazon. i think amazon is trying to push this out as much as possible so they can get same-day delivery and if they can make eggs happen the same day by telling you, the prime customer, wait for two days, and it will be on your doorstep, or go pick it up at your local radioshack, that makes sense as well but the problem is everybody once the better performing radioshack stores. those are the ones located in the highest traffic areas, and there probably are not more than a couple thousand of those. i do not think that combination will be the end result. i think it will be one bitter are buying 500 or so stores. -- one bidder buying 500 or so stores. cory: the debt holders basically would not let them do that. because we are seeing some of the plans, by keeping the name
of live, they keep some of the cheaper leases and keep some of the value there. michael: i am certainly not an expert in credit, but my reading is that the creditors are in better shape in bankruptcy because the landlords are behind the creditors, and those leases cannot be broken unless they file for bankers to, so i think when radioshack sought permission the creditors said no, thinking if we force them into bagram, we have a better chance of getting repaid. it is really hard to know because standard general stepped in and refinanced some that just a couple of months ago. they said that radioshack is in breach of covenants, so it really is a messy picture, and i am not really sure. it looks like creditors are not going to get 100 cents on the dollar. cory: it is interesting because those leases could be a real game changer, and the last i looked at brookstone, and for
full disclosure, i owned shares a long time ago. it was a small holding. they had about 500 stores. but for them to add 500 more storesstores, or 1000 or so stores, and for sprint to do that, it would really change all of those businesses in a really public way. >> amazon, because they have truly global reach, amazon 500 stores would be something in each metropolitan area, and that is really not that many. and i do not know how many stores brent owens, because i do know the at&t numbers. at&t only owns some of their stores, and the rest are third-party run and operated under the at&t brand, so it would surprise me if sprint wants it that many stores, and i cannot conceive that they want more corporate owned stores. so, again, i think we are
talking 8500 or 1000 if amazon is the buyer, but i do not think you will see all 4000 of the stores salvaged. cory: this is a location location, location-based business that was eaten by mobile. michael, thank you very much. up next, the return of the podcast. audio programs making a big comeback and we will talk to a former radio producer turned entrepreneur who is documenting his podcast startup, called startup. ♪
last you. enter alex, a former producer at npr, but now, he has founded his own podcast company called gimlet media, and he is betting there is a comeback in audio downloads that is here to stay. he is interesting. i want to see what you look like. i have listened to you for so long. look at you. you look like a real person. i just love this. i love listening to audio in the car and when i run. tell me what has changed to make this work when they fell on their face in the age of the ipod. alex: it has changed. our habits are changing a little bit. right now, if i went out to the back i would make sure that i had my headphones, that i had my headphones with me so that i could listen to the podcast. i think that is a big one. and then the podcast players
that come installed with your phones. i think that has driven a lot of the increase that we see. cory: the founders of twitter williams and stone, aimed to start a podcast company after they left google, and they got podcasts man, that is going to be it. are their execution lessons that you think you're going to learn from the skeletons of pod casters' past? alex: that is sort of a daunting story. timing is everything a sickly, right, and to me, the reason i did this is i saw an opportunity. i saw an opportunity where our audience was growing. there was demand for this kind of program so to me, it was not that much thinking.
if you listen to the podcasts, you know that i was not thinking. it just seems like something that needed to be done, and so i went out and did it. >> thinking on both a programming level, creating content, where you are creating a platform, as well, let's listen, you can as have been chronicling the launch. let's take a listen to a little bite from that. >> it i said it was going to be here in two minutes, and that was all the time you had, what are you doing? >> so i am making a network of digital podcasts that we will monitor -- that will meet -- >> so what is it going to take to do it? >> so it will take $1.5 million, i think. >> take out the i think. >> yes.
i am looking at 1.5 million dollars -- >> no, you are looking for a very specific amount of money. >> finally, after about an hour of this, i looked over and see chris holding up his hand. cory: and his hands said what? alex: well, he gave my pitch back to me. and it was really a very humbling experience trying to raise money to start a company. what you're doing is telling a story of how it is going to work. and we just went out there and fell on my face. i was just awful on that. it took a while to get my bearings. cory: i see charles duhigg is an investor. alex: yes, he is. cory: journalists, when they
tell a story, they go in with questions, and i can hear them say, i don't know, which is the last thing you want to hear when asking for money, that you actually do not know what will happen in the future. alex: it is funny because i went out to raise money and i was not doing very well in the beginning, and at the same time, simultaneously while trying to raise money, i launched the startup podcast. i launched the startup podcast and it my misadventures trying to raise the money. i was not good at it. i was failing. but hearing somebody do that on a podcast, all of a sudden investment came in once people started to hear the podcast, so it was something about me telling a good story about how i did not know what i was doing that enable them to think i could pull it off. cory: i have the cart before the horse or way behind the cart
here. tell us how this is going to make money. alex: there are two main revenues the -- areas we are looking at. i come from an area where there is a thriving revenue model, but in public radio, you sort of guilt people into giving you money. i think there is a way we can make it a little more fun and do a premium model that feels exciting and gives value. cory: of course, the cliché in television is we will be watching, but we will not be watching. we will be listening. thank you very much. time now for a check of your world headlines. the australian central bank surprised investors by cutting their benchmark rate to a record low, saying growth will be weaker for longer and the local currency remains overvalued. the decision sent australian
stocks surging to a mere seven-year high. chinese spending continues to hurt the bottom line. lvmh. posting a full-year profit that missed estimates, and that is because of their first annual decline since 2009. one of the reasons? chinese tourists spending less in hong kong with pro-democracy road tests. a bebop a has teamed up to replace one of the biggest banks -- alibaba has teamed up to replace one of the biggest banks. this was for u.s. companies buying goods from chinese suppliers on alibaba. previously, the services were provided by the bank of china. "bloomberg west" will be right back after this. ♪
year-over-year, now 7%. so what happened to the future of a 3-d printed world? for more, i am joined by a portfolio manager. this is one of their largest holdings, so cathy, what happened? they thought this would be the key to a 3-d printed future. is it game over? cathy: no this was focused on the consumer end, but that is not the main story. in fact, next year they may be less than 10% of their revenues. the real story here is industrial, and as the stocks have been going down for the past year, what we have witnessed is analysts, researchers who are focused both from the top-down and bottom-up have been raising their estimates of industrial 3-d printing for the next three to five to 10 years, so they have gone from eight to $12 billion and we have got mckenzie out there, and things in 10 to 20
years, this will be a up to 500 billion dollar industry, up from $4.5 billion right now so they are the leader in this space, and we think it is visionary and has a long way to go. cory: ok, so you have got some predictions that things are going to be great, and you have got results that shows it is not now. i wonder. this was not one of their companies until not too long from ago but why wouldn't that innovation happen in some other company, something other than this? what makes you think it is going to be the company that is leading that business, a falling business right now? cathie: first of all, what i would like to emphasis is that if you take them out, their revenue growth was 29% so that is organic revenue growth. that is a pretty good growth rate for that part of the
business that we think really matters going forward, so they are already innovating, and one of the reasons the stock is down is because they are investing against a bigger opportunity than they had expected was going to happen this quickly. we are happy they are doing that. most analysts are not happy they are doing that but some have chosen to invest against a huge opportunity, and some success. cory: when i look at these businesses i want to look at them from a technological aspect, but i cannot help but look at the accounting for these . i went to a factory in detroit that was supposedly open, and there was nothing there. i look at 3-d systems acquiring the service bureaus to whom they sell product and these that are looking at sell in and not sell through, if it was not the hype
for 3-d printing but legal and accounting decisions that make the businesses look like they are going faster than they actually are? cathie: i think in the case of 3-d systems, in the last quarter, people were worried about inventory issues and, in fact, there are inventories that fail because of some manufacturing issues, so i am not concerned about this. i have watched these management teams come together and i think there is a conservative management team, certainly relative to anything else in the industry, especially 3-d systems, which, i agree with you, growth by acquisition. in that case i am a little suspicious of. it is like putting different operating systems together. it is difficult to do. the other has been more strategic in terms of its acquisition. cory: cathie, i like your
optimism. if you liked it at 130, i think you have to like this. our bwest byte, we refocus on one number that tells us a whole lot, we have our byte. 670 6% is a lot. >> yes, the streaming of katy perry being stolen. cory: i was e-mailed, where people were saying this missy elliott person is being introduced to the rug by katy perry, but not so much. she has been around before. >> the last time in 2005, now in the top 10 on itunes. cory: it is interesting. spotify changes the way the world works am aware people can acquire music. >> yes, yes, absolutely. but twitter is out there, and people are talking about this. cory: great stuff.