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tv   Bloomberg West  Bloomberg  February 25, 2015 1:00pm-2:01pm EST

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♪ >> live from pier three in san francisco, welcome to "west." were regardless focus on innovation, technology in the future of business. i am cory johnson. janet yellen back on capitol hill today, this time testifying in front of the house financial services committee. yellen ins is that is independent and does not let the executive branch influence policy. -- insist that it is independent. >> today you are not willing to tell us the answer to the very simple question. you want to tell us i am not getting involved in politics but two weeks before an
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election, you are making political statements that are consistent with the democratic party. >> yesterday yellen strongly criticized the proposal that would allow the fed additional audits. >> sales of homes did slightly last month. the 481,000, hovering near at six-month high. the northeast of the biggest drop since 2012, the lovely weather probably had a big impact. the midwest of the biggest enough 19%. the west dipping slightly in itself up 2%. uber plans to hire hundreds of people in china this year. this comes after the two largest chinese rifles merged. meanwhile, starwood the writers will get points to the hotels that include the saint regis the w, western. the first partnership or ub er.greece won a four month
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bailout package. creditors one actions will speak louder than words. the greek finance minister has just spoken with erik schatzker in an exclusive interview. i hear they are talking about whether greece will be able to make repayment. >> despite problems and the post-political of the past two months, we still have a small but nevertheless a surplus. there is no problem paying calories and pensions. there is a problem with the payment. that is why i mentioned this site. we cap i am a repayment. certain buildups before 2000 and 15 that need to be paid. we will sit down and find a efficient ways of understanding and we shall. >> now to last of charges layoffs, falling a hand currency
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headwinds, what is not going on at hewlett-packard? it is at critical phase trying to split into two before the end of the year. the cost could hit $2 billion. that might not include the cost of layoff. yes, there will be more layoffs. job cuts will hit 55000 by the end of the fiscal year with the ceo hinting there could be more cuts during the final process. meg whitman insist that you found is on track, even though sales thousand 13 of the past 14 years. joining me now is jason nolan knows the company well. guidance came down $3 billion. some of that was currency translation, somewhat foreign seatac. a big component was the cost of separation. legal fees, consulting fees a lot of work that has to be done to separate the company's. that was a big surprise to me.
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i did not expect to billion over two years. >> talking about the free cash flow notion. it is very different. this is money the company collects. a lot of back and forth that goes on on the balance sheet that leads to that. this sounds like it did not include the cost of layoff. it could be more than that. >> is right. earnings took a hit on foreign to treating. -- that is right. that is a function of map and the strong dollar. it is a free cash flow thing when you lay people off, you pay a huge severance. we have argued hp needs to become a smaller and more focused company. some of that is lower headcount. >> the free cash flow at hewlett-packard has had the benefit of factoring.
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this shows up twice in a circular reference. they have been selling receivables from the customers. these are h-p's customers. are they running out of these tricks to boost cash flow? back they have extended payment terms to the customers. now it is more of a working capital in cash convergence cycle play. they can only take us so far to your point. the 10-12 a range is about as far as they can take it. we have seen very good cash management over the past couple of years. certainly there has been a step back the most recent quarter. >> if you look at the way they boosted free cash flow by selling receivables, they the imf conspiracy there is but i look at the quarterly pay based on free cash flow as a percentage of earnings. selling receivables to boost the free cash flow. am i crazy to look at the profit motive? >> you cannot do that forever
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but only a certain amount of time. >> the company was overenthusiastic when again to 6.5 free cash flow guidance. they should have been more forthright with investors. a lot of people, guard. >> enterprise services, which i think of as consultants marching. that should be a great, strong business for them. that was horrible this order. down 10% year-over-year. >> that is another one getting smaller. profitability ready to come back. that is really where hp can come in, sell services. where infrastructure -- that is really where hp can come in and sell infrastructure and services . they need to do a better job of stitching that together. >> the next quarter will be better, but the past working have not been.
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good to see you. heading right now to our -- to athens. an exclusive interview. one of the most important people in the world of finance. >> we are talking to the finance minister in greece. we sat down for an almost at the 45 minute and i was hoping, he made some news. let's begin with a sprinkling -- the thinking news. the authors have been going out of greek bank by the millions. estimates in the range of 20 billion euros. possibly more. he said 70 billion euros flowed back to the greek inking system. he is not being the figures yet today but it back hundreds of millions of euros more of war euros in the greek banks. he says now that turned the tide, there is hope for the safety and security of the greek banking system's future was so
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much in question. we also talked about what happens over the next fuour month. acknowledged -- yannis stournaras acknowledge that will be a serious cash flow problem in march or april. he was not specific. how will greece deal with the problem if you flunked out of capital markets and there is new -- no new bailouts? he said it is possible the ecb money greece owes could be paid to the imf because the big question is how is brief going to make the next installment payment to the imf cap requests for ecb could stand in and give them money. also possible to imf could give grief permission to do -- gree ce permission to do what it did before to issue group treasury
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bills. yavaroufakis could we not do it now gekk if? he said why would they want us to trip over such a small and relative terms cash flow problem you go back? >> that sounds pretty good -- dicey. how much of it is greek people or perhaps people from elsewhere that have made a lot of deposits in the greek banks gekko >> that is the question i'm afraid i cannot answer. he said it is safe to say this not know the source of the deposits. what he does do is check with the national bank of greece, on a daily basis. the future of the banking system so important to the stability
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and ultimately the ability to survive within the euros are spent. as for the cash flow situation i asked him how confident are you that you will get past this? the ecb and or the imf will allow you to make the temporary maneuvers comes back to me in quotation marks. the finance -- finance minister pretty confident he will not run out of cash in the next four months. take that the way you like. but i will not even take that to a great -- grreek bank. -- greek bank. we will be right back. ♪
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>> i am cory johnson. this is bloomberg "west." stuart gulliver said he will help client -- his role in helping clients avoid taxes is the product of a different era.
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he tells the committee his own private lives bank account has nothing to do with dodging taxes. it is clearly about privacy. privacy from colleagues in switzerland, and it has practice whatsoever. >> gulliver said he is delisting the firm after a report said it sheltered money for tax evaders and criminals back in the mid-2000. sim card akers said the government was probably behind the hacking attacks on the network. the comment came after a report blamed the hacking in the u.k. government as an amazing story. i will put it twitter links to this great story. it is based on a document league by edward snowden. he said no products were affected and no significant that data, although the story would argue otherwise. the radioshack name going on the audio. -- on the auction block
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separate from the stores. time to win approval to leave the bidding. also trying to buy as many as 2000 radioshack yours after the company filed for bankruptcy. >> the drumroll beats for the ash -- at the sea -- the sec energy and commerce rules. today they will vote today on the rules so-called uncertain future of the internet. joining us georgetown center for business and public policy larry downes who testified at the hearing. what did you tell them gekko >> good morning. what i tell them is the hearing is no longer about the open internet rules. what the fcc is doing is going for title, reclassification of the internet as a public ability . that is much more worrisome to many of us than the rules themselves.
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we are urged the committee to act as congress only can do in passing bipartisan legislation that would solve the problem once and for all without resorting to the crazy legal theories. >> is this a crazy old -- crazy legal theory? >> i think the big isp's have their smart machines out to befuddle and confuse the media and everybody else. let's start with the very basic. the question at issue is whether an agency and washington d.c. is going to have the authority as it has had in the 1920's over telecommunications to make sure there is no discriminatory actions by the providers to make sure it now in terms of the internet that a favored few will not be able to throttle content or block content or prioritize
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content or determine what news you and i are going to get. the fcc has had this authority. now they will reassert the authority for the communications infrastructure for the 21st century that it did for the 20th entry. it is not rocket science is -- rocket science. >> i wonder -- there is an argument that title ii is not the best way to do it. are there problems with title ii ? why is that the very best way for the fcc to pursue this? >> it is the very best way because it is the only solid legal foundation. they have told us that. the courts seem to indicate it is something that fcc is authorized to do, you have to do it under the right legal foundation. when the commission voted cable broadband was not a
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telecommunications service and later the same thing applied to telecommunication journalist, it wiped out the legal foundation to rest the arguments on. no one can predict the right outcome of what happens when the decision goes to court. i want to go to the soundest and strongest legal foundation there is. clearly that is title ii. >> we know the lawyers will get paid for this. someone will go to court in a matter what. why is title ii not the right way to support this? >> i have to disagree about this. not the most solid foundation. what the court told the fcc and what the chairman acknowledged in january through the summer was what the court said sections 106 is followed legal doherty. he said that was a roadmap, an invitation to reenact the rules will do it. the problem is the supreme court
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agreeing with the fcc has said it does not apply to information services, does not apply to the internet. that means for the fcc to fight it off it will have to buy a much stronger uphill battle in the core, possibly only to the supreme court. >> i want to respond to information coming up in the urine today about secrecy. there is a quote from the congressman. they said together representative of did said so long as the chairman continues to insist on secret the we will continue calling for more transparency and accountability. chairman wheeler not about congress. i wonder if you can help me understand why the fcc has not made the entire proposal public before the vote? >> i think number one is following the terms of the administrative procedures act.
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we know a lot more about it a lot -- very soon. you have to realize this proceeding has probably the most complete record of anything the commission has done in years and years and years. i reference the vote. the commission has been compiling since then. we have asked every western, every issue that could about has been better. -- that could have come up. people talking about other alternatives like legislation. when has congress passed a piece of substantive legislation recently anyhow? can you imagine how long that would take younger that as been put on the sideline too long. time to do it in time to do it now. next sit tight. i want to continue the conversation because it is a good one.
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we will be right back after this. ♪
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>> this is bloomberg "west.". i am cory johnson. we're talking to larry downes. we were just talking about the secrecy issue. is this a big deal? it may be as open as the fcc has ever been, but is it open enough? >> he knows far more about the secret workings of the fcc than most of us could ever possibly know? it is true it is not traditional to circulate orders ahead of the vote. while i would like to see the full 332 pages that are allegedly in the report, i understand we have to wait until
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the vote. given the magnitude of what is happening, you can understand how members of congress are increasingly agitated about what is coming. >> the interest over the issue something you think we will see in the future now that the technology and internet is such an account -- important factor for the internet? >> i would think so. isn't it amazing we have had over or million people contact the easy for something as seemingly arcane as net neutrality? i think it is not a very organizing term of technology. going beyond that for title ii. that is because people really understand what we're talking about is the communication infrastructure. the platform to talk to one another, find jobs entry -- take care of their health. it is integral to their lives. of course they have an interest
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in them. the interest will grow. i think at the media gives it more and more attention like you have done through the years, people are going to be even more involved than i have been before. that is democracy, the way policy should be made. >> also more interest from congress as a result? >> i think so. congress a year ago undertook the -- the starting point of looking at the communications act as a whole. it has not been significantly updated since 1996, and that could take years to do, but we need 21st century regulation and that is up to congress to do. >> larry downes, michael called thank you very much. we appreciate it. ♪ \
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>> you are watching bloomberg
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"west." where we focus on innovation, technology and the future of business. i am cory johnson. snoop dogg and mark zuckerman have much in common. not the least of which is coffee. snoop dogg, jonah hill, silicon valley tech alike. one investment coffee company during by the chairman for the regular office hours segment in the ceo. glad to have you both here. this is an interesting story. not just because i am a big coffee lover. there is something going on with technology and copy. the success blue bottle has had and the success locally. what is it about coffee and the
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role of technology that is coming together? >> i think part of the big reason is we are in silicon valley. most of the stores are in the bay area. a lot of technology. come in and drink a lot of coffee is ashley the engineers to keep on going. >> why is it for you? >> this is my first venture outside of technology. i love coffee. i am one of those guys that love coffee. i have a problem though. i cannot drink anything caffeinated anymore. i have decaf and that is like really being a loser. you go to the store and nobody has a lot of choices. my son told me about phil's and said there is a replace your to try. i took a sip and said you put green in this because i drank it
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black. i said i did not. also disruptive. but if disruptive? >> i think we possess a lot of similar value that technology companies to. our philosophy is the best coffee in the world is one that comes to your taste. the best coffee in the world is that that's the one that comes to each individual person's taste. every copy is different. we do not do espresso out of stores. we believe it is not what you do but what you don't do. we want to focus on doing a few things very well. every cup is handcrafted. we confirmed espresso drinkers every few months -- we convert thousands every few months. >> i am always running from place to place. i go in there. >> decaffeinated people can be
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in a hurry. >> it does not take that long. it can take 3-4-time minutes. -- five minutes. there is opportunities for efficiencies. the optimized for quality, not efficiency. we recognize some folks don't have time, so what we have is an app where you can order ahead where -- where you can prepay and preorder why you're getting up from bed. choose the blank and when you want to pick it up. it is like an express station in a way. you walk in and walked out, a two second visit. >> now all i need is a runner. >> it is interesting watching the explosion. my favorite coffee, cap they broke the. a limited number of stores and so on.
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you guys are blowing up. blue bottle having the slow food movement. at this point in we see an explosion and coffee. keurig selling like crazy. toss in holders and that is the majority of the consumer market. more people are drinking instant coffee rather than opposed to the slow copy. -- slow coffee. >> no doubt it is in waves. there are three ways. third is the instant the middle and the third is the one that you mentioned. we are sometimes in that category. the big differentiator between the second wave and third wave is an elevation of holiday and care for quality.
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not mostly about efficiency. the other thing is a little bit more transparency. >> glassworks when you are boutiqueish. i think starbucks felt they were there at one time. -- that works. how do you keep that as you get big? >> there is a fundamental difference between us and those folk. by those folks i mean second wave or third wave, but the difference and what we believe we are in is the people's business. while we possess the traits of quality and care with the beans, craft, people. it is really about the experience. it is friendly and welcoming them warm. it is not really about demographics. >> it is not just about coffee but the technology experience --
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but the customer experience. i wonder if the weight is the good part about the best about part bounces out the immediacy of the caffeine rush. >> we have an i.t. department that is great. we never start with technology. it is a tool. we start with people. we may come to the point that technology may help us optimize or team members. we treat our customers like team members because they are the most important people. we also focus heavily on creating a great experience for the team members. >> thank you. good to see both of you. >> bloomberg "west."" will be right back. ♪
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>> i am cory johnson. this is bloomberg "west."
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lending club had revenues of more than doubled to 69 point $6 million for the online lending platform posted a loss of more than $9 million in the first order as a public company. i spoke to the lending club ceo and asked him what to make of this order. >> from our great -- from our standpoint we grew 100 8% revenue year-over-year. we more than double the size of the business. a faster growth than we had planned for. we also saw a lot of good marketing efficiency. so efficiency is increasing. and this really gets us the confidence to put out guidance that would cause us to
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facilitate roughly $7.7 billion in loans. that will be roughly the same as in the previous eight years combined. really fast growth. we are continuing to have great value and great experience to the customers. quite you acquired-- >> -- >> you acquired a company called spring stone. what did you get in the acquisition? but the organic growth is the platform we built from scratch. the other new product was acquisition of strings don't strone that had us diversify. unattractive area for us. with spring stone we inherited a
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great team, a lot of knowledge to the area. great customer satisfaction and a great product. a network of schools, tutoring centers for education financing portion and medical providers, mostly dental to a network of thousands of providers. it is really getting -- giving us a great start to the distribution network of a product. lexi talked about no interest types of loans. i hope -- i feel like that. i'm what the lending club was. can you talk about what it was and why you think it does not fit? >> what we did with the product
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is an example of how we think about being very consumer friendly and transparent. pretty difficult product and retail finance in general is a deferred interest product whereby there is a promotional time that is six months, but if the customer still has a balance outstanding at the end interest rates get charged retroactively. it could be really misunderstood by customers. not the type of product we stand for. rebranding. we wanted to make product improvements. we terminated that product and launched a true, no interest product that has no deferred interest. so for the first six months or
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12 months, you will not be billed any interest at all. that is in line with customer expectations and the type of product we want to continue to bring to the market. >> what does the customer get? why is the experience of different caps on you got the other way was something of a trick or surprise to them? >> that is right. what we stand for is a transparent product well understood by consumers that are very straightforward. the new product is considered current and easy to understand than the old one was. >> lending club ceo. now for a check of the top headlines. the greek finance minister said millions and bank deposits are flowing back into greece since the bailout extension. 700 million euros extended yesterday alone.
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erik schatzker sat down for an instant interviewed talked about the growth potential of the greek economy. >> last year the greek economy grew despite the rumors. the actual number came to 1.5%. we believe given the state of depression we have the state of the banking system, the fact that we have very low levels of investment in the country will have negative investments. under those circumstances, in order to arrest the negative spiral, i think anything beyond 1.5% surplus for the next five or six or eight years would be the detriment of the country. >> he also said he is counting on the european central bank to help the company to -- divert up default when it runs out of money next month.
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apple ordered to pay $533 million in damages to a company called smart flash. a federal jury found the itunes software infringed on the patent. apple says it will appeal calling it a company with no employees, no product, simply x lloyd the u.s. patent system. millions of people who are not customers of anthem may have been affected by the might -- massive cyber attack earlier this month. anthem believes they may access social security numbers, names and addresses of 79 million people. among them 60 million to the anthem customers. some of them could be those who used to use it in states for they have partnerships. the fbi is close to finding the hackers responsible. " bottom line" with mark crumpton joins us with a preview. qwest janet yellen back on
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capitol hill for her second consecutive day of congressional testimony. she faced westerns ranging from the timing of an interest rate increase to whether the edit should be audited. tony chris cynthia well join me with analysis. -- tony christenzia. the president looks to put pressure on republicans who want to tie homeland security funding to tie on immigration action. peter cook will have details from miami. i will see you at the top of the hour. >> we will be right back. ♪
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>> i amc -- i am cory johnson. smartphones and tablets of change the way we watch. tonight an episode of " modern family" was filmed entirely on apple devices.
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we spoke tuesday levinsohn, the executive producer of the show and offer the source of his inspiration. >> it is funny that seems to be the source people are focusing on. the bigger story to me is the fact that the entire episode takes place on claire's computer screen. i find that to be the most interesting part of this. we just wanted to do it in a way that seemed as real as possible. we just used the devices one word use in real life. >> picking up the device is easy to do and extremely simple with the technology we have. i have a feeling producing this episode and directing may not have been so simple. what sort of challenges did you run into? >> there was a lot that went into it.
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the hardest part was coming up with a storyline in which we could feature all 11 or 12 of the actors and still stay on one person's computer screen. once we have the original idea, things fell into place quickly. it was not a problem probably would feature everyone but hollywood fitted all into one episode. originally we were going to have the actors shoot themselves by shoot -- by holding up the camera but then there were other considerations about framing things properly and not shooting off the set so we quickly devised a method where the cameramen the camera people were used to shoot them with the phones. did not look like they were floating -- so it did not look like they were floating in space, they were elegant instructed to get their hands on the cameraman's hands. >> was there any product placement involved? did they pay for this?
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>> other than providing the products we used for the episode, this was done -- this is purely a creative decision on our part, just like the ipad episode was. i happen to be very techie and like this. in the last episode we need -- needed a reason for phil to be waiting in line and just so happened to line up when the ipod was coming out. here once again this just came from my life, i was faced timing with my daughter in college and looking at my screen and there was e-mail and a script i was working on and could see her and myself and my wife standing behind me and some webpages open , and i thought this pain and amazing -- paint an amazing picture my life. that is where the idea started.
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>> so this is not the first time you have featured apple devices in your show. we do not necessarily think about the collaboration between the technology company in televisions studio. how important is the relationship? >> well, you want to -- it is a fine line. we are not here to sell apple products. that is not our goal in terms of the episode. they may advertise with us, and that is wonderful. i know steve jobs was a big modern family fan and that was meaningful to me. i know many of the people are fans of the show. we are very big fans of their product. really it is much more of a personal interaction than it is a business relationship. >> how impressive are these cameras that can capture an entire episode on television now ? >> i think smartphones today and not just apple but other
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companies cameras on their phones are amazing. most viewers would be hard-pressed to tell a difference. we have snuck in some footage from iphones in the past in our episodes just because we needed a quick shot. it is pretty hard to tell the difference. it opens up a whole new world for amateur filmmakers the budding filmmakers, people who are just beginning, because you do not need the initial huge investment anymore. you can make a compelling movie on your phone and computer, and all you really need is a great story and some great characters and off you go. >> speaking of great characters, shelby holiday did you do that on facetime really? >> of course.
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>> keeping it real, i love that. >> when we were talking i was setting of the interview and was wondering 30 minutes of watching someone's computer, and amazing how much you can learn about someone watching their screen but how will you do a 30 minute television show watching a desk top? we started seeing the clips and it looks hilarious. amazing how fast things move around. claire uses facebook, go shopping and is on google maps. it really moves around. found when people are really excited about the show. >> shelby holiday, thank you very much. you can always get the latest headlines all the time on your phone and tablet. more number "west." -- bloomberg "west." tomorrow. ♪
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mark: from bloomberg world headquarters in new york, i am crumpton. this is "bottom line" the intersection of business and economics with a mainstream perspective. to our viewers in the united states and those of you joining us from around the world welcome. we have full coverage of the stocks in tories making headlines today. on capitol hill, republicans on the house committee turned up the heat on fed chair janet yellen.


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