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tv   Bloomberg West  Bloomberg  August 17, 2015 8:30pm-9:01pm EDT

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matt: qvc gets a lifeline. what could this mean for etsy? ♪ i am matt miller, in for emily chang. this is "bloomberg west." dr. dre gives apple music a trial run. plus, is the amazon model a harbinger for workplaces of the futures? all of that is ahead on bloomberg west. first up to a story we are watching right now.
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the irs data breach. it is getting much bigger than we realized. we are now learning of an additional 220,000 possible victims and the total number of taxpayers to 334,000. let's go to washington dc and bloomberg news reported jordan roberts. what can you tell us about this new breach? it seems to be more focused. jordan: before and thing to remember is that while we are not talking huge numbers, 300, 400,000 people at this point, there were highly targeted attacks and and the reason they were able to get that was because they knew about them anyway. they believed they could get a big refund from them if they committed tax refund fraud. matt: this is not a case of them going through each person will account.
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-- individual account. they have reached the irs system at large. jordan: but what they were doing is they came in over the a lot of information about their potential victims. social security number, date of birth, things like that. they identify individuals who were high net worth individuals for who they could get a very large refund. they actually did. they used computer programs to do it, but they went one by one and accessed their accounts to get previous years tax refund information. as the theory goes, the point of this attack is to file fraudulent refunds for the current year or subsequent years. it is a painstaking process, but it is one we do not see. the smartest way to do this for you can steal enough personal information or buy it on the internet to do tons of tax refund fraud and billions of dollars of year are done with that. so hacking the irs directly is kind of a hard way to do it.
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matt: the way that they did it is more difficult to defend against. now to our lead, qvc parent company liberty interactive is buying zulily. it went public in 2013. shares soared initially, but they have since dropped 66%. our bloomberg news reporter is here with more. we also have our expert who helps dell and we can integrate and properties after an acquisition.
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let's start with you. is this a case of finding a company with a large user of reach and then buying it on the cheap after the market punishes it? >> i think they're getting a number of things. zulily knows there base. they are very committed and know who enjoys the site. they are picking up a very strong brand. they are also became a strong leadership team. this is a smart move with qvc to expand. from a zulily perspective it will hopefully advance their sales. matt: why have. -- why has zulily gotten punished? >> we have seen it with a lot these internet companies. as soon as you see sales growth slowed out, there is a little bit of a knee-jerk reaction to there is a story on bloomberg
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that says that this is potentially a lifeline for shareholders because for these internet companies, we have seen it with the likes of groupon, ebay, as soon as that topline contracted for these companies who do not make a lot on the bottom line, shareholders can head for the hills. matt: there are some similarities between them and etsy. are you hearing from shareholders that they will same kind of lifeline? >> not quite yet. they have been public for almost two quarters. it seems like they have a little bit of time. they are still preaching this international sales expansion plan. but zulily has had time in the market rate while it might be a new subsegment of customers for qvc, it seems like they have had a slowdown. sales of only 4% last quarter, which fell off quite a bit from the double-digit sales growth from corners previous. matt: how will qvc, or how should qvc integrate them to keep a separate and strong brand but to also boost those synergies?
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>> it is definitely important. protecting the brand would be one of the first things you focus on. do not lose your current customer base. they are different in the backend in the way they cover shipping. very similar, they going for that unique product i would definitely focus early on trying to find the synergies where it makes sense without a running the brand or hurting the portfolio. matt: etsy comes to mind immediately. but in general you have mentioned a lot of these tech ipos follow the same pattern. niche retailers come out, are we seeing a wave m&a?
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>> we are starting to see a bit of this, where these newer companies are really owning a certain market and really attracting a certain type of customer. once they saturate that, that is when they start to struggle with growth. some of these bigger retail players are also looking for growth in these kind of really committed, loyal customer basis. potentially more of this going forward. it does not mean the city cannot break the mold and turn it into the next amazon, but right now it is a wait and see process for some of the smaller companies. matt: thank you. we appreciate your time today. now, a story that we are watching very last week we learned that alibaba plan to repurchase of many as $4 million
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worth of stock, in an effort to revive a share price that has been beaten down 28% so far this year. now we know that jack ma and is cofounder are buying a portion of that back. he remains the second richest person in china. he can afford to buy a lot if you wanted. still ahead, why one apple supplier plans to invest billions in next-generation display screens. plus music streaming sites on soundcloud could be close to a licensing deal with universal music. and these people enter a cash grab machine at go daddy. they can pocket between six and $700.
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matt: apple's supplier, lg display co. is planning to invest in $.5 billion to develop next-generation screen technology. the investment will be focused on advanced displays. these will be more expensive and difficult to produce.
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apple expense -- will give a new version of the apple tv the the set-top box, not the actual television. with me in new york, stephen. adam, it's confusing because we talk about apple tv in three different ways. one, content. the tv is a box that sits on top of your console, looked into your television, and number three, the actual television show green. -- television screen. does this mean that they will use this technology for their actual television? >> the signs so far point to no. so far point to no. they have been striking deals with media companies to get content to play to that service apple, profit margins over 33%,
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they are working on the content. matt: is an apple tv something consumers are clamoring for? >> i do not think consumers are clamoring for that product necessarily. there are enough good inexpensive televisions that a luxury tv is not something that people even need or even want. matt: let's move on to the apple music story. dre recorded his first album,
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what, since the chronic? he put it out on apple music. how did it do? >> they reported some numbers that came out, they had millions of streams and they sold 7 million downloads through the itunes store itself. it points to the stuff that will we be doing to get people to subscribe to a whole music, have things that are exclusive to the service. someone who is on spot if i cannot get a copy of the new dry elbow -- dre album, so they may go to a whole music itself. you can do more and more of that, it will give you a leg up on some of the other ones. that is a tough thing to do for a lot of artists, especially because it has lower subscribers than spotify. matt: we are showing video of you when you took apple music for a test run.
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i feel like once you have spotify there is no real reason to get anything else unless you are a dr. dre diehard. >> getting people to switch over is the biggest point for apple right now. people get set in their ways, everything is the same price, the same catalog, it is hard to get someone to move over. spotify has paid subscribers versus apple. they are an established player. for apple to move out of this trial period and expand, they will take some time. matt: set us up for the september apple show. what are we going to see? new phone, new watch? >> the biggest thing is going to be the phone. a lot of attention gets put on some of the new stuff that apple gets introduced, whether it is a watch or's television, but this is all coming back to the iphone.
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as the iphone goes, so goes apple's business and if they can continue to increase sales of that product, the company and shareholders are going to continue to love the company. matt: the six s? >> that has been the trend. matt: thank you for joining me. now, i want to tell you about a story we are watching, involving a streaming music service. soundcloud is said to be close to confirming a landmark licensing deal with universal music group. talks between the two have dragged on for several months because universal is asking for a big chunk of equity in sound cloud. the report says soundcloud investors, who were spooked by sony's decision to pull music from that service of pressure the company to reach agreements
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with other major rights holders back in november warner music reached a deal and took a 5% stake in the business. you can see this get done for around that amount. a french music streaming service may be joining the global unicorn club. the spotify rival is seeking funds from investors at $1.1 billion. they are looking at expanding in europe and emerging markets. coming up, silicon valley defends amazon's corporate culture. and cord cutters hitting the media stocks hard. how fast is the american home deciding to get rid of cable? ♪
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matt: time now for the daily bite. one number that tells us a whole lot. 566,000. the estimated number of loss subscriptions from pace tv. the sector is declining at an annual rate of seven tons of 1%. but over the last year 2 million households cut cable tv or decided not to purchase it. the media stocks plunged on concerns, after espn lost a modest number of customers. it will be a continuing problem. jeff bezos is defending his company culture after the new york times export a painted a exposee painted a grueling picture of life as an amazon employee. it paints grueling allegations. employees being warned over taking vacation in for internet areas.
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other tech leaders have been commenting. the former twitter ceo saying this has taken out of context all over it, and hyperbole to score points. mark andreessen, given the number of workplaces designed for underachievers to feel good about themselves... joining me now is matt williams and jeannie branthover. would it not be difficult to recruit workers given that there are so many silicon valley were great tothat are so
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work at? jeanne: amazon has an incredibly good name. not every person is looking to be in a place like google. there are truly billion people -- brilliant people that want to push themselves, they want to be better they want to make an impact. that is what amazon does it look at these people as the olympic athletes. they are used to working hard, they are working and creating and innovating things that go out in the marketplace. there are people that truly prefer an environment like amazon. matt: matt, what you think? we have heard this time and time again.
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bezos can deny it, his employees can defend him, but surely it is a stressful place to work. surely it is a competitive environment and the treatment of the lower-level employees is definitely lacking. >> i will tell you firsthand that it is a high demand, high-intensity workplace. but that is what makes it one of the best places to work, if not the best place to work in america. a lot of what i read in the article and the story, if they were anecdotes chosen from perhaps occasion over the years, i have never seen any of those things happen inside of amazon. in fact, i have many friends who love working there. i would work there again. it is the best place to work if you're into high demand, high-intensity were laces that change the world. matt: the supreme court case last year said that some employees are made to wait 45 minutes to go through security checks, and they do not pay them for that time. that does not make any logical sense.
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why did you leave, matt? >> i was able to go be the ceo of a social website. it was not because of the people or the culture. in fact, i would challenge anyone to find a company over 100,000 people that could have the consent is the of culture -- consistency of culture and the relentless focus on customer that amazon has. matt: on the other hand, you look at linkedin and you see junior employees leaving after 6-8 months. the company has an incredibly high turnover, as proven out by the numbers, regardless of how great it is. jeanne: there is a lot of companies that will talk about how good they are to the employees. they make life so easy, and the make sure they are having fun while they are working. honestly, when it comes to really intelligent people who
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want to create, who want to be innovative, you really are not looking to be called. you are looking to be pushed we were looking to be the best. you are looking every day to achieve something that you do not even think you could achieve. you want to be surrounded by the best of the best. that is the environment that amazon really creates. the reason that they are our employees that i talked to that saves the best was the ever worked, some people really regret leaving. but most people that leave that are superstars leave because they get unbelievable offers to go do something else fabulous that they would not have gotten if they had not been at amazon getting the experience that they got. matt: how important is the compensation? what about the fact that a lot of people go to work there because of the stock-based portion of the compensation and we just showed a chart of the stock. it has done incredibly well. is that an important point to draw talent and a way to move it? >> amazon is not a day camp, it is a place if you want to work
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hard and change the world, that is where you go. i think the compensation, the data speaks for itself. the fact that they have not only sustained but grown so tremendously over the past several years, hats off to the employees that work hard, kicked butt and were able to deliver. it is something very few companies in the world are ever able to obtain because the stock-based conversation allows them to do that. matt: thank you so much for joining us. we always appreciate seeing you here on bloomberg. i think we may be conflating the
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problem of the average worker putting stuff in boxes in a warehouse, and creative executives who are getting stock options, that does it for this edition of bloomberg west. tomorrow we are talking but presidential election.
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. >> from our studios in new york city, this is "charlie rose." charlie: there has been so much talk here and elsewhere about the republican primary season and the emergence of donald trump that we thought we would take this evening to look at the democratic field of candidates. some polls show senator bernie sanders leading hillary clinton in new hampshire. speculation continues to grow whether joe biden will enter the race. clinton has been answering questions about using private accounts during her tenure at


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