tv Bloomberg West Bloomberg October 1, 2015 8:30pm-9:01pm EDT
emily: drama in the drama in the c-suite. jack dorsey is not a done deal. what does it mean? ♪ emily: i'm emily chang and this is "bloomberg west." heavyweight battle is brewing in the video streaming market as amazon takes a swing at apple and google. plus, at the same time, google and microsoft declare a truce in a five-year battle over smartphones. and a huge payday coming up for some of the executives at first
data. the company getting ready for the biggest ipo of the year. first, to our lead. just yesterday, it was reported that twitter interim ceo jack dorsey was back for good. today, recode updated saying it is not a done deal. twitter shares closed down slightly today. still, dorsey seems to be the pick for the job, and right now the only pic. so what does it mean for his babies, twitter and square? joining me from new york, the david austin professor of management with m.i.t., and alex barinka, are bloomberg news reporter who covers ideas. alex, what are you hearing from your sources today about what this means and what it does not mean? alex: i can tell you about the
state of play in the last few months. we have reported that according to our sources that they were planning on moving forward with the ipo with or without jack dorsey. our sources told us that the bankers think the company is healthy enough to go on. but one thing to keep in mind is this ipo process includes a roadshow, and they are out and-pitching the company. it does raise questions for investors -- are they comfortable buying into new public shares at a company where it is not certain at this time whether or not dorsey will be there? those will be the big things we are paying attention to when it comes to whether or not square becomes a public company in the fourth quarter, which they were planning on doing as of three weeks ago. emily: james, let's talk about the near term -- let's say he is doing both jobs. steve jobs did it. elon musk did it. does that make it ok? guest: absolutely not. basically, those justifications by pointing to jobs are not
warranted in this case, because those are completely and entirely different scenarios from what twitter and square are facing. these are companies facing fierce competition and in a do or die right now. independentlying -- operating and can only off of two different companies is not the right thing to do. -- independently off of two different companies is not the right thing to do. it is concerning now. emily: it's interesting you say that. because last week, i spoke with a partner at sequoia on the square board. i asked him, look, what would you say to jack if he came to you and said, i want to do both of these jobs? take a listen to what he had to say. >> i don't think it is for me to judge, tell him that he can't do that. emily: there you have a square board member saying he does not have a problem with this. what do you make of those
remarks? guest: it sounded like a soft pedal to me. it sounded like, well, i can't really say for him what he should do. in my opinion, jack dorsey is a very credible ceo. he has a lot of talent and skill and leadership ability. i think that will be really a benefit to twitter. because twitter is right now in a position where they need to focus on product, and that is his strength. as i have said before, i think that being distracted by another full-time job, let alone one at a company that is about to go ipo is a really important concern that he should think about and that square investors and the square board should also think about. emily: let's talk about that. alex, i want to get your thoughts on this. on the one hand, there is talk that could delay the ipo or put some pressure on the ipo. on the other hand, if something is announced before the square
ipo goes on the road that certainly adds some clarity to a very confusing situation, jack dorsey was going to be peppered with questions anyway. and if twitter makes a decision before the show goes on the road, i could imagine that could be beneficial, right? alex: it seems like clarity could be key here. it looks like uncertainty may have unsettled investors. you would think then that they might be able to figure out how to get their ducks in a row. but the bottom line here is, management is putting their face out there, and if you don't know who that face is going to be for these potential investors, that uncertainty could be a problem. james, you guys upgraded twitter recently. the ceo situation has not changed. dorsey has been the front runner for the last several months and there has not been in -- an obvious outside candidate. it seems clear that someone else
was not going to get this job. why are you optimistic about the long-term future? guest: basically, we see twitter as one of the only companies optimized for mobile. forou have that advantage the next stage of growth within the industry, but also they have the election-year benefits and limited downside for now. the big thing is that what we think we will see coming out of twitter is they will change the conversation from talking about the subscribed monthly active users and making it about the total audience as they curate the content on behalf of the users. you can go from a sunday night football game from it -- to a presidential debate and have that on curated stream and have a total audience approach. confidence will come back into the story as they change that conversation. jack dorsey is the kind of guy who can make that happen. on that risk reward, we waited the benefits and saw 15% downside risk, limited at that time, and that's why we decided to upgrade the stock.
emily: sunan, you say this could make or break twitter. that sounds obvious, but on the one hand, as you say, it could be so wonderful for twitter, just like steve jobs coming back to apple, or it could go in the opposite direction if it does not work out given the position that twitter is already in. expand on that for me. guest: i think this is a high-pressure situation for jack dorsey, because this is certainly the hallmark of his career. if he can pull this off successfully, being the head of both of these companies, he will join a very short list of tech greats, but he is not in that position currently. he has not demonstrated yet the success that he has the potential to demonstrate with these two companies. i think that for twitter, it is a crossroads. stock price has tanked in the last several months. everybody has questions about user growth and user engagement,
and there is a ton of potential with this product, but it requires a long time frame and hard work to change the product into something that is useful for everyday users and is usable. i think that jack dorsey is the right person for that job. they need to have some shuffling both in terms of who is in charge of product and on down the line, they have made some of those changes recently, as well , you could see some boarded changes and then your future that might be very beneficial for the company as well. twitter and jack dorsey are at a watershed moment. let's see what happens. all the best of luck to them, because if he succeeds it's going to be one hell of a party. an, m.i.t. management professor there. analyst, ipo reporter, speaking with you later in the show. alex, i will speak with you later. to another story we are
watching. amazon will stop selling the main competition to its tv products, including the apple tv and google's chrome cast. but not necessarily the roku or xbox. tom joins us now for more. amazon says it wants to avoid customer confusion. but is this really putting the customer first? guest: that is a good question. it gives the appearance of being a little bit less than friendly to consumers who want to get on amazon and buy whatever product they want. in particular, it is something that could be more damaging to google than apple. remember, we can buy all of the apple gadgets we want by walking down to an apple store. we can get it online from the apple store online. google is a little bit harder. google doesn't have the retail presence that apple does. in particular, if you are a consumer that wants chrome cast and go to amazon to buy it, you will be stymied.
emily: tom, what do you make of this? on the one hand, we are seeing google and microsoft strike a deal over patents. on the other hand, we are seeing amazon shot across the bow to google and apple. and prime customers are the minority of amazon's business. the vast majority don't have amazon prime and don't want amazon video on demand, right? guest: exactly. that's the point here is that there are a lot of people who are looking for ways to download streaming video onto your t.v., use a device, bypass cable operators. emily, we have been talking about this for a long time now. the kids right now are not subscribing to comcast, they are not going to dish, they want something easily accessible, easy to stream. these are not even cord cutters -- and these are cord nevers. devices like apple tv and chrome
these are allire, things that make it really easy for millions of people to get their tv easily. the competition between apple and amazon and google is intensifying in so many areas, including this one. it does have the feel of being slightly anticompetitive. emily: could there be an antitrust issue. ? that is where regulators will come and say there are other opportunities to buy your things. amazon does not have a monopoly on this. we don't think you will see regulators get up in their grill. emily: interesting. tom giles in new york. thanks so much, tom. still ahead, first data could become the biggest u.s. ipo this year. we will tell you why investors -- why the payment processor could be worth over $17 billion. ♪
emily: first data seeking to raise as much as $3.2 billion in what is poised to be biggest u.s. ipo of the year. according to regulatory filings, first data selling 160 million shares priced at $18 to $20 apiece, meaning it could be worth as much as $17.6 billion. first data was taken private eight years ago. u.s.handle 45% for all credit and debit card transactions for companies like coals and panera bread -- kohl's and panera bread. they handle debit transactions, security technology for apple pay. alex, set the stage for us here.
why is first data so important? why is it worth so much? alex: for a few reasons. this is kkr's biggest equity bet ever. was taken private back in 2007 in that area of big ipo's. they struggled through the recession, they were placed to the ceo several times. they finally got this guy, "mr. fix it" on wall street, and he has been in control since 2013. kkr is looking to make money back on their investment. right now, as of the price range that came out this morning at the high end of the range, their stake is looking to be about $5.3 billion. on the surface, it looks like they are winning on this one, but that is the stage here for how big of a bet this is for kkr and how much is riding on this ipo pricing and trading while going forward. emily: it's interesting -- as we
have seen all this market volatility, companies are still going public this year. what other companies out there are at this level that have been going public this year? guest: there are a number of big deals in the pipeline with some well-known brand names, ferrari, marcus, as neiman well as companies without real popular brand names, such as pure storage. but we are seeing a slowdown in biotech activity with a decrease in prices. and energy offerings have dried up. have: alex, i know you been crunching the numbers. flesh that out for me in terms of the biggest ipo this year when it comes to general and tech focus. alex: the biggest is looking to the first data. if they price it at the range of $3.2 billion for the offering, that will tell -- top the charts in a stellar year for ipos.
behind is digicell, looking to be about $2 billion. there are some other companies in the mix -- tall grass energy, blue buffalo, and fit it -- fitbit, but as you can tell, not as big of as a year as last year. we had alibaba in the third quarter of last year, and that $25 billion offering made it a hard comp. emily: pure storage is looking at an ipo this week, $450 million. talk about what else is coming up for the rest of the year. guest: it all depends upon what happens with the stock market. as many people have noted, a lot of tech companies have been finding it easy to get a lot of private financing, not only
through venture capitalists, but also from mutual funds that are willing to invest in private companies. i think they will be very sensitive to public market valuations if the stock market -- public market valuations. if the stock market goes up, they will have public after the markets -- equity markets, and if not, a lot of them will weight. emily: thank you. uber is fighting back against the proposals to tighten private car regulations in london. the car service has gotten more 118,000 signatures on a petition against the regulation. among the proposals, requirement that private cars wait five minutes before picking up a customer. another would prevent mobile apps from showing available cars on a map. the proposals came after london's black cab drivers claimed the lack of regulation was hurting the bottom line. it adds to problems that uber is
facing in europe. yesterday, two google executives in paris appeared on -- appeared in court, and on tuesday, police raided uber's european headquarters in amsterdam. coming up, two tech giants area -- very the hatchet. the hatchet. microsoft and google on patent lawsuits, but why? we will tell you, next. ♪
lynch said. they agreed to a $10 billion merger in 2011, but hp wrote it down and accused of ptolemy -- autonomy of accounting fraud. hp sued him for more than $5 billion. microsoft and google have agreed to a monumental truth over patents -- they have been clashing over royalties related to patents. in a joint statement, microsoft and google say they anticipate working together in other areas in the future to benefit our customers. joining me now is patent reporter susan decker and david long. susan, you have been reporting on this today. this deal is significant for what it does cover and what does it not cover. lay it out for us -- what is included in here and what is not? reporter: first, they are
dropping 20 lawsuits in germany and the u.s., a limiting all of -- eliminating all of the suits that google had inherited when it bought motorola mobility. they will also cooperate on patent issues. what it doesn't include is the android licensing program. microsoft will still be collecting royalties on android win it can. emily: david, how significant is this for both of these companies in terms of how much they spent on litigation over these patents and what potential deals it could open the door for? guest: it is significant and giving them certainty as far as resolving the dispute between them. when you look at it, google kind of inherited this case, motorola brought by mobility, back when it was its own independent company. the business justifications for bringing the lawsuit when it first was brought changed after google acquired them.
in fact, google sold the motorola mobility hardware to lenovo. so the business justification for the case changed even more after that. it allows them to focus on the things that their interests are aligned in, both patents and otherwise. emily: we saw apple and samsung o all the way to the wall in the united states over patents, and now we are seeing the truth here. we are seeing deals happen outside the u.s. is this the start of a trend? reporter: it certainly marks the end of the smartphone wars. we still have samsung and apple fighting for specific issues they have to do, but we can tell there is some maturation in the smartphone market. it is not growing the way it used to, so there is not a need for a lawsuit. emily: david, if this is the end of the smartphone patent wars, what is the next phase in
tech patents? what are you watching for? guest: that's a good question. i will say in this case, it is a good example of the ebb and flow we always see in patent law. whenever there is a new technology, mobile phones, sewing machines, we see a lot of these patent battles. the next thing we will look for , frontiert adventure for innovation, and we will see patent wars come up again. at the end of the day, the consumer benefits because of all the innovations that come about during that process. emily: susan, what are you watching for? in terms of your reporting, are you looking for more deals? what is the next big trend? reporter: right now, we are seeing a number of fights over the fundamental technologies, old-school companies like erickson and nokia are no longer in the business of making
phones, but they have fundamental technology and are fighting to get some money. in terms of new technology, we are looking at the internet of things, entertainment systems on automobiles. eye onually keeping an fracking lawsuits, since the fracking world is coming down. we have to look at what is happening in different industries, knowing if the market is going up or down, companies will start fighting. emily: susan, i know you will keep us on it. of bloomberg news, as well is patent lawyer david long, thank you both. that does it for this edition of "bloomberg west." tomorrow, we have the new ge cmo. you did on a missed that conversation. that is it for today. -- you do not want to miss that conversation. that is it for today. ♪
♪ from our studios in new york city, this is charlie rose. lisa monaco is here, president obama's chief homeland security advisor. wideole in compass is a range of critical issues that affect u.s. national security. they include the campaign against isis and cyber security. she is also at the head of situation room briefings on immigration and other issues. she also made it the adminiti