tv Bloomberg West Bloomberg October 19, 2015 5:30pm-6:01pm EDT
third-quarter results, the company saying it turned a $3 billion profit, but revenue was down 14%. big blue missing wall street estimates on the sales side as it struggles to turn the business around. ibm reduced its full-year earnings per share guidance. look good. do you see something i don't? tom: there are signs of hope, evidence the transformation is happening. it is just not happening quickly enough. emily: she wants to focus on cloud, analytics, and security. tom: when you are the management of ibm, you have to look for the silver lining somewhere.
the double-digit growth is a positive sign. the problem -- the conversion is not happening quickly now. these are potentially some of the lower margins kind of businesses, so profitability will continue to be a challenge. these are valuable businesses, this is the wave of the future. this is the way people will want their software delivered. they want the analytics that ibm is investing in, but it is just a big ship. turning a big ship takes a lot of time. emily: what about in the broader tech landscape? we have seen ibm unloading things. some we see ibm spinning more stuff off or doing some kind of big merger? tom: how can they do something that is really transformational?
they will continue to invest in those kinds of things. it is difficult even if you bought something really big. how transformational what it really be for them? that into incorporate what is already a large business? is there an activist who wants to get into the stock and wants to pressure them for something specific? here is the challenge. if there was low hanging fruit, wouldn't they have already sued -- pursued that? they have been straightforward .bout revised estimates it did take a while. they have been buying back stock and issuing dividends. the investors we talked to, you can only rely on that for so long. emily: what about watson?
take a listen to what he told me. rapidly,growing very fastest-growing segments. as we look at applying watson to other areas, we will grow those businesses as well. emily: he says watson is already incremental to their business. should we believe him? tom: it is going to be busy if you are -- it is going to be big if you are a small company. you are talking about less than a billion dollars in revenue. we will keep covering this story. tom giles, ray to have you back here in san francisco. another stock we are watching, shares surging in after-hours trading on news that the chipmaker is an advanced talks
to sell itself to western digital. last week, we reported that sandisk had spoken to western digital and micron technology about a deal. adding to the funding it has available for deals. startup facingng growing scrutiny over the accuracy of its technology. investorith an early -- theness t --hera ranos. i asked him if he still stands by the company. >> we want them to succeed. we do not have the answers to the questions swirling around right now. can i give you an answer to the questions you are asking? i remember meeting her when she
was still a student. elizabeth holmes. as a teenager, she started the passion.ith great i remove or my partner saying, she is like steve jobs. this is long before she was wearing that black turtlenecks. it was fascinating. she had that mesmerizing zeal to revolutionize. needles.inds of chapter,he very first $100,000 check. she has been somewhat independent. emily: do you guys have an observer on the board? so, i interviewed elizabeth last week and i had the same impression. she is impressive.
succeed.em to but there are people out there who think it is a fraud. is it a fraud? do you think it can recover? >> there were some reporters them oft accusing fraud. it is really frustrating to get kicked when you are down by someone on the outside. i understand people want to critique anyone who is flying high. i think they have done something remarkable. have such auys tough job because you want to invest in breakthrough technology. something separate
possible from something impossible? >> there are people walking in our door every week. of you namefuture it. that is what makes my job fascinating. some of them are dead wrong. if they are really an interesting sector of the economy and doing things that are not understood by most, some esoteric technology, or some business model that has never been tried. the best partnerships are win the venture investors believes almost as passionately as the entrepreneur themselves. when i hear it one must
explaining it -- elon musk explaining it, he has won me over. it is hard to describe when that clarion bell hits and you see the future. and i've been wrong and i will be wrong again. but when is -- when it is right, it is a remarkable thing. emily: you can catch the full interview next month during studio 1.0. it kicks off november 6. pressure mounts on marissa mayer to control a mass exodus at yahoo!. more of my conversation with mike morris, his thoughts on the state of tech valuations now versus 1999. ♪
emily: more drama in the tech the new, amazon and york times continue their back-and-forth today over workplace angst at the e-commerce giant. jay carney has responded in a blog post. he shared internal records of the excellent employees featured -- the employees featured in the market. the executive editor fired back in his own post. the reaction from the story from ex-employees leaves no doubt this was inaccurate portrait -- this was an accurate portrait.
marissa mayer loses a second top lieutenant in a month. this weeks after chief marketing officer left the company. it could be one of the biggest blows to her turnaround plans so far. brad stone broke the story. it seems like this is one after the other. they were like the top two people. brad: jackie was managing the spinoff of the alibaba assets. nothing more important or strategic for yahoo! or its investors. this is $24 billion of value inside yahoo!. she is kind of managing this process. done.probably close to of course, there are some tax
questions. if you are an investor, you were very confident when jackie reese is at the helm. left? who is brad: there are -- there is a team there, but each departure brings another mountain of bad publicity. there is this question, and she has never managed to out run it, what is yahoo! minus the alibaba assets? she has steered in the direction of search. it is a media play? they have fired -- they have hired folks. -- hired folks like katie couric. is it an advertising play? emily: how big of a win is it for jack dorsey of square?
he is now running to companies. brad: she is going to go on to square capital. by some estimates, the fastest-growing part of square. there is always some uncertainty about his ability to run both companies. emily: thank you so much. to michael mauritz, one of the stars of venture capital and chairman of sequoia capital. during the 2008 financial a phraseequoia coined that encapsulated the tech industry pain. i asked him what today's headlines would be. michael: it is a more rational time the 1999.
i do not think there is a universal feeling that every company is going to be a massive success and people will be more discriminating. yesterday's at incredible story in the wall street journal about theranos to do notand -- and i pretend to know about the butils of that company -- if similar things are true about other companies that have very --h valuations, some of them in the same collection of unicorns are a handful of companies that are going to become the great technology companies of the next 10 and 20 years. emily: what does that mean? michael: they will fail.
story is aeheranos perfect example. how many of these are out there? michael: i do not worry about it. it is the war of corporate business evolution. for theirget too big britches, if the companies are run poorly, if the product or service does not fulfill its promise, the companies deserve to fail. emily: how protected our late stage investments? michael: many late stage investments are not really investments, they are just disguised forms of debt. many of them are very well protected because of the terms investors have put around them. the ratchets, the liquidation
preferences. emily: is that a dangerous trend? these ratchets and the guarantees that investors will get a certain amount back. michael: if the company does not perform, yes. it is high risk poker. emily: you can catch the full month during our new season of studio 1.0. the head of youtube gaming shows me how they are ready to take on the competition. --ft kinks pleads not guilty draftkings pleads not guilty. ♪
emily: to a story we are watching, and external investigation has found that employee did not use proprietary information to win the money. the employee could not have used insider information to place a bet on sandal -- fan duel. statecident led new york attorney general to start a probe. the controversy could impact the websites popularity. another online industry and that is gaming. people watching other people play games. this business is booming. amazon bought twitch for a
billion dollars last year. youtube -- with its own platform -- double down with its own platform. one gamer is estimated to be worth $12 million and the company just released a beta version of sponsorship that allows viewers to subscribe to their famous gamers for a monthly fee. honor to have you here in the studio. demo and bit of a you are going to explain to me why people love watching other people. .> we have youtube gaming this is something we launched at the end of august. you have the ability to add different game pages.
you can go all the way back to 1996, as well as some of your favorite creators. away foru just added people to subscribe to their famous -- favorite gamers for a monthly fee. >> we are always looking for new ways of revenue streams. creators are generating ad revenue. they have been making great money off of that. now we added another way for people to support their favorite creators. emily: 144 billion minutes of other people watching people. break that down for me. >> you are talking hundreds and hundreds of millions of users consuming gaming content. has 1.7 million.
of thousands of people making a decent living across the board. gaming.news, it has been pretty impressive. emily: talk to me about how you can see some of these -- these guys have a lot of meant with them. it is quite a sophisticated .peration to make a living >> we try to simplify it. we integrated the playstation 4 last month. we also did something called mobile capture. on your android phone, you can use your selfie cam. we're trying to make it easy. you do not need a high level of technical savvy. quick.show you this real
korean teams. we have hundreds of thousands of people watching live on youtube. will go into the world finals for a chance to win 2.1 million dollars. emily: how profitable will this business before you? >> the advertising revenue, we give a majority of it to the creators. emily: where is this industry going? as far as i am told, this is still kind of a niche thing. >> in some ways. one you talk about hundreds of millions of people, at the same time, it is -- it isn't. indication of slowing
down. it is hard to wrap your head around where this is going to go. emily: is this better than football? ask i love watching -- >> i love watching sports. you have people who watch cooking shows, you have people who watch the kardashians. emily: i did tell people we were going to be playing games. we cannot do that for technical reasons. we will have to make good on that. i will come down to youtube. >> i will hold you to it. emily: thank you so much for joining us. i am warming up to the idea. that does it for this edition of "bloomberg west." week.eaded to austin this