tv Bloomberg West Bloomberg October 20, 2015 8:30pm-9:01pm EDT
>> yahoo! swings and misses on third-quarter earnings. ♪ i'm cory johnson and for emily chang and this is "bloomberg west." coming up, the company reports next third-quarter earnings with the looming sale of their parent company emc, and tesla shares tank. and why the multibillion-dollar delve megamerger will succeed.
but first to our lead -- yahoo! shares are lower in the biggest quarterly dip since 2009. sales are down 8% year-over-year. marissa mayer in her fourth year at the helm of the company with little to show for it. yahoo! still struggling to hold on in key areas like mobile advertising. the company is still wrestling with its thorny spinoff of the alibaba state. discuss, isow to crawford. this quarter is interesting. were going to start with alibaba. quite literally the biggest and yahoo! and it's not a part of yahoo! it all. >> this thing is looming. there are a lot of questions around what is going to happen. we expect to hear something by the end of the year. looks like we're not going to hear that. it's going to get pushed out. the irs has weighed in. cory: they have waited and they have waited.
they have looked at it but they have not said yes or no. you expect that they would give some sort of blessing, but it looks like to me, if i am a yahoo! shareholder, i'm going to get this spend co and i have no idea where -- this spin co and i have no idea what the irs is going to do that. >> and it seems like you might be paying taxes on that. that is an overhang. it is a risk you to kindly done. >> and i wonder what it will be like from january to december because the taxes will not be due for a full year. crawford: the uncertainty is just a drag. that is a common theme. the uncertainty with alibaba and the uncertainty in terms of the grander strategy and how it is going to play out. >> is the notion that a push to january is just waiting for the fed to raise interest rates. we have been six months away for six years. crawford: you could see a push and get results and the results could be lackluster.
if you continue to see a hang on the stock. i think when you get beyond the january timeframe, it's in their best interest to get this thing to close. cory: i could make the argument that the last thing marissa mayer wants is for us to pay attention to yahoo! results. sorry yahoo!. let's take a look at the actual results. what do we see in terms of progress? crawford: you see they are able to grow revenue, but not as much as last quarter. cory: revenues are down as a -- 8%. crawford: sorry, sorry, hearts -- parts of revenue were able to grow. that revenue is expensive. to actually grab. they grow 300% year-over-year. the cost to get people too, and basically to get traffic into the site were up 300%. so that basically says the money they're paying to oracle, the
money they're paying to other sites continues to be a drag on overall profitability for the company. cory: mobile? how they look in mobile? crawford: mobile was up 34%. it was up considerably, but it would probably have to double that win -- to your point, when you look at yahoo! outside of alibaba, the need to accelerate. cory: is there any sense that the acquisitions marissa has done -- she does not call them acquisitions. i call them acquisitions. she has told me they are trying to bring in talent faster than hr can do it by buying companies. crawford: the acquisitions build out a stronger skeleton for yahoo!, but what they do not yet seem to be doing is putting an entire strategy in place. an entire strategy that allows you to see where yahoo! is headed. they are clearly headed toward content, but that content is a
lumpy kind of experience. for example, bringing in david pope, katie couric. bringing in packs, will drive people. talent if you will. >> like silver. you are a sports reporter. crawford: but then you try to fold in a tumblr, other properties. what is the overall story. i think the average investor would say i understand google or alphabet's strategy a lot better than yahoo!, because the story is still being formed after all this time. cory: let's talk about tumblr. as an asset that they paid billion dollars for. you would've thought this is the year you would see acceleration. are we seeing it? crawford: so far we are not saying tremendous acquisition. -- acceleration associated with that acquisition. again, a site that a lot of folks want to go to, the very, very difficult to monetize and they have not shown an ability
to monetize it, particularly on mobile platforms. cory: sports is done well. crawford: yeah, sports continues to do well, but sports is an incredibly competitive area. you look at fantasy sports properties -- cory: i thought that was a con. -- like a pun. crawford: [laughter] here is the thing about sports. sports drives engagement. you are so engaged in acts. think about fantasy sports. -- you are so engaged in apps. that is the kind of engagement that is gold in this business. yahoo! had a considerable lead, but now you see properties beginning to catch up. that means they will have to move faster to differentiate in that category. cory: so, you're saying daily fantasy sports to figure those expectations? crawford: we don't know what those expectations were, and i would guess that the folks at espn felt the same way about the ability to engage people with
those properties. cory: my expectations of you were very high and you have exceeded them, crawford. and that orange vest with that orange tie. crawford: i'm on it. cory: moving on. tesla it longer on the recommended sedan list. david joins us from detroit with more. david, i feel like -- this is my complaint about tesla coverage. it is always covered by tech reporters, not car reporters. what does this mean? david: tesla has ramped up production and as they are selling the model s, they have taken their eye off the ball and maybe it is difficult to keep track of quality when you're adding more features. when you're adding more features
to the cars and new models. the complaints consumers have is everything from small stuff like basic carmaking issues like a sunroof that squeaks, door handles the not do not do what they're supposed to do two big stuff like the electric motor had to be replaced for some buyers, the chargers were not working for some people. that's just more stuff to keep track off and things go wrong. cory: i think every car ad ice when i'm watching football is "motor trend car of the year." it doesn't seem to matter much. does consumer reports matter much? david: consumers look at them quite a bit. toyota has done well for such a long time and it confirms what everybody already thinks. they have great quality. tesla already had -- i would say it was a coup to have the model s recommended last year.
because they were such a new car company. everybody thought they are brand-new to the game. they will make mistakes. they will have quality issues. they didn't. now as they are adding sunroofs and more electronics to the cars and building new models, they're starting to look like every other car company and that is where problems are creeping in. they can still get a handle on this because they do a pretty good job of launching these cars. they know what they are doing. they are not just a group of silicon valley guys, but they will have to pay closer attention going forward. cory: they have problems with door handles. they can get a handle on it. tesla owners still seem to love the car in spite of squeaky centers and/or handles that don't work and motors that need to be replaced. the report also found that customers rated tesla service the best in the world. close committee occasions with customers. they proactively address issues.
proactively, of course, is two times actively, or a word i cannot stand. what do you make of that? david: people do love these cars. the car performs very well. it can drive a long time on a charge, which people like, especially with an electric car because people worry about it running out of juice. it's a fast car. it's pretty dynamite really and it's a good looking car. it really delivers on all of that stuff read people like the cars lot and when the things go wrong, if the company can get it back pretty quickly, which by all accounts so far they have, the people will be happy. this is more an issue going forward if they can get this under control and launch the model x with very good quality as well. cory: all right, david welsh, think you very much. appreciate your time. most of you were watching the new "star wars" trailer last night.
tim cook had interesting things to say at a q&a. the apple ceo answered questions for about an hour and though he did not come out and say it, there were suggestions that an icar was in the works. >> it would seem like there will be massive change in the industry. massive change. you may not agree with that. that is what i say. so, for us right now, as we look at it, we would like people as they enter the car to have an iphone experience in the car. cory: he also gave details about how apple music has been doing. almost four months after it is lunch. the service has 6.5 million paying users so far. 8.5 million using it for free. this is compared to how spotify has 20 million paid users.
cory: cory johnson and for emily chang and this is "bloomberg west." vmware was out with her quarter earnings and it looked good, but you dig a little deeper, not so good. a lot of questions being raised. sales of $1.67 billion. the analysts thought things of the little bit worse. bookings were only 3%. analysts were looking for 11% and that is bad news which suggests the future may not be so bright. the shares of vmware down three bucks after hours and they are still selling off. emily chang is in austin, texas for the dell work conference, but she sat down with george colony to get his thoughts on the megadeal with dell, whether it is likely the largest tech deal ever will happen? >> it will be very difficult to pull off on a cultural level, on a financial level.
what is happening, in the i.t. space, you have an aggregation of these very large players. this is the first of many deals we will see in the i.t. space. when i say i.t., i am differentiating that from the business technology space, which technology that companies are building for their customers. i think this will be very big, high bar for michael to get over. emily: you referenced hp and compaq. you said this took carly fiorina down. why will does not take michael -- why will does not take michael dell down? george: he is like the little train that good. he just kept growing and growing. he just showed an aptitude for proving me wrong and he is not very flashy, but he has a very good strategy.
it does not mean it will be totally successful, but if anyone has a chance to do it, he has a good shot. emily: hp is going in the opposite direction. who is going to be on the right side of history? george: the i.t. space is a maturing space with lower growth and lower margins and that will dictate the aggregation. so, i would say i would be worried if he was going with this -- emily: why not? george: because it is a space where more is better. look at what is happening with large companies. they are trying to rationalize their i.t. spending. you want the lowest cost. you want one supplier for the full deal and that's really what michael is building, a one-stop shop. emily: have you told meg whitman you do not like the direction they're going?
what is the response? george: everyone has the run -- has their own logic. she has her views. by the way, i call that the investment banking view. she is listening to investment bankers. of course, the way that things should go for investment bankers are higher fees and higher fees generated by breakups. emily: who will be competition for dell? have hp and ibm. those companies have their own problems. ibm is having trouble growing. while a is disallowed from acquisitions in the u.s. government. hp is breaking up. but i forget? emily: cisco. george: cisco is in a position of new vision, new leader. if i had to rank them, this is
not a formal analysis, but i would probably put dell at the top of the list. emily: interesting. you do not think anyone else is going to bid? george: the other potential bidder is oracle. remember, mark hurd, the ceo, co-ceo, is heading it a waiver from -- heading it away from i.t. but we do not know how larry will react to this. i've the feeling that though larry tends to use revenge sometimes, as far as i know, larry and michael have a good relationship. so i do not see any revenge or blocking going on here. oracle's biggest competitor's sales force. cory: that was george colony with emily chang. tune in tomorrow when "bloomberg west" is live from the dell world conference.
emily will be speaking to michael dell. as well as the microsoft ceo. espn plans to automate as many as 350 job layoffs which could announce as early as tomorrow. espn has lost customers due to cord cutting. this follows disney's announcement in august that earnings for the network did not meet earlier forecasts for the company. coming up, what to look for tomorrow from ebay. we will look ahead at the company's first report since paypal. ♪
♪ cory: i'm cory johnson in for emily chang. this is "bloomberg west." the microsoft ceo satyana , nadella taking a personal hit. his compensation dropping. that is bad compared to the $84 $218.3 million. million he made last year. it included a stock grants worth $59 million. this year, only $12.8 million in stock. ebay will release its first quarter earnings for the first time since the split with paypal. level wall street expect, and how will the business standalone? paul sweeney from bloomberg intelligence. paul, what your thoughts about ebay now that it is back to just
being ebay? paul: this is a big quarter for ebay. this is the first since the split up. investors, for better or for worse, we'll be focusing exclusively on the commerce business without the big growth spurt of paypal around it. this is a company that works and is really positioned in an industry that has broader e-commerce that is growing 20% a year. yet, ebay is only regarding its top line in the low to mid single-digit range. they clearly have an issue in terms of topline growth and repositioning the growth, and that's going to be the challenge, to put out a strategy for a roadmap to get some back to the growth the industry is experiencing. cory: it's an interesting business, because in one case, it is one of the dominant e-commerce companies next to amazon on all of the internet, but the growth is really not happening there. i wonder if the world is changing and amazon once again has the upper hand?
paul: it certainly does. if you look at amazon from numbers, they continue to impress. ebay has been transitioning from their historical auction business to more of a traditional e-commerce business, so that transition is in place, but while they have been executing, and one can argue they have had success, but while they are executing on the strategy, traditional retail has been upping its brand offerings. we talked to the retailers they , know that e-commerce is the future and they are putting serious capital beyond those efforts. it's a very competitive marketplace for ebay right now to be standing on its own. cory: i wonder if people do not recognize that most of the sales on ebay are sold at a fixed price, it's one of the largest car market places in the world,
and i think that people do not think of ebay as what it really is. paul: my hope is as a standalone company they will be better able to capitalize those strategies. priebus evoke is a much more of their time on the faster growing paypal business. this is a time for ebay to arguably sink or swim over the next year or two. to be able to really convince the street that they are a viable play and e-commerce. cory: paul, 10 seconds. a 1977 ferrari listed on ebay. for are you a buyer or a seller? $9 million. paul: i do not think i will be a buyer today. cory: paul sweeney. bloomberg intelligence. thank you very much. tomorrow, emily chang sets down with michael dell. thank you for watching "bloomberg west." ♪
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♪ >> from our studios in new york city, this is "charlie rose." charlie: we are in phoenix, arizona at the walter cronkite. i am pleased to have as my guest senator john mccain. he is a big proponent of strong defense and america's role around the world. he ran for president in before 2008. serving in the senate, he was a member of the house of representatives. all of us know of his courage and heroism. senator mccain, is a pleasure to