Skip to main content

tv   Bloomberg West  Bloomberg  October 22, 2015 8:30pm-9:01pm EDT

8:30 pm
(the lion sleeps tonight.) woman snoring take the roar out of snore. yet another innovation only at a sleep number store. emily: amazon shares surging after posting surprise earnings. ♪ emily: i'm emily chang and this is "bloomberg west." coming up, another huge beat after the bell. alphabet with a third quarter win. the first buyback in google history. microsoft on cloud nine, thanks to rising demand for cloud services. notice a theme today? apple let the sun shine in the company, doubling down on solar
8:31 pm
power investment in china. first, to our lead. a string of tech beats. i want to start with amazon, shares spiking 13%. now nearly double where they stood last year. revenue soaring 23%. $25.4 billion. profit increasing 118% to $79 million. yes, amazon turning a rare profit. another important number, operating cash flow, $9.8 up 72%. billion, the boost coming from sales on prime day. cloud, whichzon's made up 52% of profit. for joining me is the author of a book on amazon, every time amazon turns a profit, people go crazy. are these numbers good?
8:32 pm
guest: the profit number is always kind of meaningless. they have pulled back a little bit. what we see now is that every part of the business is working really well. the fly wheel is turning. a surprise on $25.4 billion in quarterly sales. next quarter, this company is going to pass 21 years $100 billion in sales, the fastest in history. retail e-commerce itself is growing around 15%. retail, as we saw with walmart's numbers is basically flat. , amazon is taking customers away. people in general are buying more from amazon. the aws business is working remarkably well. emily: let's talk about that, 52% of profit. that is huge. >> what they are saying is that someday it could be bigger than the retail business. it is amazing how this is a
8:33 pm
business that nobody understood until last year. emily: let's talk about prime day. this is something that -- i remember going home and trying to buy something and i didn't want anything that was left. it seemed like a dismal selection but really, is it part , of its boost? >> it is a good question to see how they calculated it. they put a lot of marketing muscle behind it. it was an otherwise slow quarter, that selection of the day was very strategic. maybe it got more people talking about amazon. >> they say it added 2% to their growth rates, which is extraordinary. most people make fun of it and wondered whether it would have any impact. amazon saying that they are going to keep doing it. it was patterned after american express has its small business saturdays. now given that kind of increase, they will have to do it every year, and have to do it better next year to maintain that sales growth. >> they may not be just counting
8:34 pm
the number of sales on that day, it is the number of people the true into prime. as we know, and this is part of amazon's flywheel, you get more people into prime, they are more loyal. that is why they do all this stuff. emily: in general, amazon is a pretty secretive company. we are not getting hard numbers about the number of prime members. what are the numbers we want to know? that they haven't told us yet? >> there are a lot. that prime number is key. analyst have their own estimates. i think it is around 40 million or 50 million now. the fire tablet is always the most popular item. >> of course, you cannot get it anywhere else. >> they recovered from the fire phone last year. that was one of the things that made people very skeptical. coming back to prime, it is not
8:35 pm
just a question of members, it is the fact that they keep finding other ways. they now have a $49 membership for students. the local amazon fresh is $299 per year. they are finding more ways to get money out of people. emily: i could not live without amazon prime and amazon fresh. i have said that before. thank you so much for joining us and checking in on amazon. michael, you will be with us throughout the show. i want to talk about microsoft because it relates to amazon. microsoft shares are slightly up in after-hours sharing. the company beat on top and bottom line. first-quarter profit came in at $5.4 billion. analysts had been looking for sales of $21 billion. the ceo has been focused on selling cisco should based office products as the pc market
8:36 pm
continues to slump. joining us from new york, anarug, what is jumping out? when using an microsoft? reporter: we were not going to see the push from windows 10. that's not going to come for another couple of clubbers. -- quarters. the 365 numbers were pretty good. , revenue fornue the future quarters was up 9%. ,that was pretty good. emily: let's talk about the cloud because microsoft cloud is , also going gangbusters. to amazon. i sat down with microsoft's ceo yesterday and i asked him about margins specifically. if you are competing with amazon, could amazon spoil margins for the entire industry? take a listen to what he said. >> i don't come at this by
8:37 pm
starting with margins because i , think if there is one thing that all of us who have lived in tech learned it is how do you , grow the pie? what matters to me is the magnitude of revenue and the impact it can have. emily: is that fair? that he's not thinking about margins? is that the right way to approach this? >> if you look at their overall margins, few businesses have a 60% overall margin. they have to be in the cloud to protect their core. a lot of the people who use office 365, these are small businesses which are already moving into the cloud. microsoft has to be there at any cost. the extent to which they sacrifice margin to be there should not matter. emily: something else we are seeing is partnerships with competitors. dell, for example. microsoft and dell are both making pcs, dropbox, ibm.
8:38 pm
it is interesting that a "new york times" headline called it a "crazy like a fox" strategy. take a listen at what he had to say. >> we will look at any opportunity that fits what we do. what is it that we can uniquely do? i ask myself each day, i don't want to be in every part of the industry. i want to be in things that are addressable markets where microsoft has a unique contribution to make. i think that sense of purpose and identity is what makes companies successful, not just doing everything. emily: michael what is your , response to that? michael: in some sandboxes, they are fighting with people. and a lot of others, they are playing. it may look like they are trying to compete but that is really at the margin. a big part of dell's businesses are big servers that run on
8:39 pm
microsoft products. google other companies are hard , to partner with. it is hard to partner with apple and google. microsoft is opening the doors. their partnerships with dell and dropbox and others, all they are going to do is help drive their business forward. emily: meeting him for the first time, he seems very focused. he is winning over people with his strategies. he is winning over analysts. how bullish are you on the future of microsoft and his -- reinvent this company. reporter: what they have done is a smart move to convert to the cloud. that has taken a lot of money to come up with that infrastructure. what they are also doing is selling value-added services to the cloud. they might be matching amazon price to price but they have had-on services with a higher
8:40 pm
margin structure which is what , is going to give them not just the revenue growth, but profit growth going forward. emily: given your role on the yahoo! board, we are seeing the changes in leadership that microsoft. we are seeing him navigating this transition well. how would you compare that to what is happening at yahoo! right now under marissa mayer's leadership? michael: they are both very different companies. microsoft has lost its way but it still has a massive flywheel business. in a lot of ways, they have gone from being a consumer company to being a business-to-business company. i just think that they are in different businesses. emily: yahoo! is trying to be a consumer-only company, right? michael: i think yahoo! will find its way. the deal they announced with google could make a huge difference in their business. emily: another example of partnering with a competitor. michael: i don't think microsoft
8:41 pm
good ofed out to be as a partner for them as google will. emily: thank you for stopping by. staying with earnings, pandora has hit a sour note with investors. the largest internet radio service lost $.40 a share. analysts had been expecting pandora to post a profit. pandora says revenue rose 30%. slightly less than what wall street was expecting. the company also trimming fourth-quarter revenue projections. shares of pandora feeling the heat in after-hours, down about 20%. coming up, google's first quarter, or should i say out of it, all smiles for the company's new ceo. ♪
8:42 pm
8:43 pm
8:44 pm
♪ emily: now to google. another beat, revenue up 15% to $15.1 billion during the third quarter. profit up 41% to almost $4 billion. this is the first and last alphabet report before breaking out its core business. the biggest surprise of all, the company finally issuing a major buyback. the exact value of the buyback is somewhere over $5 billion which mirrors the square root of 26, a play on the 26th letters in the alphabet. i will not try to read it on air. shares jumped as much as 11%. here with us is the former coo of google europe.
8:45 pm
he is with us from skype and florida. wolff of activate still with us. i want to start with the buyback, michael. this is the first buyback for google in history. coming from wall street, one of the first things she is doing is giving cash back to shareholders. michael: part of it is sending a message that we think our stock is cheap. we can buy it back. this is a company that does generate a lot of cash. that is one of the first things. it is also a way of signaling to the street that despite the creation of alphabet, there was -- there still is going to be a lot of financial discipline. emily: a lot of the questions about google right now has to do with mobile and youtube. let's take a listen to what she
8:46 pm
had to say about that. >> our strong revenue growth in q3 reflects the ongoing momentum in google with acceleration and mobile search complemented by the strength of youtube. emily: what is standing out to you? how is mobile specifically doing? guest: we love to hear that programmatic is going strong. it's good that we are seeing some of the same things that google is. emily: this is a market that facebook has been running away with. is google going to be catching up? guest: there is going to be a trade-off at google. the move to mobile devices is a big question mark. how they make up for the declining we are seeing in search with increased adoption of video and youtube, and how video cpms counteract that affect, i think that is really where the tension is. emily: this is the first call we have heard from the new ceo of
8:47 pm
google -- what is your take on how he is doing, especially when it comes to mobile versus desktop? >> it is certainly good in your first quarter see results two beating expectations. qe3 saw about 21% growth. something is picking up. they mentioned programmatic mobile and youtube. that is no surprise, youtube in particular is doing really well. the number of minutes being viewed is up 60% year on year. good drivers. michael, your thoughts on
8:48 pm
youtube. michael: yesterday, they announced a paid service to watch youtube videos on the current creator videos as well as new was they are likely to create. it is ultimately a competitor to netflix but also a competitor to , people like spotify and pandora because youtube is, when you strip out the videos watched without motion, it is the largest music service. it suggests that they are looking for another revenue stream beyond advertising. emily: video is another place where facebook seems to be moving ahead. what you seeing in the trend there? guest: marketers are desperate for high quality video inventory , and there are few places you can go to get scale, particularly on mobile devices. for a long time, youtube has had that domain unto themselves, and as you mentioned, facebook is putting a lot of pressure not just on video but across the ad tech spectrum on
8:49 pm
google to innovate and at the end the day, that is a fairly good thing. we are seeing good products come out of google. in the past, they just waited it out. emily: what we are looking forward to is the next earnings call, where they are going to break out google results and everything else. that is where we will find out how much they are spending on things like google-x and the robots. we will be all over that next quarter. thank you both. michael, you are sticking with us. apple is ramping up efforts to reduce global warming emissions from its supply chain in china. the company says it plans to build solar grades in china to generate 200 megawatts of power. the grids will offset the greenhouse gas emissions of companies they work with in china. isle says that 200 megawatts
8:50 pm
enough energy to power 265,000 chinese homes. apple previously funded the construction of two solar farms in china to cover the electricity used by their offices and stores. the company is focusing on china since the majority of products are made there. still to come, why michael wolff thinks facebook will dominate the social media landscape. ♪
8:51 pm
8:52 pm
♪ emily: facebook's search engine is getting a facelift. the social network changing its search bar of the second time in only a year. instead of only being able to search for other users and groups, the update allows users
8:53 pm
to search all two trillion public posts. for example you can search for , bloomberg west and you will be given a tailored list of posts. according to facebook's vice president of search it will " balance how the authors are relevant to you and how what they are posting is relevant to what you are searching for." still with us, michael wolff. you covered a lot of ground, a lot of coverage, people calling them at the slides. i want to start with facebook because you make some broad claims that facebook is dominating, especially messaging and it could leave snapchat in , the dust. michael: messaging overall is dominating the world.
8:54 pm
messaging within three years, messaging will grow faster than the internet. there are about 2 billion people in the world using messaging today. emily: messaging apps primarily like whatsapp, messenger, facebook messenger, snapchat, a couple others. within three years, there will be 3.6 billion people using messaging. that is growing much faster than social media but facebook owns , the two largest, facebook messenger, roughly 700 million users and whatsapp. ,they have roughly 900 million users. emily: what does that mean for snapchat? and twitter? michael: they are in a different business, they are not in messaging. they are pure and simple, social media. they will serve different functions. messaging is communication therees, but increasingly
8:55 pm
will be companies to build applications on top of messaging. facebook has already launched an app store, along with sending videos to your friends, we will see a lot more mobile apps. where this gets competitive with google is that facebook is launching its own virtual assistant, something like siri. the difference is that you don't speak to it. you text your instructions. i think this is going to come together and be very disruptive to the entire search business and overall in terms of the internet. emily: what about music and audio streaming? what do you see there? michael: if you strip out all of the streams from youtube, you can see they are the largest music player, but pandora and spotify -- they are both ad
8:56 pm
supported. spotify is likely to adopt advertising because it is the only way they will grow their business. the real question is, what is happening to apple music? i was at the wall street journal conference. tim cook said they had $6 -- 6 milliong paying subscribers. there were a lot of jokes that there were 6 million people who forgot to cancel their subscription. it is not clear who is going to win. one thing is for sure, google has a lot in it to win because google has so many more tracks than anybody else. emily: michael wolff, ceo of activate. thank you so much. >> it is on our site activate.com. emily: definitely worth diving into. michael wolff, activate. breaking news from microsoft, they are cutting 1000 jobs in a new round of layoffs across different units. we will find out more about that and bring you more tomorrow.
8:57 pm
thanks so much for joining us. we will be back tomorrow. ♪
8:58 pm
8:59 pm
9:00 pm
♪ >> from our studios in new york, this is "charlie rose." charlie: we begin this evening with vice president joe biden's decision not to run for president in he made the 2016. announcement from the white house rose garden earlier today. vice president said he is out of time to launch a winnable campaign, but promised to play a role in the race. >> while i will not be a candidate, i will not be silent. i intend to speak out clearly to influence as much as i can where

12 Views

info Stream Only

Uploaded by TV Archive on