tv Bloomberg West Bloomberg October 30, 2015 10:30pm-11:01pm EDT
hp is hoping two is better than one. it gets ready for a new way of looking at the world. knocking out uber and taking on taxis. shares of solarcity down 20%, the biggest fall since the company's ipo in 2012. one reason -- the report installation growth will slow. they will become cash flow positive after being -- you guessed it -- cash flow negative. also deemphasizing the earlier byl of a million customers 2018. denying rumors that he will announce a stake in the company. sun edison down 10%. our correspondent covers energy for bloomberg. we are glad to have you here, as
well as the bp equity researcher. this solarcity news, the stock is down. is this different than what is happening in the rest of solar? i think the solar industry is facing a number of pressures. one being by the end of next a tax creditl see that is quite beneficial to its bottom line -- cory: it is a tax break of 30%. 14 months left in the calendar and it makes all the difference as to whether a solar installation is profitable or not. >> yes, that can make a big difference indeed. the other thing that can make a difference, how much they get paid for the amount of energy they put on the grid. utilities are pushing back against solar companies. cory: the way i had solar at my house, i had to pay the utility
for the right to sell the power to them, and that fee can make a big difference in a profit or loss. >> that's right, and utilities are trying to raise those fees on solar customers. cory: you have had a buy recommendation on the stock for a long time now, and i just wonder -- i might as well ask the hard question because you can take it, i know. if i were an investor and i gave you my money and said, here's my kids' retirement fund. you say the stock is going to 75, and this thing goes massively cash flow negative, worse every quarter, you are sticking by your buy rating, then the company says, yeah, what we said before, what we told you was going to happen is not going to happen. we are not went to get to a million customers. we're trying to find a way to get you free cash flow. what happened that you did not expect? >> sure. a million customers, that's a marketing gimmick.
that's not a relevant thing to look at. in 2016, solarcity will install single-handedly more than every other solar company in the u.s. combined as recently as five years ago. this is hardly an end of the world when it is growing 40%. that is slower than the 70% or 80% the market has been accustomed to, and it's normal to have a shareholder rotation from the hyper, fast money crowd momentum players -- cory: so, the stock is down 47% -- you call it shareholder rotation. i'm thinking more about the business. it sounds like what the company decided is, if they lose money on every sale, maybe they are not going to make it up in volume. i'm just wondering if there is anything different with this company today than what you saw six months ago? pavel: well, the multiple has certainly compressed. solarcity has $33 per share of net retained value.
that is the amount of the contract they hold ready in the bag. any growth they have in the future though, that is on top of that. that $33 a share today has a good chance of growing to $45, and by the end of 2016, that is before the tax credit even goes down by the way. when the tax credit goes down, the volumes they have on their business should flatten out, maybe grow a little bit. the margin will certainly be smaller. that's true of every u.s. solar developer. but that $45 that is locked in the bag by the end of 2016 does not depend on anything that happens with government policy afterward. cory: the duration of the solar panels though -- the company is suggesting there is more than 20 years -- they will not just get
the first 20 years of performance from the panels, but an extra 10 years on top of that. how long do you think the average duration of the solar panel, how long will it t continue to crank out just as much energy on your one or your earin year one or you five? pavel: sure, the panels are off the shelf. solarcity does not manufacture them. cory: but they are guaranteeing the performance of those panels. l: they are under warranty. in general, 25 to 30 years is the standard from the mainstream module suppliers. two thirds of them are in china, by the way. germany, japan, all of the countries where solar originated, those were installed in the 1980's. they are still operating today. cory: but with significantly decreased capacity. let me turn to you, mark. the notion you can put in a
solar panel and have it running 30 years from now, is that realistic question mark is that ? mark: that's difficult for me to say. it could affect performance quite dramatically. the newer panels are improving technologies. cory: whether the panels on your roof are improving -- mark: the degradation rates, i think, it depends on who you're talking to. i think most people expect the capacity of this panels will degrade over time. cory: maybe it will be 20 years, maybe it will be 30 years. maybe we don't know. the last thing we will bring up is natural gas prices. you cover all energy. that is an important component. volume solar is great when compared to expensive coal or expensive natural gas -- we don't have expensive natural gas anymore. the price of natural gas in just two years is down 36%.
mark: yeah, natural gas is hovering near a three-year low. no one expects the price to bounce back up anytime soon. there is a tremendous glut of gas coming from shale reserves across the u.s.. and natural gas helps set the price of electricity it was markets. that is putting downward pressure on electricity prices and that does make it harder for solar to compete, especially without subsidies. cory: it will be harder to sell. thank you so much, mark. and also, pavel, analyst at raymond james. we appreciate both of you. a price war underway. the semiconductor industry has -- has moreturns twists and turns. in the last three weeks, pmc sierra has been the target of two rival chipmakers. skyworks solutions had a bid to buy pmc for $11.60.
then micro semi sweetened its bid. combining cash and stocks for $11.88 a share. there have been $90 billion merger deals in the chip industry this year. the company struggles to deal with rising cost and sliding profit another stock we're watching -- hp. the last of hp trading as we know it is today. it will trade as hp inc, that sells printers and pc's and the majority of the cash flow. the other portion will be hpe, for those of us in the know. computer software and systems that is supposed to be the , growthy part. but the s&p does not think so. they downgraded it. diminish diversity as a result
they say. our correspondent who covers this as joined us. a historic moment in tech history. so, hp has been shedding parts and adding parts for a while here. but this is fairly -- it is hard to think more important company for silicon valley than hewlett-packard. >> a lot of people argue that. this is a huge deal. tens of billions of dollars, tens of thousands of employees and everything is about to change, poof, on sunday. it's amazing. but this is a trend. you saw the paypal and ebay thing happening, even restructuring at google a little bit. it is a big step and it's not as crazy as it seems at first glance. cory: this is a very strange split up. they announced right before that both companies would instantly go to restructuring, which means layoffs among other things, after the split. and i've compared that to
building a new house and saying, and the first thing of going to -- think i'm going to do is remodel the kitchen. the layoffs are never-ending at this coming. they are up to 82,000 layoffs, and it could go on and on and on. >> i think there are some folks on wall street there are little tired of, ok, we are going to cut more. ok, we are going to cut more. is going to lead to growth? of course, she made her arguments very strongly. cory: you'd like to see the ceo of just one of these companies -- >> exactly. being smaller, it makes is able to compete better. that is something that she is really betting on. obviously their big rival dell is not. cory: we will see if either company has any growth. the predictions right now is both companies will continue to shrink even after the split. brian: there are real challenges of the growth. but again, saying, let's give
eve knows all about search -- surge pricing. writers are complaining that they are lighting their pockets. but uber says that puts more drivers on the road when demand is high and wouldn't that be a nice thing? a new study says not so much. researchers spend a month hailing uber calves and they say cabs and they say the number of available rides went urge prices were in effect, with the assumption that drivers stayed away, knowing they would get fewer customers at a higher rate. sticking with the taxi app work, a 10-month-old startup stepping up against uber. they secured 200,000 cars so far including the u.k.'s largest minicab group.
but can anything stop uber? joining us ahead of the launch is the ceo. i will warn you and our viewers that i am completely biased, as a recovering new york city cab driver during win the mets won the world series. it is a different world. >> it is. thank you for having me here today. it is a pleasure to be here. this is a game changer. we bring together private hire and licensed taxis in one place, enabling consumers to have the widest choice possible -- cory: how does it work? daniel: we are a comparison site enabling consumers to choose between licensed taxis and private hire cars, giving them the biggest selection of choice, whether they're looking for private hire cars or a private taxi.
the company they want at the price they want at a time that is convenient to them. cory: there was a time when new york taxicabs have radios and they could talk about where the passengers were. the law made that go away. maybe that is not such a new thing. the technology is different. daniel: that is absolutely right. what we have been able to do, by connecting into dispatches, we are able to give an unparalleled user experience, empowering consumers with choice. we are also able to give analytics on the backend for the fleet operators, enabling them to see where the jobs are, whether it is over a period of time or real-time. it's all about empowering in the mobile marketplace.
cory: i'm glad about that. will you have drivers doing both, driving for uber and driving for your service? daniel: we work directly with fleet operators. our relationships are with them. we get the benefit of all of the drivers under this please. -- those fleets. as a result, we are coming out of the gate in new york with an unprecedented 128,000 vehicles from day one. cory: it will be interesting to see how well that works. that ease-of-use will be the toughest of all. karhoo ceo, thank you very much. we appreciate your time. daniel: thank you very much. cory: titanfall, the top-selling xbox game, making the leap from consoles. they will be working with the mobile developer. that is in the titanfall gorgeous universe.
me's strategy based and it will be easier to play on a touchscreen than first-person shooters. that after nintendo announced it was delaying its highly anticipated mobile game app. abuse triggered a stock dropped the wide-out $4 billion. a stocke news triggered dropped that wiped out $4 billion. coming up private jet use is on , the rise. it is how i get to work every day. ♪
and that's mostly from one dude who donated to marco rubio $3 million, a comparative pittance. crowd pac says research shows there is "no tech candidate" this year. but it is still early and fundraisers are scheduled next week. turning now to aviation, specifically private jet aviation. i lied that was how i get to work every day. i would like to. for example, this private jet. seeing overall growth. the overall number of flights have increased 17%. north american flights are up 159% and the bay area -- right here in tech land, pushing a big increase in flights. joining me right now is the founder and chairman thomas. , good to see you, thomas. thanks for booking me a flight on your jet.
it's an interesting business. business is always going to grow when the economy is growing. what is different this time? when they are is doing well. when people feel really rich they go out and buy an airplane rather than sharing them. we have 56 global all around the world. if executive is flying in europe or asia, anywhere in the world, they still need to send the plane over there. reduce entire fleet on a global basis. cory: who are the big three out there when you look at the biggest companies and private aviation in the world? >> it is a global business. you have to be present anywhere in the world. we recently got our chinese approval. we have a chinese airplane flying. we are also here in the u.s.. we cover the globe with brand-new airplanes. we own all of those airplanes. we make sure that they are identical.
whether it is in nairobi delhi , or london or here in the bay area, they are always the same product because we control the asset. cory: how many planes to have now and how many did you have a year ago? >> last year we had 44. right now we are at 57. we are online for 60 by the end of the year. there's another one coming in november. there is a reference growth -- there is a rapid growth. as for the tech industry, this area here flies a lot to asia. they fly across the pacific. tech companies are in a venture capital position. they shy away from capital commitment. they want to put that capital into their base business. with us, they just -- cory: or the duration of the fund, to be charged for certain investments. i wonder, when you look at the business, if you have a different kind of plane for this different kind of business. obviously a plane that will take you from chicago to new york or
fly you around the south is not the plane you want to take from san francisco to singapore. thomas: exactly right. we have two different aircraft types. we have the global 6000 that flies nonstop, or the challenger 350, a brand-new airplane in the u.s. flying coast-to-coast. we choose the airplane that is right for your mission. cory: the average age of your planes? thomas: 1.8 years. cory: very young for your fleet. thomas: it's a very, very young fleets. the youngest fleet in the sky. we use them about five years until we resell them. it is a very, very young fleet, having us the latest technology. that is what clients want. they want to work on board. they want to feel home away from home. cory: what makes tech people different as far as what they ?ant on the plane > the types of amenities, types of news? thomas: it's a lot about efficiency. they love the efficiency we offer.
i think they are more savvy when it comes to a new business model, which they embrace and they embrace us a lot here in the valley. they like the assets story. they do not need to buy an airplane. they buy the hours they need. cory: interesting. thomas flohr. founder and chairman. i know how you are getting home. i'm taking the train. [laughter] that does it for this edition of bloomberg west. starting monday, we are expanding the show to be one hour, 6:00 on the east coast, 3:00 here. that's all next week. we will see you on "bloomberg west." ♪ buddy- nice place, nice car what happened?
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