tv Bloomberg West Bloomberg January 13, 2016 11:00pm-12:01am EST
: i am angie lau. we've got breaking news. infosys coming out with third-quarter earnings. .rofit came in at 34.7 rupees that is compared to estimate of 33.5 billion. that is more than expected. we are going to keep an eye on these stocks. again, third-quarter net coming in at 34.7 rupees better than expected. on stock for the nifty infosys is up. stocks are down for the eighth time in nine days in china. the shanghai composite is headed
for a bear market after falling 20% from its december highs. the slump in stock markets has extended into currencies. the dollar fell to a 10-month low. the currency dropped as much as 1/10 of 1% against the greenback. hong kong stocks sank to a year low. let's take a look at the markets. hong kong and china, currently closed for lunch, but here is how they were trading. the selloff continues. this is the picture in singapore , tokyo, and mumbai. i'm going to be back in a half an hour from now. time now for you for bloomberg west.
emily: you are watching "bloomberg west." iran has released the 10 american sailors they detained after two boats drifted into iranian waters. a decade of sanctions on iran may end on monday. the iaea with a final report. the house approved the republican backed legislation giving congress greater oversight of the landmark iran nuclear deal. the vote was 191-106. president obama will likely veto the measure. the company sees fourth-quarter and 2015 sales of $435 million and $1.6 billion respectively. analysts had expected fourth-quarter revenue close to $510 million. joining me to break down what it means, porter bibb in new york. here with me in san francisco is cory johnson. what is happening?
cory: gopro is not going anywhere. revenue is shrinking. this is supposed to be a growth stock. some analysts said this could be the next apple. this is -- here is what has happened. revenue growth for the consistent and the guidance was going to be even higher. what we have seen, suddenly, the company says, fourth quarter, our big quarter, down 31% year over year. layoffs coming. the ceo sold his shares before any other insiders could. he donated them to a charity that he controls.
emily: many companies have been through very challenging times. apple, under steve jobs, went through a lot of difficulties. did something go wrong with gopro's business model? >> this year, there were two challenges. there was not a product refresh. the fears and concerns about market size for their hardware product was always there. the hope was that the runway is long enough to to leverage the brand. emily: they tried to transform themselves into a media company. what do you make of how gopro navigated that transition? porter: they need a lot more than a parachute because they fired the guy who was running gopro media.
they never delivered. it is a hardware company and it is a hardware company with a lot of competition right now and not only did they fire the head of gopro media, they have no marketing director. nick woodman does not have the sales and marketing infrastructure and he has to contend with sony, canon, nikon, and half a dozen other competitors. coming up with a drone and virtual reality is never going to do anything to salvage gopro. emily: you do not think a drone could save gopro? cory: it is a camera on a stick and that is all it has ever been. >> the brand strength is there. the competition is intense. it is all going to depend -- what is the product association
going to be? emily: a lot has been said about nick woodman as a founder and a leader. he is very well respected within the industry. perhaps by cory johnson. he was on bloomberg television recently. take a listen to what he had to say. nick: when we sit down with investors and they understand our vision, it becomes a question of are we the ones to execute? are we the ones to realize that vision? more often than not, people believe that we are. the stock will come up, and the stock will come down. emily: i did that interview in march of last year and i asked
him about the competition. he said, i wake up every morning scared of the competition. i would not be doing my job if i didn't. >> with any kind of hardware, we have always seen this happen. even sony cameras. if you just look at what he just said, this long-term vision and product cycle, it needs to be faster. the market is moving much faster. they are not moving as fast as they should be. emily: what about the possibility of a sale? apple could be a possible buyer. is that realistic? porter: gopro has fewer than 50 patents. apple has just about all of the patents that could allow them to
make their own gopro if they wanted to. i do not think a major internet company or hardware company is going to buy them. some of the chinese companies could easily swoop in at around billion dollars or $1.5 billion. they are a target, but not for anybody we would normally name as a major player. cory: there is a terrific camera store in manhattan that is been there for 100 years. they have these great cameras. the gopro is their best selling thing. there are 30 different knockoffs of the gopro. gopro might be bringing people to this market, but the other cameras are starting to build more.
emily: netflix also had a rough day. cory: the rug got pulled out from under the nasdaq. look at the stock chart on netflix. the successes of last year became the failures of this year. you saw a dramatic selloff in the last hour or two of the market. the gopro news right after that, it was yelling fire in a crowded theater. emily: carnage. porter, you are sticking with me. as we have been discussing, a rough day for u.s. stocks. julie hyman has a closer look.
julie: the selling in all three major averages resumed wednesday, but it was notable in the nasdaq where losses exceeded that of the other indices. we saw the nasdaq -- not only was a steep selloff, but a broad one. big cap technology feeling a lot of pain throughout the session. apple, for example, continuing its march downward. amazon, microsoft, google continuing weakness. on the smaller cap side, there is twitter. analysts who raised questions about the company's user engagement about its mobile users as well. and then there was the continued selloff in biotechs. that is a theme we have been talking about a lot in 2016. if you look at the nasdaq biotech index, not only is it in a bear market, if you date back to its big on july 20, 2015, it
is down by 30%. the selling continues this year. emily: julie hyman in new york. coming up, apple is a big part of today's tech selloff. the shipping data out of china could be a bright spot for iphone sales. google x founder joins us to discuss driverless cars, robotics, and his ultimate moonshot. ♪
emily: al jazeera america is in the news. the company will shut down operations in the united states by the end of april. al jazeera launched the network in august of 2013 after spending $500 million to buy current tv. from the beginning, ratings were a challenge for the network. observers pointed to an already saturated market in cable news. 600 people will lose their jobs as a result of the closure. apple, the world's most valuable company, making headlines. despite reports of a slow down in iphone sales, new chinese government data reportedly shows sales jumped in china in the fourth quarter of 2015.
sales of smartphones made by apple and others surging 34%. apple may be interested in buying time warner as it pushes to set up a streaming video service. joining me out to discuss these stories is our next guest. bob, i will start with you. work through this data for me. a couple of weeks ago, we heard that production had been cut. bob: this is the big question mark. you have this government agency saying non-android shipments -- in china, there is a lot of android open source, very inexpensive phones.
it is not clear if those numbers are being included. 33% jump, let's be honest, that is spectacular. all the supporting data would suggest that does not seem to be the case. the one thing i will say is, when the iphone 6 was launched last year in china, it made a huge jump. if they did not have it in there for the entire fourth quarter, it is possible we have an apples to oranges comparison. emily: are you worried about apple in the first quarter? bob: in the first quarter, i think they will do ok. i am more in the longer-term. smartphones are starting to peak. apple is going to feel the pinch. the other big challenge is iphone 7. iphone 7 should be the model where they do this innovative new design and set of features and yet, component suppliers are admitting, things are slowing down.
emily: how much more can they do? bob: we are not ready for a holdable screen yet. the challenge you see is as a result, people are holding onto their phones longer. when you have a mature market bob: we are not ready for a holdable screen yet. and a pretty saturated market, that extended lifetime means slower sales. emily: let's talk about this report from the "new york post" about apple being interested in buying time warner cable. this is my favorite story of the day. apple has a $300 million war chest, but time warner cable is very expensive. porter: consider who owns the "new york post."
it is rupert murdoch and he is stirring the pot. he made a bid in 2014. i do not think news corp. or rupert is doing anything more than stirring the pot. it is not a good deal for 21st century fox for a lot of reasons. they have just about everything that time warner has. why replicate a news channel, sports channel, movie channel, movie company? those are the assets that time warner has. except for hbo. hbo really should have a valuation much more like netflix than time warner. time warner has a 16 times pe. netflix has a 253 times pe. emily: he does not want to break
up the company. he might consider a sale of the entire company. is apple the guy? bob: i do not think so. the vast majority of time warner's revenue now is based on cable tv networks. apple wants to make their money through new types of distribution. they want access to content. word on the street is that they are having a hard time. it cannot just have time warner. if they buy time warner, how will the other guys react? realistically, it is intriguing on one hand, but on the other hand, i do not see -- given the nature of distribution in television content, it will be evolving for a decade. emily: bob o'donnell, porter bibb, thank you. we will be watching. almost 300,000 patents were granted in the u.s. last year.
emily: amazon is quietly building what analysts say looks like its own delivery company. one that may someday rival ups or fedex. the e-commerce giant plans to complete its takeover of a french parcel service within three months. amazon staying mum on entering the european parcel market. amazon will open its first data centers in canada this year to cater to demand from companies who do not want their data stored in the u.s.
the new data centers will be run in montreal and run by hydropower. sunedison is in the middle of a major shakeup. shares of the company are down more than 86% over the last year. 45% of that just this month. michael dell might be on the verge of making billions more. he stands to gain $4 billion as a government expert to buy back airwaves. he has been buying independent airwaves all across the country to sell them to wireless operators. cory johnson is back here with me.
what do you make of this story? cory: dell is selling the wrong kind of stuff right now. they are slinging boxes. they are trying to find the kinds of services that will differentiate them. there is this bifurcated world where you have the cloud service providers in microsoft and ibm, and you have amazon web services.
you do not need hardware, we will take care of that for you. dell says just the opposite. we will sell you lots of it, a one-stop shop. it is a very different approach. all of those companies that do that, hewlett-packard, ibm, oracle, cisco is the only one having any success. dell is saying, we have something else for you. emily: michael dell has been making some very risky decisions over the last few years. first over taking dell private. the biggest tech takeover ever. now this. cory: he has been at this for a long time. he is trying to protect the assets he has got.
he cannot fundamentally walk away from this business. the new business model of cloud services and cloud computing really so counter to the selling of equipment. emily: interesting. we will be watching. google x founder joins us to discuss cutting-edge education programs and prepping the workforce for self driving cars. we will get an investor's view as a major industry conference continues in san francisco this week. ♪
angie:. i am angie lau with an update. we've got breaking news from indonesia. there has been a series of explosions and gunfire close to major shopping centers in the main business district of jakarta. police say there have been casualties, but no word on how many. the first blasts happened 45 minutes ago, and there have been up to six explosions in total. the jakarta stock exchange fell more than 1% on the news. it is a day of drama across asia as markets returned to the new year tumble. chinese stocks are headed to a bear market. japanese equities think the most
since september. the yen is the best performer in fx markets this year. territory, nowe trading at its biggest discount to west texas in a year. crude is under pressure from growing stockpiles and iran's expected return to the market. let's get more on the markets. here is juliet. juliet: a very tough day for investors. let's have a look at the jakarta composite, which is continuing to fall, down over 1% on reports of explosions in jakarta, but we have been watching the chinese market and the market in hong kong. we have seen the shanghai composite now trade at levels we haven't seen since august 2006's closing level. the market is down 20% from december highs. we will see the shanghai composite back into bear market territory. in hong kong, things are not much better.
only two stocks higher, down 1.6%. the nikkei in japan is down by over 4%. only two stocks are higher. there has been momentum coming through in one stock, infosys, coming through with strong numbers. a lot of sound coming through from oil producers. shanghai material trading on the a share market has hit that 10% daily limit. let's have a look at how we are seeing the oil price faring at the moment. this is the wti contract, down another 8/10 of 1%, holding just above $30 a barrel, but it certainly hasn't been a solid day. of course, we are going to be counting down to that reopen
in hong kong and china. we do think the shanghai market entered into the bear market territory, of course coming off from the lows we haven't seen since december. emily: you density is stepping up its guaranteed to place graduating students in a job. the new program promises students a job within six months of completing a nano degree, and if no job is found, the company will give a refund, 100% of the cost of tuition. udacity has seen 10,000 students enrolled in programs. why add the new degree and the guarantee? joining us is sebastian thrun. what is the motivation? sebastian: great to see you, emily.
we feel the ultimate promise we can give is a job. we want to place people in jobs. many people find jobs. this is the most exciting day in the history of my company. emily: how often do people not get a job in six months? sebastian: most of the people who want to have jobs get jobs. a good example, android, the beginning salary tends to be $85,000 or more. emily: not strictly engineering and coding. what are the new skills needed in the new batch of graduates? what do employers want? sebastian: strong decision-making skills, strong coding. they also want people who can deal with other people, collaborate. emily: the next generation of jobseekers, they need skills to
code self-driving cars, virtual reality. how are these skills different today than what you were looking for when you were just starting google x? sebastian: when we were starting google x, facebook was much smaller. twitter was much smaller. today, it is a completely different landscape. we have a wave of fantastic artificial intelligence.
there is an amazing demand of people, colleges cannot keep up. emily: you are best known as being the inventor of the self-driving car, so much news in this industry over the last few months, whether it is a uber, tesla, google partnering with ford, apple. how do you see this race playing out? sebastian: i am super intrigued and i take a little bit of pride. 10 years ago, people laughed at me. now it is a dominant topic in the automotive industry. some people are smiling, some educators are cynical. emily: what do you make of this recent development, we have seen lyft partnering with g.m. the president of g.m. said we
would see self-driving cars first through companies like uber and lyft. do you think ridesharing companies may be the first real implementation? sebastian: i believe that is the case. do not discount google in that discussion. technology-wise, the best ones drive better than people. i am not a good driver, but i am not that bad of a driver. transportation as a service, you get a scale that is very different than owned cars. they produce costs by sitting in the garage. i estimate the cost is about a quarter of the amount for a driven car.
emily: do you see google cars being part of a ridesharing program? sebastian: sergey brin has made it clear that google's intention is to offer transportation as a service. it is a great model. imagine downtown san francisco having a lot of empty parking spaces. emily: the self-driving car was your original moonshot. the first one we know about. you have moved on to education.
if udacity is successful, what changes about the world? sebastian: it will truly democratize education. it should be a first amendment kind of right. it is so uneven. we talk about stanford and harvard as the best places to educate, but almost nobody can get in. i think education is the empowering thing. if you catch a man a fish, he has dinner for a night. if you teach a man to fish, he has dinner for the rest of his life. emily: sebastian, as always, great to have you on the show. coming up, watch out, watson. ibm takes the crown for the most u.s. patents for the 23rd year in a row.
how are you using these patents? bernie: for instance, we have entered a new era, we used to talk about memory, the reality is, information technology is an assistant technology and these patents support that. we have patents that look at the issue of -- can i help somebody who has alzheimer's complete a phrase when they get lost? this is an issue. we get results out of taking watson even further into the future. when it speaks, it has to be emotive. if a building is on fire, you do not want it to say, run for the exits. you want it to say, run! we started working on them many years ago. now they are seeing the light of day as a product.
emily: there is a quantity versus quality question here. bernie: the truth of the matter is, i would debate whether or not it is an issue of quality. if you look at the patents we have, many of them tend to be foundational. these are at the leading edge of an emerging technology. when a patent is issued in 2015, it may have been filed in 2011, 2012, and it may have been worked on five years prior before people really got to a result they would patent. it is not a question of quantity. it is one of quality. some of them are striking. a neuro-computer where we address the issue of power. it reduced the power consumption by a factor of 10,000.
that is a breakthrough. emily: what is your strategy going into 2016? it takes a lot of time. startups do not have time to pursue all of the patents. how much of a priority is this for you? bernie: it is well known around the world by our employees, leaders, technical community that ibm has to have several things. we want to define the future, not be a victim of it. you have to reinvent yourself constantly. you cannot reinvent yourself until you know what the future holds. you must have freedom of action. there is an entire body of folks who would love to stand at the door and say, i will not let you take that to market. you want to be absolutely sure
the things you are going to market with, you have covered fully with your patent portfolio. there are many reasons for having that portfolio in terms of leadership and business acumen. emily: some have argued that patents can slow down innovation. bernie: to be quite frank, if misused, i agree with them. at the point that there were folks using patents to slow down the open source movement, we donated 500 of our key patents to the open source movement to provide air cover. we practice reasonable and nondiscriminatory licensing. you want to ensure you have freedom of action and those who take advantage of the work you have done pay some equitable payout.
not something that blocks them from further innovating. emily: bernie meyerson, thank you so much. we will be watching to see if you are on the top of the list in 2016. the most cutting-edge innovations in biotech showcase at a major industry conference here in san francisco this week. are steep declines in biotech stocks hurting funding? more "bloomberg west" is next. ♪
emily: the jpmorgan health care conference has been underway in san francisco this week. it is one of the most important conferences of the year for this industry with 300 companies presenting to more than 4000 investors. it is usually a week of optimism, but investors cannot ignore the sea of red as biotech stocks get off to the worst start in trading in years. third rock partner joins me now to discuss whether public market sentiment is spilling over into private funding. it has been a bad start to the year with a lot of companies. alexis: it is ugly. a lot of the fundamentals are very strong and great. it is a great conference except for all of that red. biotech is cyclical. it has a lot of volatility. this has happened before.
emily: how has it moved over to the private market? alexis: people are still very encouraged about the future. at the moment, this has not spilled over. if this becomes a longer period of time -- emily: what are the most exciting areas of biotech innovation right now? alexis: there are multiple areas. a great time in science and innovation. amino oncology is where we use your own immune system.
emily: curing cancer could happen soon? alexis: cancer is for a complex, so i do not want to overstate. emily: what else? alexis: molecular information. in diseases, we can read your programming code and figure out what is wrong with you. using that information, we can match things up so that the physician can say ok, what is the right drug for you?
it sounds easy, but it is like -- how do you get the right drug to the right patient when you have read the personal genome of that patient? it is expensive, but hopefully, that is worthwhile. emily: what about gene editing? alexis: we are not doing that. emily: others are. alexis: but others are. using gene editing for grievous disease, we can read the genome of a sick child and figure out what is wrong. the whole promise is to create -- we can reprogram that programming code. emily: what do you make of some of the consolidation in big pharma right now?
alexis: we focus on innovation. big pharma always has a hunger for that. sometimes they will do financial engineering, cost-saving. this ongoing hunger to get the new breakthroughs. emily: we talk a lot about the potential bubble in the consumer tech markets. what is happening in the biotech private market? is there something similar? alexis: biotech has gone through some spectacularly strong years. these are relatively strong markets for biotech.
there has been a lot of capital, valuations being pushed up. if we have some type of correction, it is not necessarily a bad thing in the long term. emily: theranos comes to mind. alexis: i am a very empirical person. emily: do you think that situation could impact enthusiasm for biotech? alexis: biotech works best when we actually deliver the goods. there has been some crossover from our silicon valley investors. sometimes that makes things fundamentally better. we have had google as investors, kleiner perkins, bill gates. what they bring to the table, it makes those companies better.
sometimes, maybe a little bit of correction is not a bad thing. emily: 2016 will be the year of what? alexis: hopefully, this red ink is relatively short. emily: i will take it. thank you for joining us. here is something you do not see every day. a san francisco inventor has taken to kickstarter to build custom delorean hovercrafts. isn't that cool? you can see him test driving here.
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