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tv   Bloomberg West  Bloomberg  January 26, 2016 6:00pm-7:01pm EST

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to europe. he gave the pope a hug -- a rug and asked for prayers. he is visiting italy and france this week. el salvador is urging women not to have children for two years epidemic. the zika it is linked to brain damage it infants. one million brazilians have been infected and 4000 infants have been infected. the abortion opponents claim the videos show them selling feel tissue for profits. they are accused of tampering with document records which is a felony. the knotted nations the lead tainted water crisis in flint looking at the human rights aspect of the disaster. it is not the first time it has
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attracted their attention. the u.n. called on detroit to stop shutting off water to residents behind on their bills. .lobal news 24 hours a day from the bloomberg news room i'm emily chang. i'm emily chang this is bloomberg west. apple reports its biggest quarterly profit ever. the stock is in limbo as investors digest a miss on iphone sales. and beating estimates as it swaps out cfos. and twitter's revolving door is still swinging. is and a
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to our lead. apple beats earnings expectations but iphone sales are stalling. 70.9 percent.e is the real number to watch is iphone sales. for the first time in a decade apple is forecasting a sales decline adding to evidence the market for smartphones may be peaking. the company is feeling the effects of a different economic environment around the world and is beginning to see softness in hong kong, a big part of the china business. take a look at what tim cook at the saying. im cook: we are seeing extreme conditions everywhere we look. have been impacted
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by slowing economic growth, slow income commodity prices and weakening currencies. emily: has apple reach the limit of the growth potential of the iphone? analystus, and apple ives.aniel live the numbers are just monstrous. yet this negativity. what do you see. numbers are very profitable. i think this is a growth stock. it is supposed to show big growth. the bottom line in the tech reflect actuald growth. look at this. revenueh in iphones
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year-over-year compared to 57% a year ago. that change shows a company that is a growing anymore. slowing andtself is about to turn negative. guest: you are facing the worst conditions. the in 2009 we didn't hear this catastrophe occur. in that sense, having been declining into one quarter. conditions,ordinary mostly in emerging markets which have been the engine of growth for them. i think this is a phenomenon that is by no means peak apple. cory: i want to dig -- emily: i want to dig deeper.
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they see strong business in china, strong interest in all products. but he said in the first few weeks of january we are seeing some level of economic software. not in china but in hong kong. ofsked about these reports iphone production cats. he said he could not comment specifically but they have provided guidance for the second quarter which reports to the revenue decline year-over-year. there are a lot of countries in a recession. he pointed to canada, brazil and russia. currencies around the world are simply weaker against the u.s. dollar. how alarming are these comments tim -- to you? twice yet is a step back.
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-- >> you have to take a step back. they are dependent on china. china is high-octane fuel. i would call it robust, respectable. you did see some things in the armor. going forward it is about iphone seven. we are going through an interim product cycle. unless you're living under a rock, slightly better in terms of the iphone unit for march. now it is convincing investors there is growth ahead on iphone seven. iphone seven is trying to remain strong. what did they do with that cash? is it significant? that is what investors focus on today. when you go to sleep tonight it is not like this quarter makes you feel great about apple.
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it is a near-term disruption. emily: let's look beyond the iphone. it drives revenue as much as the iphone does. it went very deep on services with me. in recent weeks we crossed an important milestone for the first time ever active devices for one billion. how much we are growing and compare that to other internet services companies it is not valued the other ways internet services companies are. we believe our valuation is not correct and the stock price does it reflect the true value of our company. services have better be the next big business. we don't see watch numbers but we see the other category. this is a small business.
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i've had numbers are down 11 in the last 12 quarters. businesses have tried to launch. reports that they got rid of the head of the car business and they have had a hiring freeze. services is a place where they could grow. very healthy things, good gross margins. free cash flow. that is the only place it may be hope. other things have not worked. what are you most optimistic about question mark what is the next big product category? guest: i still believe in the apple watch. we have had this product launch. they sell 5.5 million units in the last quarter. north of 12 million since launch. i still think they are on target for 20 million. we see high iteration rates in
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terms of software. they launch this product without anyone doing anything. it is not like they came in at an inflection point. they are creating the market. it is a significant leg up on the stool and apple believes this. beyond this we have the car opportunity. i don't think there will be difficulties. there will be slowdowns and speed bumps but it is going to be a huge category. trillion dollar business opportunity. emily: you have the last word. what is the future of apple? guest: when you look at watching wearables, i think the game changer is when you look at streaming. you have had a speed bump in terms of negotiations. do they go outside of the playbook and use the $200
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billion for significant acquisition? whether it is a larger deal like netflix. apple has to do something big here. they are getting into this red zone. iphone seven is going to be stronger this year. as you look longer-term it comes down to streaming. head. cory is shaking his cory: they are not a company that does transformative acquisitions like that. emily: all right. thank you all. turning to the broader markets another day of big swings for stocks rallying after monday selloff. nasdaq closed near session highs. , andring movements consumer confidence for january came in at a three-month high.
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t-mobile propelling the sector with its 4% rise. looking at the hard drive space, both rallied more than 5%. they declined to comment. in video streaming netflix fell for a fifth day extending losses after it crossed it's moving average. this is his longest losing streak since september. it has been down 4% but clawback from the bottom. a no doubt impacted tesla. they lowered expectations because of inability to deliver 4000 model x suv's. down 1.5 percent.
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facebook shares were up a third of a percent. now to the him where -- m wear. cfo.ompany named zane roe it is part of a restructuring plan that bloomberg news reported on last week. struggling.en at the beginning of the -- once theer transaction closes they will be combined and remain a publicly traded company. when we return sprint is seeing its stock surge after lukewarm earnings.
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is the plan actually working? we will discuss. ♪
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emily: shares of at&t dropping fter expectations were reported. it shares were down 1% after hours. sprint spiking 20% at one point after reporting third-quarter earnings, raising its profit forecast and pledging to fund its debt. it is not clear whether job cut in other measures will be enough to turn the company around. for more i'm joined by jonathan
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chaplin and peter in tokyo. i listened in on the call with the ceo. do the earnings signify the turnaround plan is working? there are positive signs there. sprint is the most exciting name in my coverage at the moment. it is either zero or worth $10. if you look at the assets there is a tremendous treasure trove of spectrum that gets you $10 a share. it comes down to whether this management team can execute and realize the value of the asset. the track record hasn't been great. in the last couple of quarters there have been positive signs. this is a business that is still declining revenue 7%. they are still burning eddie
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vicious right. over the last two quarters they have started growing customers again. based on their comments on the call it looks like the growth in customers strengthen going into the next quarter and from there if you can trace forward to a turnaround in revenue that 0% scenario becomes less probable. the $10 becomes more probable given the financing they have put in place that helps them fund through the next debt maturities. emily: when i spoke to the ceo on the call this morning i asked how he is positioning to t-mobile, turning this into a price war, and verizon focusing on video. what is his strategy? he said we are going to offer a great product at a great price. the biggest challenges perception. a lot people don't believe in the quality of the network and
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it is going to take a time to change perception. is that true? they deftly have the best prices. they have cut price dramatically with their latest set of promotions. they are set to expire in a couple of weeks. the issue of the network is more debatable. it has improved tremendously from where it was. it is in some cases the fourth based -- best network. not nearly as far behind the others as it was. is it good enough now at this price for customers to start switching over and for guys to gain subscriber momentum? it seems so. the story gets more interesting once they get through the next deployment.rum they have all the spectrum they
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haven't deployed yet. they have started a new plan to get that out there. it is a complex undertaking. that gets them to a poor they have more capacity than everybody else. it becomes interesting. emily: what are the implications? deep in has their commitment to sprint but both stocks have been sinking? 3 they have been -- guest: they have been trading in parallel for a wild. they think about it differently. the plan in the u.s. is ambitious. they want to be able to roll out this broadband coverage. the goal is to able to provide this service just as jonathan would describe.
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operations have been challenging enough they've had enough time making it clear to investors they will have the money to deal do this. they do have this high-quality network. cory: -- emily: it makes the wireless wars more interesting. thank you so much for weighing in. coming up, how india is making its mark in the economy. ♪
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emily: india has been home to one of the best startups in the
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world. i was just speaking with the cfo of apple who says he's excited about india. india.k is excited about it has been going particularly well there. what is the secret for u.s. technology businesses to succeed? guest: you have to be local. emily: like working in china. in some ways. because of language and integration of that company, to a larger extent it is easier. you have to understand what makes india check. emily: would you say u.s. companies haven't done that well? guest: normally they have pretty have succeeded tremendously in india. hp has been tremendously successful. it is not as if they have not been in india.
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the bottom of the pyramid, adoption of technology. these are tremendous moments. if you look at cellphones. today we have 700 million subscribers. it is huge. india is certainly offering tremendous opportunity and the second startup capital in the world. guest: what are the opportunities for hp? hp.t: i don't work for i just represent them. emily: but they own a majority of the company. can theion is how well company remain independent? what is the long-term vision? guest: the long-term vision is independent in many ways. are direct business constitutes roughly 73% of revenue. we are doing well. hp is supported of doing the right thing with the company.
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they do not interfere and ask us to make compromises. and most of our business comes from the u.s.. 75% from the u.s.. that is what we are. >> one of the big things this jobs beingcern about outsourced to india and other countries. where do you stand? guest: this concept of jobs being outsourced is a thing of the past. automation,ening is artificial intelligence, robotics. this is the next wave hitting the industry. it is no more about labor arbitrage. it is about automation and robotics. emily: so that is what we should be concerned about. guest: absolutely. you can't stop it from happening. it will affect every industry. it is coming. emily: what is your vision?
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where'd you want to take the company? guest: we want to be the best serving our clients. ultimately our digital revolution will happen through our clients. many are in analog businesses and they have to deal with digital. our role is to be the bridge, the enabler. of theiro be part journey. emily: all right. thank you for joining us. coming up. and amex executive takes on a marketing challenge at twitter. we tell you about her coming up. ♪
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when you're on hold, your business is on hold. that's why comcast business doesn't leave you there. when you call, a small business expert will answer you in about 30 seconds. no annoying hold music. just a real person, real fast. whenever you need them.
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so your business can get back to business. sounds like my ride's ready. don't get stuck on hold. reach an expert fast. comcast business. built for business. emily: emily chang and this is bloomberg west. by julia with a look at the stories making headlines in asia.
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joel jo: just julia: shares in shanghai plunged 6.5% closing at their lowest level in 13 months. chinad of money exiting fueled it. one of the most accurate forecasters says stocks could fall another 10% before they hit bottom. jumpedtion equipment solicitediving an unselecte takeover bid. emergecompany had last year and a deal that would create $10 billion in sales. india's biggest airline has become the world's worst performing airline stock two months after its ipo. indigo has lost a quarter of its market value. that is after the airline said
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it was leasing to planes. jump in profits in the third quarter on lower fuel prices and higher traffic. ber is lining up a bank to help drivers buy cars. into 400expanded chinese cities and attracted 250 million users. it plans to roll out credit and debit cards with the banks that offer discounts and benefits to .riters -- riders emily: given the rivalry what does the same to you to ensure that it retains market share? >> they are continue with the growth strategy in china. tuesday they announced they will
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expand to 18 more cities. that means uber will be available in 55 chinese cities by the end of february. they have more ambitious plans to be in 100 cities in china by the end of the year dominating the space. they are competing with each other but it is the taxi industry that is flailing. all right. thank you. day.l news, 24 hours a from the bloomberg news rim, i'm emily chang. -- from the bloomberg news ri room, i'm emily chang. ♪ to more developments in
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twitter's management shuffle. she and jack dorsey confirm the news with these tweets. she's excited to join the team to bring to life the uniqueness and magic of twitter. buildinggs the job of twitters brand. the cfo has been handling marketing up until now. what does she bring to the table? she was an executive vice ,resident at american express she a been there since 2005 to build bridges between traditional payments and silicon valley. strikemple, a deal with -- straight -- stripe. here she is in that interview describing the power of it. >> very smart and sharp. they are enhancing that platform.
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we are big fans of twitter. joining me to discuss the significance of the changes, ryan wheeze or. how significant is this appointment? point,the one particular i think to the extent that the overall changes we are seeing management reflect a continuation of the appointment of dorsey. it was significant but in a sense it is old news. as effectively where the changes announced over the weekend. emily: the revolving door seems to be the norm at twitter. you take an unconventional task area you think twitter is to focus on the mainstream. >> i think this is the big risk. i would argue a more positive about twitter's prospects than
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the company is seemingly at this point in time. if they just left it alone and didn't sell flagellate so much about it. their failure to become ubiquitous. that is the biggest threat. if you think of the role of ad sales, the goal is to make the marketer a hero. you talk down your own business you make your client look like junk. jack dorsey says he wants to make it more an easy to understand. guest: if they can get there, great. that may be a different product. it may be called facebook or instagram. it may not be called twitter. emily: what is your advice? guest: it is difficult to advise in the company. i can only observe the product as it is is truly unique and
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what is also unique is the degree to which they built tangible at products that madison avenue really likes. there is a devoted base of users that are more than sufficient to make a meaningful and scalable ad platform. the problem is it is not facebook. that is ok. they just need to realize they are good enough. marketers do like them. you are more positive on their potential than ever before. given the fact that you seem to disagree with jack dorsey's strategy, how positive can you be about the company's outlook? : there is added rest because they're going to continue down this path of trying to iterate in pursuit of ubiquity. it is possible they will get
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there. it is possible they will fail and hurt the platform. it is more likely after they go through the process there is a devoted amount of users who are not going anywhere anytime soon. i'm confident the outcome is reasonably positive. when i say i'm were convicted in terms of the value of the stock, allhese trading levels, if they did was treaded water with the industry and grew by low double digits over the next five years it is worth 40% more. my price targets double that. they can grow by 20% which is pretty conservative. message to jack dorsey, stop worrying so much. thank you. another thing we are monitoring,
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amazon prime has 54 million members at the end of last year. prime reaches 21% of u.s. adults and half of all u.s. households had it. hit of tesla. slower than expected production of the model x. all of this as elon musk tries to woo local regulators. hasays china's market enormous potential given concerns about pollution and the environment. he spoke about china at a business conference in hong kong. >> china is where i have had a number of meetings with the chinese government. the minister of finance mentioned tesla in a speech that he gave. as a good example. likes what we are
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doing. >> which is a good thing. >> absolutely. last year in an effort to help goodndustry and be a neighbor we open sourced our patents. any company in china can use our patents to create electric vehicles. >> it underscores a theme that emerged. the latest climate change conference in paris. >> china is quite well-developed. anda has better highways trains in the united states. by far. taking great experience the bullet train from beijing to see the warriors. it was a great experience.
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so, yes. there is a lot of opportunity there. in china, for tesla we need to establish a local partnership. we are going to figure that out. emily: elon musk speaking in hong kong. , we had to the largest cyber security conference outside of the united states. ♪
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emily: we are watching lockheed martin shares down the most in five months as investors question their growth prospects.
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analystscame in below estimates. . lockheed announced it is combining its id division with a $5 billion deal expected to help the company shed its less profitable business. the cybertek conference is underway in tel aviv. the largest event outside of the united states, they have reports swirl of a possible merger between the two companies. >> checkpoints were going to buy you. is there truth to those reports? >> we can't respond to rumors. i am just back from a keynote interview.
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that is always our mission. i'm repeating that today. whatever isg to do right for their shareholders. we feel like we're just getting started. >> let me rephrase. what is it about the middle of the appealing? >> ciber is getting a lot of traction because of our growth and profitability. from our perspective we're just getting started. we have 2000 customers. we're just scratching the surface, embarking on a global financial. you assume the bad guys get in and then attack it. >> yes. even if they make it inside, we prevent them from getting access
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to the i.t. systems. a layer on the inside. >> quite a big company in its own right. yet met a number of acquisitions. are you in the market for more? we are here at this conference and we are excited about the opportunity to look at nonorganic options as well. l.a. heard from israel's biggest cyber security firm, checkpoint. andsked about the rumors the company strategy. >> is there any truth to reports whatsoever? >> we don't comment.
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>> but you do have a lot of cash. you could make an acquisition. this will provide more protection, blocking hackers from everyone to network. >> he had been doing a number of transactions. some of the young whippersnappers seem to say you are not innovating is much as you should. you are acquiring innovation rather than developing in-house. >> we just did the criticism from both sides. we are committed to do both. you look at the amount of technology, the vast majorities are organic growth.
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i think it is a very good combination we have now. people try to hack cars. what is behind that deal? >> we see the risk to ciber is everywhere. cars one of the devices that can be affected. in securingalizing the internals of cars. we have unique solutions to secure the car inside out. we are approaching car manufacturers. we will see where it goes. let's take a look at what
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is trending. real estate in new york city is getting rough. a man in brooklyn try to take advantage of that during the building astorm snowstorm and putting it for rent on airbnb. he called it the snowpack a apocalypse's most popular getaway. coming up. the ripple effect of apple earnings. what is next for suppliers of the iphone maker? and tomorrow, barry diller is our guest. more next. ♪
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emily: a story we are watching,
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meredith corporation close to walking away from its pursuit of a merger with media general. the move would allow the next are two acquire the tv broadcaster after months of negotiations. meredith is close to a termination package. amazon and netflix are both vying for oscars in 2017. they are upping their credit in the film world by outfitting major studios for film rights. amazon with the manchester by the sea starring casey affleck. the final price is $2 million. netflix has purchased three films so far including tallulah and the fundamentals of carrie with paul run. as paul rudd. sales declined for the first
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time in a decade. hundreds of suppliers are dissecting the company earnings about whether there fortunes are poised to rise or fall. suppliersstalled for of audio components for apple? me, tim, how do you think they are reacting to the latest results today? >> it is not good news. quarter wasfor this weaker than expected. some suppliers could kind of see about but when it is put down and paper the suppliers are going to feel it. shares may move as a result. one of the big issues, companies rely on apple. apple has been a solid client for the supplies. others have grown higher or faster.
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.enovo has come up others have come and gone. apple has been a solid performer for all of them. when apple starts to slip up, slow down, this is the first in a decade. all of the supplies are going to that is going through the smart phone market. it is going to be weak in 2016. the fact that apple has come out and given us these numbers is going to tell the supply chain what they need to expect this year. emily: the bloomberg terminal breaks down how reliable these suppliers are on apple. apple.its revenue from we talk about apple diversifying its revenue streams. what is beyond the iphone? how are these suppliers trying
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to diversify their companies? are they focused on creating new revenue streams outside of apple? >> they are trying desperately. the chairman and ceo of foxconn has for years and years tried to diversify away from apple but he can't do it. there are two reasons for that. there is such a reliable partnership. it for companies on the supply chain. they make ps3's. they do tvs in so many other things. half of sales come from apple. they have one million workers turning out products. how'd you find another apple. there isn't one.
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they are making robots. they are trying to do other stuff. apple is so huge. they are having a hard time finding a supply that can surpass apple. emily: interesting. thank you as always. it is time now for today's edition of the best day ever. actually today is the worst a after. microsoft, you get the prize. surface tablets are hitting the big time for the wrong reasons. the devices stopped working in front of 50 million down -- 50 million users at an nfl game. issues.ium has network
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microsoft has a $400 million deal with the nfl. it has taken a beating with sportscasters calling the devices ipads. ouch. date tech earnings continue with reports from facebook, ebay, paypal. full coverage from here in san francisco. ♪
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announcer: from our studios in new york city, this is "charlie rose." charlie: mohamed el-erian is here. he is chief economic advisor at allianz, the corporate parent of pimco, where he was previously the ceo. he is a columnist for bloomberg view and a contributing editor for the "financial times." his latest book examines the impact of central banks across the world since the financial crisis. it is called "the only game in town: central banks, instability, and avoiding the next collapse." i'm pleased to have him back at this table. welcome. mohamed: thank you. charlie: why the title?


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