tv Bloomberg West Bloomberg February 8, 2016 11:00pm-12:01am EST
>> leeann visited highest since november of 2014. it is also pushed the yield on forn's 10 year bond to zero the first time. that is an unprecedented low for the g-7 economy. to an apartment in the obama says false if i data was not a cover-up. haveing material suppliers issued an internally quarry into the issue. shares are down more than 4% in
tokyo today. number of people killed in the earthquake on saturday is raised to 77. 100 still unaccounted for. hong kong has condemned writing that left one police officer unconscious and dozens of others injured. 24 people were arrested after violent clashes. those of the headlines from bloomberg news. i am angie lau. ♪ emily: i'm emily chang and this
is "bloomberg west." coming up, tim armstrong and yahoo!. what it will stand to gain or lose. plunging to the lowest level since 2012, the company announces a departure of the cfo. the struggling online customer reviews site, what kind of reboot of the need? india delivers a devastating blow to mark zuckerberg's free internet plan for the nation. we will debate the net neutrality ruling coming up. first, to our lead. has yahoo! found its first serious suitor? we have seen signs of the legacy member opening to selling, despite ceo marissa mayer's attempt to turn the company around. no former offer has been made yet, but verizon has said to have given aol ceo tim armstrong a lead role in exploring a possible deal. joining me now to discuss, president of aol content and consumer brown's -- brands jimmy maymann. what is your reaction to this story, that tim armstrong has been given some sort of a directive to look into buying yahoo!? jimmy: my reaction is there are
a lot of similarities between yahoo! and our business. i think it is a conversation that you need to have with tim armstrong are with verizon. right now, our focus is on building aol -- the huge shift we are seeing from text to video. from close to it to open. those are some of things that we are really focusing on right now. do in the future game. emily: you're a directive has been how to monetize content that people are consuming outside the platform. when you look at something like yahoo!, what kind of holes do you see an sort of aol and verizon that yahoo! could fill? do you see any sort of synergies
there? jimmy: without any doubt, there are synergies. it is not that we have been spending a lot of time looking at the synergies because we stop a lot of things that we have to do. we have 5 million people coming to our properties every month and we need to make sure that we are crating the best video experiences and the best mobile experiences for those uses right now. obvious they come at your point, figuring out in this new world where a lot of the content that we are seeing is being consumed outside of our own operations, on problems that we do not control, what does that mean for the broader ecosystem? that is what we focus on. emily: you are weathering a ship from tech to video. yahoo! aside, what are some holes that aol and verizon that need to be filled? jimmy: one of the things that you have seen is obvious they we're really doubling down on video. we are launching a video platform on mobile. the same thing happened across all of our brands, and they have needed to embrace this. you know that we have an audience that wants to consume more video, and right now, across, we have billions of impressions on a monthly basis, it only around 20% of our content is video and that needs to be accelerated. people consume more of their content in a video format.
emily: as far as we know, verizon is the only serious suitor out of a couple of private equity firms. does buying yahoo! makes sense? >> i think it does make a lot of sense. i think of company like verizon could probably justify the price whatever it might be, better than almost anybody because they have this huge community of mobile customers, 112 million people in the united states. as everybody knows, and jimmy has been very well articulating, video is where the internet content universe is migrating. one billion people on yahoo!. that is the key thing to remember. one billion people that you conserve things to, that you can market to.
and you can add that community and start finding more ways to put video in front of his people and make money with the advertisements that go along with it to go on top of the money they are making from those hundred 12 main customers by charging the monthly fees. emily: tim armstrong, ceo of aol, has talked a lot about partnerships. we asked in the other question a few weeks ago. take a listen to what he had to say. tim: we believe our strategy in common nation with what everybody else is doing in the industry, one of the only people that partners with all of the people in the industries. if you go to silicon valley and companies like apple or google, microsoft, facebook, twitter, we are partners with all of those companies. we have a long-term strategy of our own and we have a long-term partnership strategy. really, i think from a competitive standpoint, we are not so much indirect competition, but in cooperative vision with all of those companies. emily: do you see a potential for partnerships with yahoo!? jenny: there are a string of partnerships that we want to
make. as i said, we need to accelerate the mobile first. the generation is here. we need to accelerate back and accelerates the video side of things. they could be a partner. other people could be partners which could help us accelerate that. there are lots of things we can do internally. partnership is one of the ways. emily: i want to talk about the nfl. essentially a huge advertising opportunity. bloomberg has confirms that yahoo!, verizon, and at&t could be interested in additional streaming rights to the nfl. i spoke to mercer my last week, actually through a football analogy at her and i said, is this your help mary pass, the five second -- with five seconds left in the game? take a listen. i marissa: i'm not much of a
football fan. i'm not sure i can provide the and writable analogy. what i will say is, we are really very confident in our strategic plan. for 2015 and beyond. emily: what do you make of her answer their? you will answer their? and you and you jimmy: and you will and will i'm all not interpret what mercedes and not interpret what mercedes thing about that, but what i can and say is that aol is definitely moving fast down the in definitely moving fast down the field if we are staying in football terminology. we are expecting to make you and you are you touchdowns and you are both when it comes to video and when it comes to mobile.
whatever partnerships will help us and allow us to do that, we will try to do this partnerships. emily: what about the potential for a lot to do interesting advertising and take advantage of opportunities around the nfl? jimmy: we are already doing in the development ofjimmy: we are already doing an that, admirable obviously. i'm just coming off of the back off of a seminal weekend in san francisco. we had a big events with the nfl were we brought the tech branch to activate entrepreneurs and show them a lot of the ideas that are happening out there in the valley. we have a very good relationship with the nfl. in with the nfl. so does rising, as you know. we have rights to stream it across the mobile. and across files. yes, i believe we can do great a heyes, i believe we can do great things with nfl and other partners. emily: changing gears to the super bowl upset of sorts. social media activity was not nearly as high as it was last year, in fact,nd you and i year, in fact, facebook says that activity on its site was down 5% around the and you its site was down 5% around the super bowl and
nielsen says that there were 49% fewer tweets during sunday's you game. in a and a i want to bring in you mark mahaney joining us for this conversation. and and this conversation. you what gives? twitter cannot catch a break. in mark: twitter's problems are also of its own making. that kind of management turnover, this kind of expectations that they set out at the beginning. an at the beginning. twitter is probably on the long path toward a resurgence in usage and user growth, if they get a lot of things right. it will take them a while, 6-12 and is in months. will happen to the stock from a inwill happen to the stock from a perspective of the stockholder, is monthly user growth. it has been flat in the united init has been flat in the united states. if that starts to decline, stock and still go down. we are not touching the stock. we would not be buyers. emily: we are expecting some potentially big changes to the twitter platform.
there is talk, jimmy, that they are will change the way that we will see tweets and it will be field -- will be viewed with more of an algorithm. as somebody with experience trying to change a product with in investors saying one thing and user saying another thing, what is jack dorsey going to do? ; i think we should look at it from the other side. he still has more than 300 engaged users and they care. emily: are they 60% less engaged this year than last year? jimmy: honestly, i have not looked at the specifics of that. i think they're still doing more in than a billion tweets on a you daily basis. obviously, you saw from the obviously, you saw from the and you and backlash when it came out that they wanted to change the timeline. obviously, people felt very strongly about that. you i would use that in my will favor. it goes to prove that it is a fantastic utility. i think twitter will be here and they will have to change, but obviously, they will have to do
it in small increments in order not to turn off a big part of the audience. what you i'm a believer in a twitter. i love what twitter is capable of doing. whether they are valued at the right value, that is something for analysts to put a price on. as a business or utility, for sure, they will be here and they will find a way to treat a product so they will get engagement back. emily: the #riptwitter started inemily: the #riptwitter started trending in response. in what you think about all of an this, david? david: i have criticized twitter a lot for being too hard to use. people who are not like us, and you professional media you types, have a difficult time and types, have a difficult time understanding what their twitter behavior actually means and how and to do it properly. i think it is also a fire hose information, the way to structure today that many people find both intimidating and very disorienting and not that in disorienting and not that useful. i'm a big believer that an in ai'm a big believer that an algorithmic feed makes a lot more sense.
emily: does twitter get through this, mark? or do they become the next and legacy media product? you and you legacy media product? mark: if they do not execute our materially improve their execution, you'll most likely become a legacy media property. i completely agree with david. this is a company that needs to you arethis is a company that you itself much more than it could have. and you more than it could have. it is hard to say that about a in service that has 300 million people. in the u.s., they have 66 million users and the growth has plateaued. it may well be starting to decline. that is the issue for the stock. they need to make it more test marketed it, if you will. if you want to expand an appeal and in and -- when we return, we get the breakdown on the yelp quarterly earnings as the stock plunges to levels not seen since 2012. ♪ ♪
♪ emily: 21st century fox posted second-quarter profits that met analyst estimates, it comes as the cable and broadcast television business countered lower revenue from film. revenue missed estimates following 0.7% to $7.38 billion. earlier this month, the media giant said that it would trim costs by cutting staff in the u.s. with a voluntary buyout program. sticking with earnings, amid the broad market decline, yelp fell to its lowest levels in 2012 after forecasting revenues. sales were up 40% than a year earlier. the company reported profits of $.11 a share, higher than estimates. investors briefly seemed to like the news but they gave up the gains ending the day and the red. we are the cfo as we can the company on yelp is looking for a
replacement. i want to bring back mark mahaney and madeline parra who runs a real-time dining suggest and service. also my guest is, david could badger, still with us. let's speak to you mark. why are investors so down on yelp? mark: the growth, although in line with expectations, the backdrop is that their local ad revenue growth, the bread-and-butter, used to be great 60% year-over-year and out is only 35% year-over-year. it is clearly decelerating. also a cfo departure also raises flags. there is also increasing concern about competition. it came on the earnings call today. competition from google and now facebook, both are making more plays in local advertising and the concern is that yelp as last relevant. emily: madeline, as somebody operates in the space, how much of the competition is facebook and google? igoogle through restaurant
reviews a lot more than i used to. madeline: nobody reads reviews. it is increasingly expensive for yelp to maintain this site. people share things on facebook, instagram, twitter. i don't think it is a sustainable model going forward for them. emily: what about you david? generally, they often have not been able to do specific things like this very well. but they seem to be making headway. david: i think that yelp really faces a bunch of big questions about its relationship to the big internet companies. i will say, i think mercer mayer did a very smart move when she bought -- for google. your criticized a lot, but that is something sure that she did. i didn't experience sitting here in new york, indian restaurants, first they get a bunch of zagat listings and a few listings from yelp.
my question, to mark, if i could ask him one, is really, what is the role of these nich -- niche sites generally when it seems like so much more needs to be done by the internet giant? mark: they get crowded out, and thus the innovate aggressively, unless they also get more people to use their applications. a key number to look at with yelp is what is happening to their application users. those are still growing pretty healthily. also, the number of yokel businesses using yelp. around 111,000. that growth is not crested. does that back, we like the stock because we built something that is sustainable and we think that as well factored into one stock is now in terms of valuation. one last thing, it is possible that one of the small vertical sites like we have seen around six times faster, aol is a great example, gets by buy one of these behemoths. yelp could be a very easy tech in for a name like google or others.
emily: four years, jeremy has held out and not sold the company. you think you will sell now? mark: it is possible. we think there are reasonable, strategic bidders and after a well, i find entrepreneurs sometimes get a little tired as public company ceos and are more willing to sell, usually when things have gotten bad rather than things getting better. emily: how much growth potential d.c. for a company like yelp? madeline: honestly, i do not see a lot of growth for the company. the percentage of users who have left reviews on yelp has remained static for the past two years. they're shoveling more money into getting people to leave reviews, and it is just not sustainable. they need to the two sources like people who are already shared the entrance to a more twitter.
for us, we spent 3% the amount of money to get that data from twitter than what yelp spends to get their communities to leave reviews. emily: you are in the trenches, thank you so much. madeline parra, mark mahaney, always great to have you here on bloomberg west. and david kirkpatrick is sticking with me for the hour. coming up, google ceo just awarded a record stock grant and he is not the only one getting a massive payday. all the details, next. plus, stay tuned to find out who is having the worst day ever. super bowl edition. hence, it is not the panthers. ♪
diane greene, got $42.8 million in restricted stocks. here to discuss, kayla milby. how unusual is this, really? >> for google, not particularly. they have a history of giving executives a big award to keep them incentivized tuesday on. eric schmidt, received awards large enough to make him a billionaire. the ceo is already well on his way. emily: david, the largest one-time stock award ever was steve jobs in 2000, given 40 million options fight over $600 million at the time. are we making too much of this situation? do think this is significant? david: it is an awful large restricted stock grant. by the time, i think you is making a dollar a year. he was very focused on that. any upside was something that shareholders would be happy to have given the performance of to that point. google, right now, as just
firing on all cylinders. i think that the ceo has come in and in a terrific job taking over the core property. i'm not surprised that they want to reward him, and i think it is testimony to just how successful google thinks it is right now and how critical he seems to be in the company. emily: also how critical the core search business still is to alphabet. caleb, how closely tied are these awards to performance? caleb: they're only tied to performance in the sense -- sense that they are tied to the stock price. a lot of companies will determine the exact number of shares that you get based on financial metrics. for google, these are just going to pay out through 2019 and their ultimate value will just be the stock price. the number he is getting is the number that he is getting.
emily: of course, compared to larry and sergey for multi billionaires, is sundar pichai in billionaire territory? caleb: if you allow him to invest today and had a few options, they would be worth around 650 million. we are in a down market right now. he is getting close. if he stays on and gets a few more awards and google continues killing it, you could get there pretty quickly. emily: google pretty much grants awards every two years. could he get more? caleb: yes, a good way to think about this award is that it is for two years. instead of $200 million for each of the next two years, you can probably expect that they might reload him two years from now with even more equity. emily: nice. caleb melby, r bloomberg news reported.
those of the headlines from bloomberg news powered by over 2400 journalists in 150 bureaus around the world. let's check in on the markets in the asia-pacific. >> it's a bad day. there are a few markets that are trading right now. they are taking it straight on the chimney. gold the japanese yen and japanese government bonds. see, google investments continuing to selloff. there's an increased demand for quality and safety. we are seeing that pick up a little more. -- the sentiment is
weak at the moment. japan is the worst off. it down by 5% on the nikkei. every single stock on the nikkei. one stock is actually lower. the story right now is a broad selloff. indiscriminate selling across the region led by japan's financial down 6%. everything is following by a similar amount. the yesterday. dollar yen at 114. year for thethe 10 first time on record is below zero. you have nearly half of all japanese governments at or below zero.
schools are closed today. it gets underway tomorrow, but it's expected to be fairly quiet. leave you with this rare shot of hong kong's blue sky. ♪ emily: i'm emily chang, and this is "bloomberg west." a store we are watching, apple is on track to get government permission to open its first retail stores and india. the source went on to say that apple should qualify as a provider of cutting edge technology. the decision what incentive from a roll that forces were in business to source 30% of a products material locally. a major setback for art deco birds internet -- mark zuckerberg's injured -- internet expansion plan. while that does not specifically mention facebook's free basic services program, that is exactly what it means. free basics offer limited access to the internet, including facebook and things like wikipedia and the weather for free.
while it is branded as an average connect those who otherwise could not afford a data plan, some critics have said that he gives facebook and unfair advantage and makes it a so-called gatekeeper of the web. secretary responded to the ruling with a post is saying, well you're disappointed with today's decision, i want to personally communicate that we are committed to keep working on breaking down barriers to connectivity and india and around the world. we have many initiatives and we will keep working until everyone has access to the internet. who is in the right, here? my guest house, -- guest host, david and jeremy malcolm. is this really a violation of no neutrality? does internet.org filing a neutrality?
german: there are various ways to violate net neutrality. the clearest ways are blocking our filtering certain websites. zero rating is what we call what facebook was doing. that is a less clear-cut case. that is where your eggs some websites from charges or data cap. it is a less clear-cut violation, it is still problematic because it discriminates against certain content providers and gives them an unfair advantage in the marketplace. as you can said, it can create a daily situation where facebook has control over people's access to the internet and therefore, operates is kind of a locust for potential censorship or privacy violations. emily: how big a blow is this for mark zuckerberg, david? david: i think it is a big blow. i think it is unfair.
i think they are absolutely on the wrong side of history. you have an american company with enormous resources coming in, trying to help get their citizens online, which is what this is all about. they are basically saying, no thanks. i think the key thing that is not understood correctly about this whole thing is that it is not a new internet service that is alternative to other forms of internet access, it is a transitional program aimed to give people a taste so they will want to pay money and go online later. in fact, very few people stay with this for more than a few weeks. i think facebook has done a terrible job explaining it, but i do not see it is any kind of violation of anything significant. i think it is a big loss for india. just a quick fact, both india and china have about 1.3 billion people. and yet has 250 million people online, china has over 700 million online. i think that is one reason why india will not be able to lead the global economy coming forward. if they cannot get more people online and connected to the real economy that is digital, they are going to be in trouble. emily: 800 laypeople and india are not online. that is huge. you say they will be on the wrong side of history.
but, the netherlands, brazil, have already done this. jeremy, how is india different than these previous countries, or is it the same? jeremy: and has special circumstances. what the regular set in today's ruling of knowledge that. they said that in europe and in the u.s., there is not an absolute ban on this kind of practice, it is looked at on a case-by-case basis. they said, and india, we do not have the resources to examine all of these zero rating schemes. so we will issue a blanket ruling. we think it is fair enough that they did that. emily: i spoke with mark zuckerberg after he had just returned from india at the end of 2014. yet just know the prime minister and since then, it seems like everybody, aside from the prime
minister, does not want internet.org in their country. mark zuckerberg has also said this is not an attempt to make money or to grow facebook's business. take a listen to what he told me. mark: the reality is that if a lot of people cannot afford to pay for data access and some of these places, they probably are not going to be big ad markets, so will not be particular profitable in the near term. will probably lose a bunch of money just because supporting facebook as a service and storing the photos and content that people want to share, cost money. we probably not offset by making much. emily: that said, david, do you really buy that? even if users get just a taste, and then they decide to buy an internet plan on their own, isn't that good for facebook's business? david: of course it is good for facebook's business. one thing, you have to not make too much out of the idea that they are trying to promote facebook. facebook is an obsession of people in all of these developing countries, to the point that many of them think that facebook is the internet. you can criticize them for not understanding the world, or facebook for being too successful, but in reality, people already want to get on facebook. i think one of the things that needs to be looked at here, i think modi really gets the role
of the internet and technology in building india's economy, but there is a real anti-americanism that has said in an china, india, and in europe, based on the overwhelming size of some of these american internet companies and it is waiting to a lot of bad decisions on the part of governments. i do not think the citizens are really down on these companies as much as the governments are. i would say, this ruling is probably indicative of a direction that we are going to see more and more of, and i think it is not good for these american internet giants. if you think that they should continue to have any success around the world, this is worrisome. emily: mark zuckerberg says he is not giving up on india, so we will see what other options he pursues. jeremy malcolm, css, think is a much for joining us. david, stick with me.
baking of facebook, i want to turn to france. the country's privacy watchdog is given the company three months to stop storing data on people who do not have a facebook account. and a statement, regulators saying that facebook can track online users without obtaining clear consent. this comes as watchdogs across the european union collaborate on roads into possible dilutions of eu law by facebook policies for handling personal photos and data. now, we turn to the markets. another ugly day in trading, and once again, the nasdaq is leading declines in the u.s. julie hyman has the rapid new york. julie: it has been this familiar scene, that technology has been selling off all year long. that continued during the session on monday. the nasdaq know, if you look over the course of the day, like the other major averages, actually recovered a lot of the losses in the last hours of trading. at one point during the day, it was down more than 3%. they recovered considerably from those levels. big cap technologies, we have been talking about this a lot, doing poorly, once again. facebook, amazon, microsoft,
which had a strong your laughter, all of them declining. amid concerns that keep persisting in the market, over global growth. one interesting outlier to the upside, with apple, and perhaps one of the reasons why the nasdaq cannot even worse during the session, apple actually recovered a bit during the day. the declines on the day do mean that the nasdaq is closer to a bear market. if you go back to its closing high on july 20, and go through the end of the session today, you get a decline of about 18%. 20%, of course, technically would be a bear market. we are getting very close to that level. we will continue to monitor it and see if we enter it in the coming days. back to you.
emily: to a story that seems to be more along the lines of a highly blockbuster than real life. russian hackers were able to move the ruble dollar rate more than 50% in just 14 minutes. the perpetrator stipulated a virus, and a regional bank in russia, many good more than $500 million in trades and not market rates with the malware, causing the bank to lose over $3 million. the resulting rate swing prompted the russian central bank to investigate the hack. turning to start of funding, hired, an online job marketplace just closed a $40 million round. ceo mehul patel tailored his pigeon profitability. telling investors that is -- comfy which of all revenues this
year and that it would be profitable by 2017. a rethink your these days from startups. he joins me now the studio. when did you decide to do this, to focus on profitability rather than growth? mehul: we actually have always decided to do that. the best run companies are profitable. because they are to get into the public markets. the value cash profit. we have always focused on that. we focus on to sides of the income statement, great revenue, juggling year-over-year, and also focusing on profitability from the get-go. emily: explain to me what investors are asking of you, and how it was perhaps different than maybe a year ago or the year before? mehul: a lot of the conversation in august was around how quickly we can grow, addressing a $700 billion market that is underserved. a month later, became about how quickly can we be profitable and
laser cash burn. fortunately, we are good for both. but, it changed very quickly, a matter of weeks. emily: give me the numbers. mehul: we triple year-over-year. $100 million run rate. we will be profitable next year. we are addressing a $700 billion market that is broken for both sides. candidates hate finding a job and client paid hiring. we're crating a marketplace erasing solution -- solution to reimagining. emily: what you do differently from others? mehul: we think there are three waves of recruiting on the web. job requisitions. they struggle with quality. lincoln put job candidate profiles online. the struggle is intense. he but do not know if there action looking for a job. we are doing both. we are crating a curated marketplace and we are looking for great people who are open to about opportunities. if we do that, we will solve -- we've have essentially flip the model. we pick the best candidates, pick the ones were good, and open to looking. emily: people apply to you? mehul: you only take like 4% of
candidates. 500,000 applications. emily: they say they want to advertise themselves on hired because they are looking to a job. mehul: are there hoping to hearing. we accept 4%. once on the platform, companies apply to them. they are in control of the job search. come police -- companies look for you. emily: had you make money? mehul: we make money by charging employers when they make a higher. emily: what are you hearing from employers about what is working and what is not? mehul: they are finding that what is working as being upfront about compensation. really addressing candidates on a personal level. the candidates on a profiles will stay but they want to do next and employers will lock into that. we are finding that perks do not win the best candidates. emily: free food, not important? mehul: what matters is the mission. are you going to be a big company. will you have impact. will there be a legacy that you can look back on. emily: you survived the first.com boom/bust. what are you doing differently?
mehul: my founders and myself have all gone through that downturn. we know you have to think about cash and cash management. we do not spend on crazy vertical hanging wall gardens and a other things that dot-coms have done. we are building a sustainable business. we think it will be $1 billion in revenue and a couple of years. we start with that mine. we built a culture that things but profitability. emily: what you think about these on-demand services companies. will they survive? mehul: they need to have good economics. it means for each transaction, you have to make money. we do, many of those may not. emily: mehul patel of higher.com. and for joining us. here's a throwback. on this day in tech history, the world's first long competition catch you later, the idea mark one was patented on this day in 1945. before mark one, we had there was monitor. before that, the abacus.
the automatic sequence control calculator with a massive configuration. 51 feet long and eight feet high. in way 10,000 pounds, and can only perform for basic arithmetic -- functions. it would cap out after 23 decimal places. a simple multiplication input could take over five seconds to compute. how far we have come. for a look at what is trending, the asay hinting that she did not stay in a five-star hotel for the super bowl, she is airbnb. the singer posted this photo after the game and had airbnb. according to tmz, she was unnecessarily roughing it, this rental goes for $10,000 a night, featuring an infinity pool, a game room, and a fitness center. coming up, the earnings continue this week with disney, twitter, tesla, and activision. what investors are looking for, next. ♪
emily: to a story we are geeking out about, you may see be able to drop the daily task of charging your phone. what? intelligent energy holdings, a u.k.-based company, announced plans to develop a cell phone battery posting a seven day battery life. the company which receive $7.69 and funding aims to produce a battery powered by converting hydrogen into electricity, leaving only water vapor as a byproduct. the ceo says the long-lasting battery could make its way to market in two years. it is time now to greet the week. we look at stories we will be watching this week. i'm joined by our editor at large, cory johnson, devika patrick is still with us in new york. test the reporting earnings on wednesday. what are you going to be watching, corey? cory: this will be an
interesting quarter for tesla. there's a lot of interest in the new launch. this is a company that the more that they may, the more they lose, whether it is a gross margin basis, or operating margin basis during it is not the way things are supposed to work. one second after going and things are moving around, the gross margins are supposed to get better. with company, gross margins are getting worse. that is a bad thing for a company that is losing money. emily: david, corey has played the part of tesla pass this for five years now, and when you talk to people who drive teslas, they love their cars, they love elon musk, most of them. how do you feel about tesla? are you concerned about their future? david: i love tesla for the degree it has shaken up the entire auto industry and demanded from in this respect. i think when a company stock drops almost 40%, and a relatively short time, as a recently has, their ability to raise the capital that they will need going forward, as a money losing a massively money-losing entity, will be a challenge. i worry about them, given the
incredible expenditures that they are taken on themselves with the world's largest battery factory and all of these things that they are doing. i do think the model three could be a catalytic product, which is a 35,000 other car they're supposedly going to come out with in the not distant future. we'll hear about that on this week's call. emily: could the battery save tesla? do they have any future changes to their business model that could change the future for them? cory: fundamentally, the battery is an imaginary business. they dramatically reduce the factory by 80%. the factory looks like it will be a lot smaller than they said it would be. there is not a great market for these things and they have a lot of competition. the vehicles themselves are money-losing and every instance. the more they make, the more they lose. emily: how does elon musk find his way out of this? cory: i don't know.
he will convince shareholders to buy more stocks, maybe go into the debt markets. we have been talking about yields an inverting at this point, with the notion of these kinds of companies losing so much money, raising money will be really hard. they burn nearly $600 million in free cash flow in the last quarter. we will see with this number looks like when we get real numbers in the company reports. i love the tesla and the idea of the tesla. i love the look of the model s, but the business itself, is a financial disaster. the notion that when they get bigger will get better has been the opposite. when they're gone bigger, the numbers have gone worse. emily: thoughts on cisco? cory: of all the big hardware companies, it has done better than hp, ibm, sun oracle, it has them better than dell. even better than emc recently. you see a company that is really sort of managing to find its way
into networking business, were semi-competitors have gone away and other companies in the hardware businesses have really been hurting. emily: last thought on cisco, david? david: i think chuck robbins, the relatively new ceo is doing a great job. that is why the company is performing. john chambers is still there. the chairman and all that. check robbins is doing great. it is a great thing for the company. emily: i will be interviewing ceo chuck robbins later this week, the ceo of cisco. do not miss that. david kirkpatrick, our guest house for the hour. cory johnson from our editor at large, as always, thank you. time now for the best day ever. in this case, the worst day. the award goes to apple ceo tim cook, who should have been having a great day attending super bowl 50, but, he tweeted this picture on sunday, presumably taken with his iphone of the broncos celebration after the game. twitter users were quick to judge his photography skills. we will guess that this photo probably will not make it into apples shot with an iphone ad campaign. that does it for this edition of "bloomberg west."
choose, choose, choose. but at bedtime... ...why settle for this? enter sleep number and the ultimate sleep number event, going on now. sleepiq technology tells you how well you slept and what adjustments you can make. you like the bed soft. he's more hardcore. so your sleep goes from good to great to wow! only at a sleep number store, right now save 50% on the ultimate limited edition bed. know better sleep with sleep number. >> next, paid presentation from