tv Bloomberg West Bloomberg February 10, 2016 11:00pm-12:01am EST
>> it is known in hong kong. the yen has risen to levels not seen since the doj surprise people in late 2014. there is a growing risk that they will intervene in the fx markets. oil is maintaining its decline. it is below $27. new sanctions over the last weekend. the u.s. and japan are discussing new measures. south korea has closed it shortly run plant. several companies are withdrawing staff and supplies and workers are staying away. in thege fund manager
u.s. says they being crashed in china could be four times worst then the u.s. received $3.5 trillion in equity -- and that would have implications for the rest of the world. there was a bad lines from bloomberg news powered by over 2400 journalists in 150 euros. hong kong closed for lunch but here is how they are trading in the morning session. a start to the lunar new year for hong kong since 1994. this is the picture we are seeing. selloff is continuing. time now for bloomberg west. ♪ emily: this is bloomberg west. jack dorsey in the spotlight showing decline for the first time ever.
know ahares popping even huge earnings. and amazon also enjoying an after-hours rally on word of billion-dollar share buyback. we break down the numbers. ♪ emily: first, to our lead twitter fourth-quarter earnings. shares dropping and then rebounding. the last quarter, monthly active users remained flat. monthly active users excluding active service messenger platforms actually declined from 307 million to 305 million in q4. moments ago, jack dorsey added an extra detail that twitter users ticked back up in january, sending the stock back up. still, revenue numbers fell
short of estimates. they drop from $595 million to a lower number. jack dorsey says how he plans to turn the ship around. jack: number one, we are going to refine our core service and make everything more intuitive, number two, we are going to invest in being a leader in live streaming video, and number three, we are going to give creators and influences the best tools to connect with their audiences, number four, we are going to invest in making twitter safer so everyone can feel more empowered to speak safely, and finally, fifth, we are going to support developers to build and grow their businesses with twitter. emily: can he do it and will it the enough? here with me to discuss is om malik, our editor at large, cory
johnson, and an analysis with a company in new york. we will start with you. this is not a great report from twitter today. what is your take? om: i think jack was able to accomplish a couple of things. they were able to get some of the measuring tools in place and the biggie, as you mentioned, emily, we saw an uptick in users in january. they were able to define what users actually were. he elaborated first on that and i think that is going to start to resonate. what they needed to do was recalibrate their expectations to the point where we can actually see some positive surprises. it will be positive data points and the lowered bar looking at the march quarter. i think that the scott -- the stock will finally trough after
the big declines after we have seen in the last month. emily: they're going to focus on the first rather than the second screen. cory? cory: there is this notion that twitter is reaching a bottom here and twitter kind of set a new local, and yet another bad quarter from twitter. one of the things that we see here are real struggles with the users. it was low calorie users, and now they are not even going to give us those numbers anymore. they're going to use these sms free user numbers. but no growth at all. if you look at the slideshow, they actually lost users in the u.s.. so user growth is really a problem for twitter. james has got this great idea and it shows a lot of merit. you don't want everyone on
twitter. you don't want to necessarily read your grandmother's tweets. emily: but maybe that is where algorithmic timelines, in whereby right now they are trying to put the most important treats -- right now they are trying to put up the most important tweets to the top. cory: but the problem is, if you look at all of the competitors out there and you look at other big social media companies out there, who are they? linkedin and facebook. both are growing users on a much bigger base. i think that is indicative of the problems on the twitter platform. emily: everyone who uses twitter a lot has a vested usage in twitter and figuring this out but there is a concern that users are spending time on other platforms. give us your take, om.
om: there is more clarity around what twitter needs to do with this earnings call. that is number one. number two, we should look towards every social environment which is taste on our attention and we should look at daily active using. we should look at the user base their. that is -- base there. trust me, there is more utility -- emily: what are the numbers on that? cory: they don't give the numbers. om: nobody gives the numbers. cory: that is not true. facebook gives the numbers because it looks good. twitter said they were not prepared to give it to us on a regular basis. emily: james, how confident are you, you seem fairly confident in what jack dorsey had to say, but how competent are you that they can re-accelerate user growth in a sick forget way that
gives a reason for twitter to remain a long-term, independent, sustainable business? james: we have been giving twitter and jack the benefit of the doubt since august, and i think we will continue to do so. the fact that we now have better clarity and they are now thinking about identity of the product itself in the service, but i think the way we should look at it right now is they known what they are doing in terms of how far they want to execute against product iterations, but in the meantime, we have positive tailwinds on the moderation side. the measurement tools making advertisers more comfortable with actually using twitter as an advertising channel, with of those two tailwinds and the ad load, they could increase beyond vine and periscope. i think you can get a pass for now on the financial side of it if those tailwinds persist, in the meantime, if we would just
give them the benefit on the product side, because for the first time, we have some clarity as to how twitter wants to be defined in the eyes of users around the world. emily: om, what is your view on product tweets? why don't they just do something drastic. what they are doing now isn't working. om: it is coming. emily: but why is it taking so long? om: because sometimes you need to make sure things work before they are put out into the world. i think the 1000 character limit hang, the new -- limit thing, the new idea, that will come relatively soon, three months. emily: what is your idea of what twitter becomes? how will twitter involve? om: users want to write, they want to show their pictures, and
they want to show their videos. so this been centerstage is a very good reason to allow twitter to increase on service much more. similarly, they need to do a good job of offering a photo publishing solution because it is kind of terrible right now. that said, from a longer, post perspective, they should absolutely be doing that. their audience is telling them, you know, we want to invite longer pieces. they want to do this. twitter should start listening to the audience a little bit more, giving them things and listening to their behavior, not actually two people, but to the behavior, of how people use twitter more often. emily: om malik of true ventures goa we are going to be sticking with -- speaking with you later in the show -- true ventures, we are going to be sticking with you later in the show, and cory johnson, you're going to be sticking with us, and james cakmak, thank you so much.
and cisco announced it would add $15 billion to its share buyback program. this is coming just after a week that the company announced that it would bite jasper technologies for $44 billion in cash. check my interview with the ceo chuck robbins tomorrow at 3:00 p.m. pacific right here on "bloomberg west." coming up, a big launch for tesla and the fourth quarter, but surges -- sales are surging. why elon musk thinks that makes all the difference, next. ♪
rallying in after-hours trade. amazon says it will repurchase as much as $5 billion of its own shares in a program where the company says it has no fixed expiration. the $2 billion program was announced back in 2010. amazon says it allows them the flexibility to repurchase their shares when it knows it would enhance long-term shareholder value. their shares have increased 26% over the last three months. tesla shares also surging in the last few hours. analysts have been looking for a profit of $.10 per share. investors are focused on the guidance. tesla is topping delivery estimates. bloomberg news columnist ed niedermayer is in oregon, our editor at large cory johnson, and kevin, i want to start with you. kevin: as an analyst, the
numbers that surprise me or the cash burn, that is obviously something that they talked about and saying that they are within striking distance of being cash flow positive this year, which is optimistic i think, considering the new products that are coming or ramping up production. the delivery goal is 80,000 to 90,000, and that is a number that the stock is actually trading on. i think there is a lot of information going on here based on what is projected. i think is an analyst, you kind of bang your head against the wall and wonder why the stock reacts the way it does. emily: cory, we got much better than expected projection numbers. is that enough to change cory johnson wash opinion of tesla -- cory johnson's opinion of tesla? cory: we know that they missed those numbers 100% of the time
and of a lower those numbers, so this is the first time that they may meet their goals. i hope that they do. that would be great for them. but based on experience, not only what they say about the future, but i do believe what they say about what was going on in the past. what we saw in the last quarter is that there was a massive gross margin collapse. if you look at the gross margins of this company, they fell to 18% this quarter. it was a terrible, terrible quarter. a blame it on some production problems they had and other issues they had during the quarter, but fundamentally, that is a very bad quarter for gross margins. if you look at the wrong turn that they made in terms of gross margins, again, the more you make, the better you should he
added, not the worst. we have seen just the opposite of tesla. it is not getting worse, it is getting worseer and worse -- w orser and worser. emily: you say that is too good to be true and i should not make it at all. why? ed: like cory was just saying, the more you operate your plant, the more you scale up, and the better your margins should be. tesla is heading in the wrong direction with that. the more they scale, the worse the markets get. that should add margin, not create less margin than the sedan version. so based on how we are seeing this business operate, i think that scaling up is the wrong choice, and i think what they
are successful at is being a luxury brand and they should focus on that and orient their business model around that. emily: yet people who own tesla love their cars. i haven't met a single person who hates their tesla. kevin, this is -- cory: it's a hundred thousand dollars, of course they love it. emily: yes, but there has to be something there. there has to be something there. kevin, when is this company going to turn a profit? kevin: two cory and ed's point, -- to cory and ed's point, as you see it ramp up in production, it is going to take time to get fully positioned on that product. when they will be profitable selling a $30,000 vehicle -- a $300,000 vehicle remains something to be seen. emily: ed, you make another interesting point that i didn't realize, but insurance costs for
tesla are crazy expensive, adding on to what anyone would pay out for a model three. ed: yeah, and it all gets back to their scale. even if they ramp up to 500,000 units, that is still pretty small in the scope of the car industry. when you have that low of scale, it is even worse with the model s right now, just the parts availability and the number of shops they can actually do these repairs are limited, so that drives up your insurance costs. even if they can get the model as a down to the price limits that they were talking about, it is not at all clear if they can be competitive on their insurance costs. emily: all right, ed niedermayer , and kevin tynan, and cory johnson. thank you all. google could be one step closer to getting its drivers license. the tech giant self driving
system cannot be considered a "driver." this previously only apply to humans. that makes sense. the federal watchdog overseeing this richly said that the car could not be distributed to the public. and looking beyond smartphones and into cars. ceo simon seeger spoke to bloomberg in london. simon: when we look at the next few years of automotive's, we look at driver assist and in vehicle information and eventually moving to self driving cars, we anticipate a factor of about 100 in growth. that translates as an opportunity for a $15 billion semi conductor market that we can address. when you do the math on that, you get about $160 million in silicone content on average. emily: they still amount to about 45% of annual revenue. mark zuckerberg response to
emily: mark zuckerberg has responded to a controversial comment from a board member about expanding in india. "i found the comments deeply upsetting and are not the way that facebook or i think it all." we are now joined by om malik of true ventures to discuss why facebook is playing the victim while controlling the flow of information in emergent economies. this is india's attempt to block out internet.org. you have been a critical of internet.org in general, saying it is not a charity and in fact the name its self -- name itself
is a misnomer. om: this latest brouhaha eventually stokes the fears that people are most fearful of. i think that is very clear. i think there is a historical context here, which, if you are not on the ground there, you perhaps do not understand. two generations from now, we perhaps will not feel that way. people from india, right? but right now, it is a pretty strong issue for them. that said, it is not just an indian issue, it is an issue about a private company which has private ownership and listens to the stock market and has to make decisions about a lot of people who have no say in it. emily: now europe and is, it is not charity, it is a business, and facebook ultimately wants
more people on facebook. i asked a mark zuckerberg about this question when interviewed him about one year ago, and i asked him if this was business or if this was charity. take a listen as to what he had to say. mark: if we were focused on profit, the most reasonable thing that we would have to do is focus on the first billion people are so who were using our product. the billion people who are on facebook have more money than the rest of the world combined. emily: so you are hearing their that it is not good business if it is an attempt to get business. if internet.org is not the way, how does india then get you through to online? om: there are a lot of new technologies that need to be developed, in keeping up with the needs of the market. see, this is not in india's best interest that i am talking about, there is a newly unwired nation, whether they are in africa or in asia or in latin america, they cannot be given access and be told how to access the internet by a for-profit entity.
emily: right, but of a country -- if a country of 1.4 billion people wants to get online and internet.org is not the answer, then what is? om: how many people have actually signed on, you should see the advertising which they launched with and the advertising change in september when they went from internet.org to facebook. you know, i think people have it really embraced it for a specific reason, it is not the internet, it is not the experience, it doesn't provide the access that they tout. i think there is a lot less than what meets the eye here. emily: in fact, you think it should be called facebook free is that of internet.org. we will have to leave it there. om malik of true ventures. this is a great issue and we can talk about it for hours. coming up in less than six
hikenet yellen says a rate may be delayed by the turmoil but insisted she will not abandon the program. she said recent volatility hiding financial conditions and could weigh on the economic outlook but she said it will not affect that policy in the long term. >> we have not yet seen a short drop off in growth either globally or in the united states , but we certainly recognize that global market development
bears close watching the >> hours after growth predictions and the announcement of a new model. tesla is announcing it is 90,000 an increase of 70%. china is not a huge market at the moment but it will become its biggest in the long term. it plans to build a factory there. japanese -- an exclusive talk brand fortors for the a most $3 billion. it would be the largest ever acquisition and break into europe as a domestic market. it would also help them clear regulatory hurdles from the takeover of sab miller. those are the headlines from bloomberg news powered by over many journalists around the world. let's check in the how the market seven trading in the asia-pacific that appeared >>
china closed and japan closed today after a terrible day. having a look at the markets online after the lunar loonier -- new year, you can see that here. down 4% all the lunch break him of the worst start to a lunar new year since 1994. there are a few stocks that have been in the black today. we have seen some heavy downs from any -- energy producers. stillong and korea playing catch-up to the equity moves we have seen across the region. jakarta is looking ok after the 8/10 of 1%. oneralia in late trade up i -- 1/10 of a percent. yen in focus and the market is closed but we have seen it be a safe haven.
it is up by about .61%. we are counting down to the reopened in hong kong at the top of the hour. that is a picture of the new levels here in hong kong. they have stalled off. ♪ emily: the nasdaq pulled back from a bear market companies that were big winners are seeing big volatility. optimism has spread as investors grow wary about the valuation. none of them have been able to sustain the gains they have had
in the after markets. we do think once investors stop focusing on the macro elements and start voting on the fundamentals and the micro part of the market, these will be some of the first companies to recover. emily: the ceo of alphabet is going to be taking a closer look as to where alphabet should and should not be spending. where would you like see them cut back and where would you like to see them invest? heather: i don't expect to hear about them cutting, what we expect to hear is about more rigor in how they decide to determine to invest their dollars. meaning may be more stringent hurdles to fund new projects. you saw microsoft go through that probably six or seven years ago where they started to make it harder to get a project funded. they wanted to prove how big the market could be, what the returns could be. i think you are going to see that natural evolution at alphabet under ruth as well. i don't think anyone would
accuse google of not innovating. i think what people would sometimes say is that there are so many projects focused on so many disparate areas in the company that maybe if they narrowed that focus a little bit, which would still cast a very broad net, that you could actually see just more rigor behind the expense process and actually, it would be a new alphabet with a new reporting structure. they are giving those businesses the signal that they are determined to get involved investments and that it is time drive. emily: that was heather bellini there. now does a new normal in the public market mean in new normal in the private market? how is all of this market volatility impact others? >> it in packs as quite a bit. what we use in order to value
private companies, like when we look to invest in a company, particularly at a later stage or larger, we look at the multiples that publicly traded companies are trading at. in the past two years, we have seen a strong aberration in a market where there is an i lliquidity of treatment. now that the public multiples have fallen by 50% in the last month, that means that the private companies are valued at four times the multiples of the public ones, and that is a really big problem. emily: i was speaking with gary codes, the ceo of goldman sachs yesterday -- gary kohl's, the ceo of goldman sachs yesterday, and this is what he had to say. gary: the market is clearly taking a pause and trying to understand the long-term viability and the long-term
wealth creation vehicle for shareholders. emily: are we seeing a massive revaluation in private companies as well? tomasz: we are starting to see it and we will see it. i think -- so, in the last two years, those were the two largest years for capital venture investment in 25 years. we saw $45 billion investment, which is twice the 15 year median, and that is going to come back down a lot. the biggest of that are nontraditional investors, venture funds, hedge funds, and it is very likely that that money will leave the market, meaning that the supply of dollars into ventures will go down and that will make it compress. that is in addition to the multiple benefits we will see. emily: we saw linked in lose half of its value in the last week. many analysts say that is not that bad.
how does that, in fact, affecting your investment and your psychology? tomasz: it definitely affects us a lot. the way we think about it is fundraising is train and the public markets are the locomotives. if things are going really well in the public markets, then things are going really well in the private markets. but the locomotive has gone to about half of its speed, so all of these trains have begun to hit each other and they are starting to back up, so that is the revaluation that we are seeing. there is good to be a major difference in two different ways. one, investors have pricing leverage, which they have not had in a very long time. every company that was growing very fast had many investors pursuing it, and there was this notion or this fear of missing out. we would have two or three days, maybe four days to make a decision to invest in those companies, which is not a lot of
time. and now we are seeing investors have more price leverage in the past two years and is process, -- and these processes, our diligence processes, have become a lot more diligent. emily: we have heard words like balloon or bust, where are we? tomasz: it is like a weighing machine. it is taking stock of the company and how viable they are. that means that people are moving with their feet. it was a cyclical rotation or just a secular rotation out of high growth and high, multiple stocks. we did an analysis that the faster a company was growing, the worst it was doing in the stock market. it doesn't make any sense. emily: so bubble, boom, or bust?
tomasz: i think it is like a bubble -- emily: so the bubble is deflating? tomasz: it is deflating. we're going to see a regression to the mean, it is going to go back to a was four or five or six years ago. emily: on the flip side, you've got some private companies like uber and airbnb sucking out a lot of steam from what could potentially going into the public market. is that preventing or hindering how much these public companies can grow because the investment is going nowhere else? tomasz: i don't think it is hindering it. this is why they are doing it. public market investors must be wondering when they can get their hands on these stocks that are growing so fast, but i don't think it is negative. emily: tomasz, that is the most frank take on what is happening of what is happening.
thank you so much for joining us. turning now to europe. texting drivers brought traffic to a standstill in central london, all in the name of protesting over. caroline hyde -- protesting uber. carolyn hyde reports. carolyn: they are protesting and being protested against in the uk and france. that continues to disrupt the taxi companies in europe. these iconic black taxis demonstrate to the use of a standstill. they were waiting the usual 5% commission for one year, claiming that the -- waiving the usual 5% commission for one year.
but it seems unlikely that this all of branch will actually be taken up. in france, uber joined in a protest, striking alongside its drivers in central paris. for four hours, customers were unable to use the mobile app. it asked for stricter police controls. uber executives are due in court this week in regards to a legal battle in france. it seems the regulatory battle continues. back to you. emily: these days, losing a game of chess to your computer is no big deal. but 20 years ago, it was considered career suicide for the man some considered the greatest chessplayer of all time. in 1996, world chess champion terry kasparov fought against a computer.
emily: we have our first clip at how hbo now is doing. time warner's $15 a month, web only subscription program fell short of one estimate, however, hbo now is not available on some devices like playstation and xbox, and new programming hasn't been issued. how does it stack up? netflix is still the clear
winner at the end of 2015 and dish network's sling tv had about 394,000 subscribers at the end of q3. you can now listen to the streaming service through sonos. sonos has partnerships with sound hound, and other music programs. but does a partnership with apple music signify something more significant? i'm joined by patrick in new york. thank you for joining us. what does this actually mean for the bottom line? patrick: thanks, emily. it has really been a 10 year journey with sonos. you have seen some of the services that you had up there. today marks apple music jumping on the solution. they are the fastest growing streaming service. really having this strong partner come into play will
really mean it new things in the segment. emily: you think it is going to increase speaker sales? patrick: this partnership today marks a new start of that happening. emily: that will lead to my next question. how has streaming versus downloading impacted sonos's business? patrick: we really did get our start in downloading. that is really the new wave, if you will. working with apple is a great indication of what is happening in the streaming space. you're going to see more of those in the home. emily: talking about bluetooth speakers, i wonder, sonos is still the popular speaker company on the market. how has the rise of bluetooth
speakers affected you guys? patrick: it is really not about the technology, it is about the bluetooth. what wi-fi really does and what sonos is really great at is providing a great in-home experience. that is what we focus on, that is what wi-fi is all about, and that is really where we specialize. emily: but bluetooth is cheaper. is that a threat? patrick: there are great speakers out there that are great for portable, but really, when it comes to home, you already see a lot of other companies jumping on the wi-fi bandwagon. it is really the best experience for your home. emily: you guys have a new report out with some interesting findings. i will try to not blush as i read these. people who listen to music together have 67% more sex and 80% say doing chores is easier and time spent in the kitchen cooking increases 20%, i am not sure how i feel about that one, but how do you make of some of those findings, and, you
know, what they mean for your business? patrick: music makes everything in-home just a little bit better. i think it is great if we can move from everybody kind of being in their mobile world, looking at their smart phone, listening to music on their headphones in their home, and bringing everybody back together inside a home and listening to music together, i think it is great. emily: individual listening, is that a bad trend for you? patrick: no, it has really helped with the mobile streaming side of the equation, that is where it takes off, but now we are in the market where people are starting to make that transition is starting to listen out loud in their homes. so i think is a great entry into listening out loud in their homes. emily: patrick spence, chief operating officer of sonos. thank you so much. patrick: thank you. emily: and looking at oculus rift for next month.
>> what she is talking about is the most elegant, sensational trump castle in atlantic city. she runs it. >> it is a building more beautiful than anything or anyone. >> that is correct. emily: no surprise, not trending, johnny depp in funny or die's clip of donald trump. it also started out molina, henry winkler, and more -- alfred molina, henry winkler, and more. and oculus rift vr sales are
expected to surge. they are offering deep discounts for the machines which will be $200 less than their normal price when purchased with an oculus rift. and speaking of oculus, facebook will soon put the game "eve: valkyrie" one month earlier. how much is it going to help them move the needle? the virtual-reality ready for prime time? joining us, the maker of the game. thank you for joining us. congratulations, because your game is the only game shipping on with the oculus rift. how did you make that happen? >> we started early. we were one of the first companies to partner in 2012, so we got one of the first oculus rift kits.
we put together a prototype of kind of the basic mechanic of this game. that blew everyone away. emily: how closely did you work with facebook and oculus in developing this? >> we worked very closely and we worked prior to the acquisition of facebook. we worked with them when they were just a start up, you getting their sort of first entry into this race, so we have been now working with them for years and it is a very close relationship. emily: so tell me how the game actually works. it is a 12-year-old colt classic pc game that you actually revised. >> yes, we release a game back in 2003 and it is still going strong on the pc, so what we kind of did was repurpose the assets of the ideas, and you are a really, small fighter jet and what you see here are the large ships and you are flying a smaller, fully immersive space
fighter. so we kind of leveraged the back story. emily: this is also going to be available on the playstation vr. why not exclusive with oculus? did they not try that? >> everyone tries that with everything, but we are in business and all of that. but we wanted to make a game. that is what we are about. emily: on that note, facebook has a lot riding on the oculus rift and there is this the question of when virtual reality will go mainstream. how confident are you that this game, being the only game, will ship out with the oculus headset, can get and keep users hooked? >> we have taken a lot of the learnings that we have gotten online and we have been compiling them for 13 years and we think of taking that kind of experience with the game, we would be able to bring to vr what we did with the pc.
that is definitely our hope and we would then help the kind of revolution for vr. emily: all right, congratulations. thank you so much for joining us. and it is time now for our best day ever. who is having it today? perhaps elon musk. a bit of redemption as investors sent the stocks flying after hours. the numbers gave tesla shares big gains after hours and some of our earlier guests say they deserve it. a 22% stake in tesla motors. it was lost more than 40% of its value since the beginning of the year. and that does it for this edition of "bloomberg west." tomorrow we will follow up on earnings with the cisco ceo and more. all of that tomorrow on "bloomberg west."