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tv   Bloomberg West  Bloomberg  February 24, 2016 6:00pm-7:01pm EST

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sandoval is being vetted for the supreme court vacancy. he is 52. he was nevada's first hispanic governor and a former federal judge. picked up two congressional endorsements from representatives chris collins of new york and duncan hunter of california. texas governor greg abbott threw his support behind senator ted cruz. senate minority leader harry reid endorsed hillary clinton. renewed aobama 20-year-old state of emergency against cuba. what he softened to some language used to justify those powers. obama plans a trip to cuba next month. and brazilian health workers are joining forces to determine if the zika virus is causing babies to be born with a birth defect. teams went to work in northeastern brazil where the virus has hit the hardest. they are trying to persuade mothers of infants to take part
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in the study. global news 24 hours a day. ♪ ♪ corey: this is bloomberg west. growth is slow and here going to take a deep dive into the cloud. since when is computer code protected as free speech? are going to analyze apple's legal defense. coming to anternet city that desperately needs it. san francisco will be the next fiber project.
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two big tech companies with earnings after the bell. guidancee boosted its for the current quarter again. sales growing slower than in prior years. better than the analysts had predicted. hard in 2016. spooking investors across the sector. hp ink the computer and printer business once part of hewlett-packard. issued its first quarterly report as a standalone company. when you look at those hp numbers what you see? they had a really tough quarter. from an overall demand standpoint.
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pcs continue to struggle. for the consumer more than commercial. some real struggle on the printer side. it is really clear that we're just not seeing the kind of and not seeings that market recover as we go forward. as you get back into pcs, we are not seeing necessarily a stimulation and demand associated with windows 10. even though microsoft has lit up hundreds of millions of desktops. and notebooks. we're seeing a relatively weak demand in both consumer and commercial. look at those printer numbers you can see the decline in printing getting worse a double-digit decline in the printing business. certainly hurt by currency. that helps the japanese competitors where they can sell stuff for less. hp becomes more expensive around the world.
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the ceo said to me i expect that to be the new normal. it is the way this environment is going to work for the foreseeable future. in my mind hope is not a strategy. do you see within this signs of any kind of a turnaround? crawford: they are really defending their business as best they can. force a tremendous amount of innovation into print. it is not going to go away but it is going to continue to decline for a while. pc side, they are defending their number one position. they have streamlined their product line. on the commercial side they will continue to fight it out. this businessterm will stabilize. you saw him say was they are taking immediate action. they're cutting expenses. they have to in a weak demand environment. the never-ending
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restructuring of hewlett-packard that goes all the way back to 2001 is continuing. he said we will accelerate our restructuring. the restructuring never ends at this company. crawford: you'll see this going forward until they can find a bottom with respect to demand. corey: at salesforce slowing growth. >> 26% to deferred revenue. that was a key highlight. this company continues to grow at mid 20's. everything since slowing. but the backlog growth is about 11 $.5 billion. that is a phenomenal number. it was a godzilla quarter. relative to tableau and linkedin.
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when you look at mid 20% growth and improving operating margins and subscriptions going lower. when i look at the clouds that they are giving birth to. some of them are growing bigger. it is still drawing double digits. they signed to nine figure with state farm and another big as i company. multiples ceo level decisions making platform decisions across the board. not just to run sales and service for custom applications. this is hitting every employee in the company for salesforce. not just what oracle can handle. they are heading across the platform.
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corey: i am alone in my concern about their marketing expenses. over 50% of sales spent on marketing. those are huge numbers. i wonder if it is over $3 billion. sales thereage of is no other company that comes close to spending as much to promote its sales. it is a fair criticism but as long as they keep driving the rate they are able continue to spend. when they see a slowdown they are committed to wall street that they will slow down and that operating margin will decline. marketingmy mind expenses is how much you want to pedal to the metal. brent: arj can the red bull and it is working. as long as it continues to work they will let it run through a steady out margins.
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they will at the margin go up. it is not pretty but it is worth. the guardrails here are cios above thei love their approach. it is not the old market i microsoft approach of here's $10 million and some software good luck. we think they have the right people. we just raised prices by more than 10%. the first time ever. that is still something investors have to look forward to. as that rolls through these rules. it is tough to pull any big holes in the story right now. corey: always appreciate your thoughts on this company. up, the battle between
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apple and the u.s. government. should code be protected under the first amendment? it is a very interesting topic. plus a look at virtual reality. producing ai content. ♪
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corey: blackberry building on the consultancy business. set against hackers to acquire the u.k. firm. encryption. they are not say how much they
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paid for the company. the deal has the potential for a new source of revenue for a company that needs it. relying on smartphone sales. on to the ongoing encryption debate. apple fighting a government order to unlock an iphone that was used by one of the san bernardino shooters. tim cook explains why he believes he is doing the right thing. we know that doing this could expose people to incredible vulnerabilities. this is not something that we would create. this would be bad for america. it would also set a precedent that i believe many people in america would be offended by. whichou think about those are known, compared to something that might be there, i believe we are making the right choice.
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corey: the full interview airs on abc world news tonight. apple expected to argue in federal court that code should be protected as speech. loretta general lette lynch defended the government's stance. she said if the government needs the assistance of third parties to make sure that a search was parties conducted those must assist if it is reasonably within their powers to do so. the battle between apple and the justice department sparks a larger debate with congress. should they be with access encrypted communications? jeff smith holds 20 patents in this field.
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has the government picked this case is the beginning of many cases? >> i do think the government was looking for a case. a poster child for an image an issue that has been simmering for the last several months. when paris came along government officials were quickly out the door saying that technology companies had blamed the attack. it had been piling on over the last several months. then san bernardino came along. seen this ast has being a case where they have some sympathetic facts on their side. drag therying to technology industry into a public battle over this. corey: how do you look at this.
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? jeff: it is potentially going to create a big problem. a new weapon for terrorists to use against our country. rushing to make a decision here seems mercurial to me. i wonder if they should take a step back and allow all of us to assess what is going on. perhaps revisit some of the assumptions they are making that corey: even as we're talking right now. the ceo of verizon sent out a jumping into the fray saying they support strong encryption with no backdoors. case with apple involves some unique issues. it should not be addressed in an ad hoc basis.
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supporting apple's convention that congress should look into what the rules of the road are. i wonder if the framers didn't decide this when they made this a first amendment issue. very interesting to frame this as code as free speech. the mostis one of powerful arguments the technology industry can make right now. the government cannot compel the company to write software. a free-speech right in their software. that is an argument that the tech industry will have on its side. the government was looking for a case that exactly bring to the forefront. technologiessay companies are trying to say we need to get this out of the courts right now and let's take it congress. be careful what you ask for because congress is not always sympathetic to the tech
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companies either. corey: a fair point. jeff: i do think the tech industry is on apple's side. i developed some of the standards that we used to encrypt e-mail. these are some of the software systems my company built. i can tell you what the fbi's asking apple to do is a mistake. it is not going to make us safer. it will create a key that we assume is only going to be protected by the government but once we create that key which doesn't exist today. we won't know where it goes. they are offering up a new precedent as it relates to how companies behave or even how we as citizens express ourselves through speech. it is one thing for the government to be prescriptive and tell us what we can't say and what we can't do. it is something altogether
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different for the government to come in and tell us what we must say. how would bloomberg feel if we came in the government came in and said here's the story we want you to write. has tried to help the government access this information. now the government is telling them to build a new version of the software that would unlock 700 million iphones across the world. it is a bad idea. think they could even build the software? jeff: i suspect they can. down thet taking garden is preventing a group force attack. it does not exist today and there's a reason they haven't built it. corey: thank you very much. siri may finally be coming to the mac.
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across all of the product lines. it made its they at the developer conference. of all the cities that might need an internet upgrade san francisco could be next in line for the ultrafast google fiber. everything else is a little different in san francisco, so why not? ♪
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corey: the nike cofounder is giving $400 million to stanford. it is one of the biggest gift ever given to any diversity. it will be modeled on the road scholarships. on thursday the eu has been google forng monopolistic practices. it claims that it diverted traffic away from its rivals to google. google could face billions of
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dollars in fines if it is found to have violated the european antitrust rules. the ultrafast fiber service will valley in the silicon area, some parts of san francisco. a lot of san francisco is weird. it would be built on existing fiber that already exist. was in provo about a year ago. fiber iny has unprofitable system that google decided to take over and run. what are they doing here? taking fiber from a bunch of unnamed providers. that is somewhat different from what they've done in provo and huntsville alabama. within a gone to municipal fiber and see if they can tap into that.
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this is a way to bring that cost down. they don't have to know that infrastructure. they can tap into the one that exists. you don't get everywhere covered. they haven't disclosed that. given how crazy san francisco rents are, we don't know. i live on the east bay. we're talking about one gigabyte so that is 10 times faster than you will get in most places. 20 to 30 times faster based on the actual speeds based on their traditional provider. they are rolling this out for a slowly. they are starting to ramp it up. google it first wants to do fiber is way to set an example to places like at&t and comcast. have him reduce prices and up
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speeds. are trying to turn it into more of a big business in itself. they do generate revenue from this. around $400 million in the most recent year. much of it is making what we don't know yet. when you look at how much comcast earns or at&t, there is money to be made from selling the internet. corey: it is a very different kind of business model than the jack: business model renting it from someone else rather than laying down the cable yourself. corey: thank you, jack.
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deep mind technologies is pushing into medical technology. have created a software called streams. it allows doctors to see medical results faster. this is a very different kind of business. early pilotan project. it will not make money right now. an english person i have been to the nhs a lot. it runs off pen and paper. they're just trying to bring some software techniques into british health care. corey: it feels like this is an announcement to kick the shins of ibm. jack: it is a statement of intent. they've hired 15 people and a couple of doctors. a lot less than ibm has in its watson division. google is famous for doing good technology very quickly.
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relatively few resources compared to traditional tech companies. they got fields of computers. corey: coming up, hollywood animated blockbusters coming to the world of virtual reality. i will be joined by the director of the madagascar films. he has started a virtual reality studio. .loomberg is on the radio more from bloomberg west after this. ♪
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>> i am cory johnson. record find out more about the japanese company sharp in a few hours.
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they are talking about competing rescue plans. peter is in tokyo. are we going to get something soon? >> that is what we are hearing. meeting started early .n tokyo if decision-making is quick, we could get it soon. you think we will get something today. cory: what are they deciding this on? >> rewrote a story based on saying in the company the directors are focused on the business liability of the two plans. that sounds pretty straightforward that at one time observers thought that foxconn
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would not be able to buy sharp and that it would go to the domestic acquire but now they are focused on is this viability . which plan will have the best chance of succeeding in providing sharp? cory: i can only imagine. be likely is this going to for a chinese company to have a chance? >> if they use this idea of this miss viability, the foxconn plan is a stronger. they are a major supplier to apple. sharp makes many things but the one here is lcd displays.
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the crosscut would be able to make their own and supply apple. there also offering more money. they have a bit of an advantage. cory: more money in my book is a good thing. >> it is complex. dder is offering to pay shareholders. more yenill invest which will go to additional shares and then the other offer will go to ¥300 billion. bloomberg the newsroom, i am cory johnson. cory: virtual reality is taking center stage in barcelona this week.
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mark zuckerberg promoting technology for tourism, education and the workplace. vr -- eventin veer vr, there have been many hours of 360 video being watched. that will be one part of the content ecosystem for virtual reality. cory: content ecosystem. eric darnell know some thing about that. he has been making animation specifically designed for the immersive experience. tell us what you are doing. it is so fascinating. our approach is to do
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entertainment content. it is not games. we think there will be a great opportunity for storytelling. that movie work is to sit the viewer down and have them have an experience. things rush toward them and see things happen. but you have a captive viewer. virtual reality is the opposite where the viewer guides things. how do you tell a narrative when you cannot control the viewer? >> they can look anywhere. that is one of the beauties of the art. cory: or real-life. >> exactly. you can explore. ora director i encourage inspire the viewer to compose certain shots. you can do that with sound or a character going, what is that? and you want to see what they are seeing. there are a lot of ways to see the pace could have the viewer look at clouds roll by.
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cory: i was thinking of the example where you're in a movie theater and you see something crash toward you or role in your direction. you're sitting in her seat and cannot get out of the way. in vr, you would get out of the way. maybe? >> you're right. it is such an immersive experience that even though you know it is not real, something in your reptile brain in the back says get out of there. cory: is that what is back there? reptile brain? >> it is. cory: that explain a lot in my life. say that's brain can not real that is fake. cory: some are saying people cannot take too much vr.
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it is too much stimulation and exhausting. what do you think the right duration is for this immersive storytelling? >> i think that the duration depends on two things. what is the content? if you're doing a point-and-shoot game you could get physically nauseous because your inner ear and eyes are giving a brain different information. there are those challenges that make it difficult. benign situation, you can last longer. more about the language, we can eliminate more of those strains. cory: we just showed three major platforms. oculus rift, cardboard. then the sony playstation vr. a lot of people are waiting to
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see what that will be. some of the high-end equipment is amazing. i am most excited about the user-friendly market. cory: you like cardboard? >> that for me is the way to get the most eyeballs. to turn the world on to what vr has to offer. you can have a really cool experience. cory: can you tell me about the story? "invasion" is about aliens that come from another planet with advanced technology. cory: this is fiction? >> it is inspired by a true story with things happening today in the world. they come to the earth and the earthlings rise up. in our story, the main character
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is this cute bunny who is responsible for sending them packing. cory: the bunny's name? >> bunny. cory: that's clever. >> when you look down, you are a bunny too. you and your bunny friends take on these aliens and save the planet. cory: that is interesting. how long is it? >> five minutes when it is all said and done. cory: how expensive is it to develop something like this? >> this is probably one of the more expensive things. we are focused on the high-end feature animation quality work. importantfeel it is to engage the viewer, to have that quality of importance. cory: how do you get paid for this? >> i don't -- do you have ideas? cory: i've got 20 bucks. i'm happy to help out.
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seriously, how much will it cost? >> this could cost hundreds of thousands of dollars to create. we will see what the business model ends up being. what the distribution models are. valleythat is so silicon of you. >> we will see what the market is and at the end we will stand on a pile of great things that makes us a leader. cory: build it and they will come? >> we will try that. baobab? what is that. >> it was a tree that grew in africa. and the king of africa movies. we also did some market testing and that was the most memorable then we could come up with. cory: i like the idea of baobab studios. vr, a new video from
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google dynamics. this robot is 5'9", 180 pounds. look at this thing. walking through difficult situations like snow, picking up boxes. picking itself up if you knock it down. they have primarily worked for the military but we have yet to see if there are consumer applications. help around the house. rosie is coming soon. we have plans to carve out a path for foreign entrepreneurs. we will tell you who is having the best day ever.
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cory: stripes is now in the business of helping startups get off the ground. the platform lets founders across the globe sidestep some of the hurdles with incorporating the states. ceo aboutoke with the atlas. base andk at our user the potential audience and what people were doing around the world. support businesses in 24 countries. that really only covers half of all the developers. more and more people are learning to code in emerging markets.
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cory: what about concerns of weeding out country -- companies that are not what they said it are? he explains. >> we are just making the recipe available today. silicon valley banks and our banking partner. they have been doing it for years. cory: stripes going after the same customers as airbnb?
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listen to what they have to say. >> we are not focused on existing businesses. we are focusing on new customers that can be enabled. spendingof consumer takes place on the internet today. it is our belief that 2% will be much larger over time. 10%, 20%, 50%. is,ever the terminal figure it will be more than 2%. our focus is very much on what is and what is not happening in inefficient ways. what businesses are not getting started. collison, was patrick ceo and cofounder in barcelona. picture facebook in your mind, you are probably single like button. be can like, love, laugh, or
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wowed, but there is still no dislike button. frier is our bloomberg reporter. why are they finally doing this? meah does not like apparently, because she cannot hear me. sometimes we can love sarah frier, she will hear about that later. about up, we will talk the liking much more. the soaring market valuation for wind companies. wind and solar happening big-time. as we head to the break i will check on two stocks moving after hours. one going down and one going lay-up. up.ay ♪
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cory: china's biggest right hailing company is seeking fundraising to raise a lot of money, perhaps as much as $1 billion. the round is said to be oversubscribed and the terms yet to be finalized. uber is heating up with a motorbike ride service in bangkok. it could be a smart way to skirt gridlocked traffic. ailing app is hi the leader in most of asia. really low oil prices, record low oil prices. demand for clean energy is not slowing down. wind installations at market valuing doubling. we are joined by bloomberg news analyst amy grays.
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this is interesting to me. you would think that when gas oiles are at bottom levels, prices hovering around $30 per barrel, the appeal of expensive wind and solar projects are doing fantastic. low oil prices is not holding back clean energy investment. there was about $110 billion invested over the year. we saw the total capacity for wind which is roughly speaking the entire generating capacity of the country of argentina. cory: what is china doing? wind and solar. is that happening in china? >> it is all policy driven.
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the government has a fixed price for the wind power that the developers sell into the grid and last year they announced that they will ratchet back those tariffs. they essentially surged into the market to build as much capacity as they could. it doesn't mean it will die, it means they're going from something like ludicrous mode to fast mode. cory: ludicrous mode. i like that. in the u.s., i read warren buffett's annual letter and he talks about the big push they have made in wind. who are the leaders in the u.s.? >> mid-american is one of the big developers. next air are the biggest. a lot of european utilities like eon, edf, edpr are big wind developers. cory: in the u.s. how do the subsidies work -- wind developers in the u.s.. cory: how do the subsidies work? are they all the same?
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>> not the same at all. we just extended a subsidy by five years. we usually get a two-year extension. that was unexpected and great for demand. in many markets like europe, there are feed in tariffs, or premiums paid on wholesale price. in brazil, there are auctions. they have reverse auctions where the lowest bidder gets the contract. that has pushed prices down to some exceptionally low levels. ofperu, there was an offer watt hour. manufacturersine are making money here? >> they had a good year.
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this year will be flat in terms of demand. for 2016-2017 demand will be about the same. it will be a very good year. that will impact the chinese manufacturers. they are able to export their turbines outside of china. less than 1% of chinese sales are outside china. cory: why is that? >> the chinese market is strong and easy to sell into. in developed markets like europe and the u.s., chinese manufacturers have tried to come in, but you are making a multimillion dollar commitment to a turbine that does not have operational experience in the u.s. market. things like spare parts or if the company goes bankrupt, where do you get those
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spare parts? who do you go to offer warranty -- who do you go to for warranty? cory: cool stuff. newsrace is our bloomberg wind energy finance specialist. think you for joining us. the new york times is reporting that apple engineers have begun developing new security measures which would make it possible for the government to break into locked iphones. sources say that, if apple succeeds, it would significantly increase the challenge for law enforcement. some experts say that the only way out of this back-and-forth is for congress to get involved. it is our time to find out who may have the rest a ever -- best day ever. woody allen. amazon studios just bought his untitled film for $50 million. that it -- for $15 million.
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that is three times what sony paid for his last film. that does it for this edition of bloomberg west. coo ofw, don't miss the yahoo!
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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. so your business can get back to business.
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sounds like my ride's ready. don't get stuck on hold. reach an expert fast. comcast business. built for business. charlie: we begin this evening with our continued coverage of the encryption debate. should privacy be for second for security? apple's refusal to unlock a phone from one of the san bernardino shooters has revived this question. law enforcement has weighed in with their concerns. running me now from washington is apple's attorney, ted olson.


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