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tv   Bloomberg West  Bloomberg  July 26, 2016 6:00pm-7:01pm EDT

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clinton nomination for president is underway. clintonormer president will make the case for his wife while trying to convince supporters of senator bernie sanders at their support is critical to defeating donald trump. senator sanders's elliotts are seeing given a chance to let their voices be heard during the rollcall. the french president is calling for unity in the face of terrorism after an attack in a normandy church left a priest dead. he said the threat has never been that high in france and europe. two attackers took hostages in the church during morning mass and dab the elderly priest to death before being killed by police. the united states, australia and japan are urging china not to build military out posts on reclaimed land in these out china's the. it's seen as a strong show of support for southeast asian nations.
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the countries failed to take a stand against china over the weekend because they could not reach an agreement. global news 24 hours a powered by more than 2600 journalists and analysts in more than 100 20 countries. i'm mark crumpton. bloomberg west is next. emily: i'm emily chang and this is "bloomberg west." to be a hitiphone and apple is enjoying a pop, but china sales continue to slump. how does it impact tim cook's strategies? plunging after hours. we will break down the numbers. and a chinese company is known as the apple am a tesla, netflix
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of china and is now buying a u.s. company for $2 billion. we will hear from executives later this hour. apple shares gaining after-hours with a sales slowdown that was not quite as bad as expected. back-to-backfirst quarterly sales declined since 2002 but actual iphone unit sales beat estimates coming in at 44.4 million. i spoke to the apple cfo who to a mix oft companies developed in emerging markets, something tim cook just reiterated on the earnings call. analysts our initial -- analysis says it is popular and sales going to customers new to iphone is greater than we have seen in the first week of
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availability for other iphones launched in the last several years. emily: all of this building up to next quarter's report which part ofke up a small the sales for the i-27. joining me is ryan reese and ryan white from drexel hamilton. not quite as that as we expected in the coming quarter actually looks quite good, which means that west quarter was the low point? .uest: it seems like it there are some highlights and they are talking about pocket of opportunity in china. that market as a whole is basically flat in the are finding good opportunities. they highlighted some penetration into india and that is great because that has not been the easiest thing because of some legal issues. cheaper iphone is
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finding new opportunities and you audience as well. earnings call, they are talking that augmented reality and tim cook says they are in the ring heavily there. want to talk about china and foreign exchange issues. they say it is clear the economy is going through difficult path that we look at the potential market offers for the long-term. pointed out that business in china is only down about 2%. or you worried about china are there positive signs and other countries around the world that are enough to offset that? guest: i'm not worried about china. the big thing we need to worry -- we need to member about china is growth has been significant. china mobile starting to ramp iphones and eight acre iphone with pent-up manned and expanding 4g networks. the comps were impossible, so
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when you see a 33% decline year-over-year, we said 25% to 35%, so this is a normal sequential -- sequential change, but it is normal on a year over year basis. we are not concerned. emily: i want to talk about the iphone as a because the average selling price of the iphone has declined and the order, it dropped to $595, a sequential decline of $47. it peaked a couple of quarters ago and they said they were prepared for this because they launched the iphone sc in this corner and willing the channel to meet the demand and they singled out japan, western europe and thailand, turkey, india and russia. they don't want this to cannibalize their current
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business and they say they are adding new users, but we don't know how many. product an important and they are going to take this initial drop. we estimated it accounted for roughly 20%, so that is strong. emily: can that grow? can grow.hink they i don't know if i see it going past one third of their shipments in a single quarter. a lot of that depends on how heavily they put marketing toward these and so forth but this is a strong initial launch and the obvious result of cheaper product is going to bring down the estate. annalee: is the success of a cheaper iphone a good or bad thing? guest: i think the great thing. the number of new users that are brings into the apple ecosystem, it does impact your unit market
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share and with apple, there was gross margin guidance for the set timber order that was actually excellent. and when and even year you come on an even number, the declined by has over 200 basis points in the september quarter and they are guiding to down 25 basis points. they may come out with a higher and iphone as well. emily: i want to talk about the watch. in my call with the cfo, he did not mention it and we did not about it. is the watch doing well? estimatesput out our that it was roughly one .6 million in terms of volume. that is down significantly and coming off a year since the launch quarter.
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that market is challenged and i think the reason is people are trying to find what is the use case and there's a lot of hype about the second-generation coming this fall. this is not apple alone facing these challenges. they are just trying to figure out what is the use case and what is the demand for wearables in general. ands competing with iphones other smart phone devices. something that they talked about with their investment in the chinese made a of uber, apple huge investment and analysts are trying to make sense of that investment. take a listen to what tim cook had to say about it. cook: we see it is a great financial investment. we think there are some strategic things the companies can do together over time, and we think we will learn a lot about the and the chinese market
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even beyond what we currently know and we have an incredible team there. that is the rationale for why we did it. emily: strategic things the .ompany can do together what does that mean? >> they have a huge interest in the automobile market. i think they are hinting at something in that area. just understanding what the china consumer is all about that they don't understand right now has potential, but i think it speaks to potential for the car for sure. >> tim cook mentioned sales in india are of over 51% and they are opening their first retail store. of 7% and sales of the ipad pro apparently of going to businesses. if they can get any
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access to what consumers are doing in china, just have a better understanding, that is huge. in terms of india, they have finally broken ground and it will be interesting to see what the consumer reception is to china as a whole. much like many pockets of china, it's much lower than even their introductory offerings. the ipad pro did the opposite of what happened with iphone and drove things up pretty significantly. directionsdifferent now for iphone and ipad because of these new products. specifically singling out improvement on the music streaming side of things. if there is one challenge you are watching, what is the biggest challenge to mark guest: one of the concerns that is out there is the up great rate with consumers in the smartphone
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market has lengthened. i think what investors are missing here is we grew iphone 37% in 15 and we are monitoring a decline of 11%. that is about 13% growth over two years, so that slow down is really just comps. so you will see growth return in 17. some people are looking at this klein, saying the cycle is elongated and this is big trouble for apple. it holds back a little bit of sales, but that is not the story. how long is the upgrade cycle? emily: we will be watching to see how big that am from the iphone seven is. thank you. coming up, twitter getting slammed in extended trading on a dismal forecast. we will give you the numbers, next. and among the biggest tech movers -- linear technology
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surging after bloomberg was first to report a pending deal for analog devices to buy the company. that deal was confirmed for $60 a share. this is bloomberg. ♪
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emily: another stock we are watching -- verizon. the carrier added fewer subscribers and analysts predict it. verizon is buying yahoo! assets for $4.8 billion in focused on finding new revenues through ad sales. the ceo explains the goal becoming a major competitor in the mobile media arena today. >> the next works and their
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sports channels see an opportunity to partner with us. they may already have nba or nfl rights and can work on streaming their games, not only through the traditional channels of bios or full bundles, but over aol and yahoo! and over golf 90. as a waterfall of content moving through our different properties. emily: investors are focused on how verizon will pay to scale up to the likes of google and facebook. verizon already has about 100 ilion dollars debt to pay down. twitter shares plunging in extended trading after the company released earnings, down as much as 12 are sent. the company need second quarter earnings-per-share estimates are ported a big miss for it third-quarter revenue. by a wide margin.
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the closely watched number of act of users edged, but will it the enough to boost ad revenue going forward? -- tog us is and analysts analysts. users growing slowly and that is a number we have been watching quarter after order, but now they are having numbers -- they're having problem with revenue. has to leadgement monetization and it is to remember twitter, their latest efforts are on services growing. improving user engagement is more critical and if their latest by streaming at 70 and captures the market, then they may have fewer eyeballs, but the quality of those eyeballs as more and. you will have longer viewing and
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singlescreen viewing with the marrying of tv screens with mobile devices. there may be fewer ads with the polity of the ads will improve and advertisers are willing to pay a bigger price tag and we see this across the broader digital advertising system where light touch is inferior to customer engagement and advertisers are willing to spend more money. so the economics are changing for twitter. emily: let's take a look at how the stock is trading, down about 10.5%. drops. one of the bigger investors are still not happy. it is quite unfortunate. we use it as an avid user constantly and we gave twitter
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the benefit of the doubt and downgraded the stock two weeks ago because we are just not sure it's there. seeing isre cannibalization of the revenue with new products cannibalizing you have tocts and understand that a trying to be niche or are they trying to go mass-market? if they are, at what cost is it going to come? right now, we have jack dorsey strategicallyd it does not make sense to operate as an independent company or part of a larger organization for in our view, you think twitter could have a nice home in a company like disney where ory relationships converge especially on microsoft. since that's interesting microsoft just bought lead-in
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for $26 billion. is there a company out there would pay the price for twitter? guest: i think twitter has a lot of work to do getting her house in order before they put on the market. they are currently trying to fix their problem with a band-aid and their latest ad campaign. they announced yesterday that they have 90% local brand recognition, but most don't understand what is twitter for and how do i use it? there's a big gap between what twitter is hoping to deliver, which is a real-time social media commentary plat for which is what believe it is, a substitute for facebook. need to fix their platform and user experience and deliver on their promise of a real-time media experience and conversation before there can be any discussion about who to sell to.
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week: this is the second twitter is live streaming the convention and they have deals to live stream nfl games and bloomberg television shows, including this show, but facebook is making huge inroads into life. take a listen to what jack dorsey said about the improvements they are making toward slow and they progress. growthhat makes audience border notable as we can see only between the product changes we made and our growth. we are making the right decisions on our products and it gives us a foundation for future growth. though twitter is making these changes, they have not had dramatic results yet. do you think facebook threatens the stronghold twitter has had on life? platformthink every
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threatens their stronghold, whether it is facebook, snapchat or google. there's a lot of big scale players with a lot better measurement capabilities able to attract the budgets they are having difficulty attracting currently. that is why we think twitter does make sense as part of a larger organization and when you think about things they are trying to do, it's a lot of nonexclusive content. it is challenging to differentiate yourself in a way you are a consumer thinking that the cost for five different forms, why should i go to twitter? everyone knows what twitter is as far as its liberation of tweets across the world and donald trump has helped in that regard. dailytimately, becoming a user, which is at the core of monetizing the service is a far greater challenge and that's why i think it's going to cost a lot of money to differentiate
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yourself in a way to attract that must the content and be able to operate independently on a long-term basis. unfortunately, we have to stay on the sidelines. thank you both. we will continue to watch. mobile i fell after they say their driver assistant technology will no longer be in test vehicles. take a listen. >> our work with tesla will not extend beyond q3. parkintain the tesla wines, including a significant upgrade of several functions that affects our ability to respond to crash avoidance and optimize steering without any hardware up dates. forward, it, moving
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is a paradigm shift in terms of function, complexity, any a need to ensure a high level of safety. there is much at stake to our reputation and to the industry at large. they: elon musk says agreements with other automakers prevents it from keeping up with tesla's pace of development. later this hour, a chinese are not company setting it types of broad, snapping up visio. we will catch up with one of their executives ahead. ♪
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emily: the irs is looking for information from facebook about third-party investors. the agency is trying to miss the whether they transfer of intangibles to it irish subsidiary in 2010. officials were summoned several times to meet with irs auditors
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but the officials failed to show and not submit documents by the deadline. its numberseases tomorrow. maleg up, we'll hear from chip about their decision to double down on podcast. theyou can listen to us on bloomberg radio and on sirius xm. this is bloomberg. ♪
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you don't see that every day. introducing wifi pro, wifi that helps grow your business. comcast business. built for business. mark: i'm mark crumpton. let's begin with a check of bloomberg's first word news. the rollcall of states is underway in philadelphia where in just a few minutes, delegates
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attending the democratic national convention are expected to formally select hillary clinton as their parties nominee for president of the united states. in a step toward party unity, the voter -- the vote is being organized so that the home state of vermont will be able to deliver the nomination. be hittingbama will the campaign trail this fall on behalf of senate hopefuls according to the director of the senatorial campaign committee who says the president will be deployed to help in close races. they also want to get michelle obama more involved and is reaching out to bernie sanders in an effort to bring his supporters to the polls, especially in the state of wisconsin. more than 180 athletes from the russian athlete teams have been barred from the olympic games due to the doping scandal. 67 athletes were excluded from the track and field team when a
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band was upheld at the court of opportunity -- or of arbitration for sport last week. it is 6:30 p.m. in new york and just after eight: 30 wednesday morning in sydney. i'm joined by paul allen were a look at the markets. good morning. has been up and running for 30 minutes in new zealand. a different story in australia -- are expecting gains at the open with futures indicating a right start in japan. in australia, we are keeping an eye on the metals group up with quarterly iron ore reduction figures. the big one today is the australian dollar. it is going to move in three hours time because that is when quarterly cci hours -- cpi numbers are out. another quarter of deflation means to catch rate will be cut again, but a strong print means they will be on hold.
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either way, the aussie dollar is going to move today. we were looking at an estimation of a 4% gain in cpi. 1.3%,tly, the rate is at a little lower than the reserve bank would like to see. we expect to see another month for growth in china. that is some of what we are watching around the region today. i'm paul allen in the, australia. emily: turning to podcast -- the 2014 runaway success of the serial podcast created not only
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hit for the medium and a sponsorship darling. one company gained sponsorship that is because the name was mispronounced. by and they81% currently sponsored 10 other podcast. we were talking and could not episode brought to you by mail chip -- that is what we associate you with. it wasn't the first podcast you sponsor, but now you are sponsoring all of them. i had to change my twitter i/o because of that. i think the whole thing behind the podcast is a testament to our creative culture, which is we always experiment. podcastseen sponsoring for years and this was a lucky
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break. we sponsored "this american life " and they were grateful for us investing in them early on. and when they did this one, they gave us first dibs. emily: how did it impact your business? us and ask came to how do we want a promotion to sound? we said you guys are experts. they went out on the street and had people read the script and they had that wonderful lady just mispronounced name and it came a viral sensation. what did for us as sales went up in the fourth quarter and it introduced our brand outside the business world, to the tech space. we had grandmothers asking employees about it. we saw tv stars tweeting about it and it was crazy. i have to leave it there
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because we had a historic moment happening in philadelphia the floor of the democratic national can. hillary clinton is about to be formally nominated, the first woman to be nominated for president by a major u.s. party. the roll call is happening right now and she needs to get to 2382. it number we are looking for and the voting has been orchestrated so that the voters from bernie vermonthome state of will deliver the votes. i want to ring in our bloomberg politics reporter. a historicthis is moment for our country and for the world, but it has not come without a lot of pain on both sides. yesterday on the floor, we saw bernie sanders supporters doing and hillary clinton supporters doing bernie sanders and now, bernie sanders, who was heard diehard own and is her biggest champion and she needs them for
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what is the mood on the floor right now? guest: the mood on the floor is quite different than yesterday. we saw a lot of bernie sanders blowing off steam yesterday, a very better and hard primary. the bernie sanders campaign did extra nearly well but came up short by about 3.8 million votes. hillary clinton was the clear winner and about a moment or so she will be nominated and inocrats will make history the wells fargo arena by being the first american party, first major party to nominate a woman. hillary clinton will be the democratic nominee for the we have known this june when she unofficially clinched the nomination. she needs to hit 2383 votes and that should be happening any moment now. emily: we are just a few votes away and hillary clinton is not even there. she is on the road but her
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husband, former president bill clinton will be speaking tonight. talk to me about this idea of unity. do much more work is left to over the next couple of days and the next weeks and months? guest: the democrats have made a lot of strides toward unity after bernie sanders through his word to hillary clinton and he gave a rousing speech last night, enthusiastically and unequivocally endorsing hillary clinton. we have seen bernie sanders supporters who say they do intend rise from 50% to about 85% in last month or so. there is still work to be done because emotions are running high and passion are still wrong and the bernie sanders delegates believe they should have won this nomination. it's going to take some time to cool off but hillary clinton campaign is not trying to interfere or battle them. they are letting the chips fall
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where they may and letting the delegates have their moment on the floor and say what they need to say. emily: we are just three votes a way to get to that magic number. ofnie sanders'home state vermont will put them over the top. what do we expect to hear from hillary clinton's husband, her partner of four decades? guest: bill clinton will serve as the ultimate character witness for his wife. there is a side to hillary clinton voters do not see when the cameras not on. her public persona is not the same person that people who know her very well know. she is not well known or trusted by the public and we will hear from bill clinton why she should be trusted and why she is the right person to carry the torch and be the nominee. why she has the chops and
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qualifications, perhaps even more qualified than he was to be the next president of the united states. : it will be an incredibly important speech, especially given the issues she is having around likability and trustworthiness. we are watching the votes coming in from the floor and it looks like we are there. 2382 votes. hillary clinton now the first woman nominee for a major u.s. party -- i just want to take a moment to bask in the importance of this. it has been 100 years since women were afforded the right to vote and it has taken a century to get to this point, not counting the century before that. talk to me about the importance of what this means. guest: 240 years of american history and never been woman nominated.
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hillary clinton has a ways to go to become president, but this is an iconic moment any country's history and the glass ceiling hillary clinton talked about, putting 18 million cracks in 2008. she lost by a hair to barack obama and in a show of solidarity and she is richer delegates to support him on the floor. bernie sanders did not do that for the had his delegates vote for him but there was a lot of unity between them at the end and they are working together to bring the party and for women, for american women, this is a powerful moment that nobody in this arena is going to forget. cheers behind me is audible. i can hear it through the headphones right now. emily: hillary clinton becomes the very first woman to be nominated for the office of president by either the democrat or republican party. our an exciting moment in
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country's history. we will continue to follow this and we have national coverage with bloomberg politics all night long. thank you so much for joining us. ♪
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emily: breaking news -- just in its ago, hillary clinton was nominated as president for the democratic party. first woman to be nominated by either of the major parties were office of president of the united states. it wasn't vermont but south dakota that put her over the top. bill clinton will be speaking
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tonight as well as other notable speakers. i want to bring back the ceo of mail chimp, the cofounder. we have been basking in this moment. guest: it's crazy. history being made. thank you, south dakota. emily: i do want to talk about your business because you are so much more than a podcast bouncer. one thing about you guys as you guys have dropped since the beginning. we started in april 2000, probably one of the worst times to art and internet company. if we wanted vc funding, there would have been no money to be had emily: what is the real future of e-mail? companies are trying to replace e-mail with messaging. e-mail is such a drag, people who say e-mail will die. is e-mail going to die?
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guest: they have told me that for 15 years now. i think when you use e-mail, the ease is for employed. when you get a job, e-mail is a blessing. emily: what's next for you guys? going tothink we're expand beyond e-mail. when we talk to our small business customers, the plan is to help small as this is grow, so we are going to look into our customers and build campaigns on social media, even old-fashioned direct mail has a lot of innovation left in it for emily: i'm sure we will hear more about you guys as we was to all of our podcast. thank you for being with us through the hillary moment. guest: i will rumor where i was when it happened top emily: --nese tech giant erik:
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hasese tech giantle eco for $2d the leo -- visio billion. here with me to discuss it is our bloomberg news reporter that broke the story and the senior .ice president of le eco i will start with you. why visio? guest: they give us a great platform. they are the number one domestic or tv provider. they have an excellent brand and great relationship with channel partners and suppliers and that tolerates our entry into the north american market. this is such an interesting company that makes so many different kinds of things and here now, u.s.
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company that makes televisions, a step toward u.s. expansion. sprawlingy have invest -- sprawling interests and are invested in smartphones and electric cars. something they have said over and over is that this is about capturing the user 24 hours a day and they have been making aggressive inroads internationally. this deal cements its foundations in the u.s.. what i'm curious to know is we yourchatting earlier about long-term plan and you mentioned an ipo moving forward. what are the plans moving forward? guest: moving forward, we have a dual headquarters strategy and visio is part of our expansion into the united states.
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we plan to bring it into core markets in china and the u.s. we're building a large team here entity, we private intend to over the next three or four years list our business in the u.s. market. cool to beounds so apple, sessler and netflix once. how can you be good at all these different things? ,uest: our chairman has a great great vision and broad believe in terms of bringing on the best people. the vision but brings a lot of latitude to execute on that vision. we brought in a former shanghai general motors ceo. we brought in senior executives from our sports business and handset business and now, with this acquisition, we have an excellent team joining us in our
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ecosystem. ready there is all significant competition and we heard tim cook say while they are investing in everything from smartphones to cars, is to do the same thing as far as capturing the user throughout the entire day. what is your plan to differentiate yourself? hardwaresecure landscape, it's hard to differentiate out. but we start with combining platform cloud services and or licensedebrities or acquired content and delivering that into an experience through our devices to the paying customer. so we bring value both fine economic benefit and the experience died. emily: we have to leave it there.
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move you guysng are making and our bloomberg news reporter, selina wang in york. coming up, pokemon go will not play into nintendo's earnings report tomorrow. details on the defendant's results are next. and to learn in -- tune in to bloomberg go tomorrow. this is bloomberg. ♪
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emily: nintendo will be reporting fourth-quarter earnings and this by the fact that pokemon go do you are ended, it will not play into the results. they will to convince investors that it is a revenue generating model. without pokemon go, what are we expecting? nintendo is going to
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report after the close in tokyo today. the company is projected to report a small loss, a decline in revenue, but the focus is on pokemon go and what kind of information the company will provide about the game and more specifically how it is going to benefit from the game. nintendo does not own 100% of the game but some investors have been can use by that, so we are looking for clarity as to how the company will benefit. emily: isn't monetizing the game an issue? i know they partnered with mcdonald's in japan, but what can we really expect? guest: exactly. investors are looking for some clarity about how they can read revenue from this. the challenging part is nintendo has not been very effective in providing information on how they're going to benefit from the game. it actually owns about a third
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of the company and then owns a stake in the company that developed the game. investors want to understand how it is going to get profits from the game and what the potential is going forward. there is an expectation nintendo withevelop similar games its own intellectual property and if it is able to do that and monetize those games, there could be a lot of potential. but analysts are confused about how it is going to benefit. what about new games they can introduce after this wave of nostalgia passes? guest: nintendo has a whole host of intellectual property that over then popular decades -- mario, donkey kong, games that have the potential to be deployed in new and mobile ways. makingpany has resisted smartphone games because they want to sell its consoles because best but now it is
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edging into the area of mobile and some see the success of pokemon go as a precursor to the potential of the future. emily: what does nintendo need to do outside of pokemon to get firstetter place? guest: and foremost, they need to communicate more effectively with investors and analysts. hit,the pokemon go craze nintendo stock went on a tear in double over the course of a couple of week and then after 7:00 on friday, they put out a statement saying it did not expect to benefit much financially from the game. that led to a historic fall in the share price on monday. the stock fell the most in 26 years. so investors would like more clarity and proactive can indication from the company on that front. our asia tech editor joining us from hong kong. thank you so much. our best day ever has to go to
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hillary clinton winning the nomination for the democratic candidate for president of the united dates, the first woman ever to be nominated for president by a major party. senator bernie sanders delivering the nomination. once her biggest supporter cap -- opponent, now he will. atl clinton will be speaking a big scene over the next few days, can they unify the democratic party? day, noday, historic matter what party you are affiliated with. that does it for this edition of "bloomberg west." tomorrow, we will we talking facebook earnings after the bell. ♪
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charlie: and this from the democratic nomination. what she did not get angry or disillusioned. [applause] hillary did not pack up and go home. as a true public servant hillary knows this is so much bigger than her own desires and disappointments.

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