tv Bloomberg West Bloomberg August 22, 2016 6:00pm-7:01pm EDT
will step down from the board of the clinton health axis initiative. donald trump said the clinton should shut down there terrible foundation "immediately." mr. trump -- promised to be fair but firm toward the estimated 11 million illegal government -- immigrants. he said he is not puffing on his earlier hardline position which included calls for construction of a wall along the u.s.-mexican border. a federal judge in texas has walked the obama administration order requiring public schools to let transgender students use bathrooms and locker rooms consistent with their chosen gender identity. the ruling applies nationwide through the judge said federal officials failed to follow rules requiring an opportunity for comment before such directives are issued. german chancellor angela merkel, france holland and matteo renzi promised to increase joint european security efforts in the
wake of terror attacks. apreme leaders spoke aboard aircraft carrier. crumpton, this is bloomberg. bloomberg west does next. -- is next. ♪ >> this is bloomberg west. coming up to my tech takes charge. why the sector is exerting more control in u.s. markets than at any other time since the.com bubble. this is going e-commerce start up behind the great wall. toy cut a deal with alibaba give amazon a run for their money. and china's big plans for the advertising aid. latest to bes the
snapped up by chinese investors. the ceo joins us later this hour. first, to the lead. tech stocks exerting more control over u.s. markets than in any other time since the internet bubble. the largest tech stocks, we're talking microsoft, alphabet, this split, amazon, seeing massive multiyear rallies. that is closest to its widest ever. we have more. break it down with me. exit is getting to be about 21%. when you look at the magnitude in terms of how much the percentage changes, it is relative to the rest of the market. it is picking up a bigger slice so you are looking at 21%. you can see that in the white line with the infotech. obviously the biggest one right now. compare that to something like financials, it has been flat for that group throughout this recovery.
the tech stocks have led the way. it has been a bit of a turnaround in the earnings reports, where tech has been leading so you are looking at 20%, 14 or 15 for the financials. those are typically the biggest groups. you can see how this compares. this level we are at four tech is a bit higher than it has been. nothing quite compared to where we were in 2000. i want to bring up another chart here that is interesting. looking at the sale story. there is -- this is a function of market cap. cap is shares in price. at the same time you have to think about what is going on with them of its big leaders. ,mazon, facebook, google microsoft. some of the companies that have been leading the charge in terms of that market cap expansion. this shows the diversions that has shown.
valuations are high but part of the sobriety of this rally has been the fact that there are andl pretty low valuations some of these big companies. the you look at microsoft, google, they are getting back to toios down to it as closer zero. you have an s&p average of about three. there is not quite the same exuberance. maybe that is why investors are that he this rally and not too concerned. a lot of people got caught in the.com bubble. >> this is basically the story in one simple chart. what was going back in 2000, 1999. the top panel here is the tech sector in the white. the price to earnings in the past 12 months versus the s&p
and blue. this is pretty amazing. the spread is at the bottom. --k at how high tech stocks were valued. not even come to what we had today. in the techto 21 pe as well as the s&p. things are blown out of proportion. it accurate to thousand, you have tech stocks trading 80 times 12 month earnings and it was building, hard to know when you hit that top that we will -- you've see that flat line, basically the same and i have one must chart that is showing the same principle. this is looking at those earnings so boiling it down a little more acutely when you look at profits. this speaks to the idea that rings are pretty highly valued in some areas of tech market but nothing incredible especially when you think about whether or not earnings can provide a backstop. the blue line assuring you that eps this iss growth
what we have been following the last year. we have not gone anywhere but tech is still up, up 25% since the start of the bull market. op givesnings backdr people encouragement and whether things are blown out of proportion. the nasdaq and the s&p tech sector have been up 23%. some amazing numbers there. turning out to asia. alibaba has been adding social features to its mobile app to attract younger customers and get them to stand the app longer and entice them to spend more money. that strategy may be paying off. and mobileers jumped revenue is up to two and $6 billion in the june quarter. people are visiting the app more than seven times a day spending over 25 minutes in total. compare that to nine minutes on
amazon's mobile app or 16 minutes on twitter. some interesting stuff here. how were they able to do this? celine: they started with a simple app but it has evolved into something much different from what we think of as typical as e-commerce. amazon's stats are much lower. young basehis very of users and to hook them and they need to add all the social features. a conjoint one of over 1000 special interest groups, you can watch live feed from your favorite blog or testing out your favorite makeup or read your favorite news feed. that is what keeps them coming back for more. reny: it seems like the numbers are not playing out on that just yet. definitely an envy. what is the disconnect in terms of the companies?
celine: facebook has tried to get people to shop and insight, they have added the buy button. and thing with twitter interest and amazon has not made any major inroads into social network. there is a host of reasons why there are these differences but the main one is china has his enormous base that is growing and they are used to the extremely cramped interfaces. to a typical western smartphone user it would be overwhelming. so because of that the chinese ecosystem these companies have an able to put everything altogether, you can look at reach out, social message, book a taxi, get a haircut. hard towhy it has been change the habits of the u.s. consumer? they want to put
everything up against the wall to see what sticks it is helping there. i do want to bring up a quote cofounderad from the of alibaba talking about his comparison with facebook. he said on facebook you are theyding your friends but start with strangers and use data to find a commonality of interest and create a community. do you think in the west that that could make traction? thene: he is saying e-commerce site has all these data points. they are able to group people into what you buy, what you like, creepy. that is why there are these forcing special interest groups from fishing or wedding planning or baby planning. in the u.s. amazon, they have not really try to do this. they said they would have to change habits. i am used to going to facebook to talking to my friends and going to amazon to why things
and going to twitter to look at news and tweets. it is hard to change habits and it will take more years to be comfortable social networking and on other types of apps. that they have invested in snapchat. he does not want folks to know that. there is another road here. he says we do want to learn and understand how snapchat is engaging with young users. we are intrigued by the product and impressed with evan steele, the founder and we want to be partners was -- with him. why does he not want people to know? >> they do not want to comment. they know the u.s. media, we are all over this. alibaba and septet, tell us everything. they do not want people speculating. alibaba is a super long-term oriented strategy.
most of what he said was off the record but what i can say is they really are looking to see what septet is doing, how they are able to hook in all of these young users in the u.s. and five, 1015, even 20 years down the line all of this knowledge they are gaining from the u.s. investments are going to pay off when it comes full force in the u.s.. >> thank you. now to today's revolving door in tech. tableau has a new ceo. cofounder.the he comes from the cloud computing division of amazon. 5% butsparked -- spiked it is a small recovery for the embattled stock. it had 42% through monday's close. tableau is trying to transition its software tools to a cloud-based substitution model and is grappling with slowing sales growth. coming up, asia's internet
giants may be scrabbling to diversify but j.d..com's laser focused on retail. we will talk strategy with the cto of china's second-biggest e-commerce company next. india's biggest e-commerce startup is heating up not in a good way. we will focus on the internal t later thislip car hour. this is bloomberg. ♪
it does this to justify the billions of dollars in tax-free revenue it has collected since moving its affect -- assets to luxembourg. authorities on both sides of the atlantic are asking questions with the virus telling amazon it owes $1.5 billion in back taxes. amazon maintains it is following the law and has sued in response. we are expecting a decision this fall. china is one of the hottest markets in the world for e-commerce. shopping volume made double to more than $1 trillion by 2018. one company poised to capitalize on that is j.d..com. this is china's economic is e-commerce operator behind alibaba. the company struck a major deal with walmart agreeing to buy its walls are -- it's website.
joining us now from san francisco to discuss how the finches -- company is positioning itself is the chief technology officer. stating on its core retail, we were talking about alibaba moving into the cloud and social and entertainment. do you see any change similar to alibaba in the near or midterm future? >> first, thank you for having me. have [indiscernible] the largest social media company in china. users00 million chinese use it every day. spent andir time are the e-commerce platform will integrate right in. jd account.need a
you can purchase a product and that will pay. 50% of new users were [indiscernible] >> let's talk about strategy in com relative to other competitors. what makes your strategy better question mark if i were an investor why would i want to invest in your company versus othering else when companies are expanding into other areas? guest: we have the largest online [indiscernible] in china. we have 234 warehouses across china and over 6700 delivery stations. we provide the same day all major cities
in china including second day deliveries. 85% of orders last year or delivered within the same day or the second day deliveries. this is a tremendous speed and service is tremendous asset for us and also we are [indiscernible] concern.n area of is a shift in chinese consumers is moving away from price being the primary consideration when going online shopping. and authenticity and service became more important today. we talked about j what does jd.com see in
terms of that deal? >> we are collaborating and continuing to build the brand in the business. we were launching a [indiscernible] jd.com. we are pursuing online to off-line initiatives and we will [indiscernible] to improve our product selections for our users from china. company considering any other kinds of partnerships or similar deals there? are always looking at how to service our customers better. leveraging each other supply chains will be important to improve product selections. next walmart gets a 5% stake because that deal.
what is the benefit for walmart here? chen: walmart is participating -commerce in china. as this we are always looking at innovating and adapting to ever-changing user needs. is the strength of a local company. and walmart can participate in that fast-growing sector. itsust earlier today for cannot with an article with the -- iine, saying that wanted to get your thoughts on that. andent had bought shares today it is more than 21%. jd.com would be open to a take over there? >> tencent always see the value of jd, has confidence in jd.
to execute and deliver the height quality customer service. we have always had a strong partnership with consent and we believe it is a win-win for both companies. >> let's talk about the future of e-commerce. we are talking about amazon with their drones buying up their own planes to get their products across the country and around the world. what is your forecast for any the in the drone region to? >> yes. most of theoday participation is not andicipating in e-commerce china. the cost is five to six more times -- times more expensive than cities. our we're doing is using
drones to deliver the product and packages to the villagers -- we havee have over 100,000 chinese villages and from there the customer can or theirhe goods representatives candidate or the goods from there. we are not going to deliver the package to individual customers. we had a pilot program in place to deliver packages to will customers. intend toian term we rely this program to more areas in china. will leave it there. thank you for your time. still to come, we will continue with asia's fast-changing e-commerce landscape and dig into the serious going pains -- growing pains at flipcart. the city is gearing up to be the testing ground for a fleet of
>> the rally in chip stock is taking on historic dimensions. up 20% following the eighth straight weekly game. if that rally continues it would be the longest such streak since 1995 create all this is the broader market remains flat area this rally is a sign of economic strength somewhere to the growth of railroad stocks about a century ago. that has boded well for future stock market performance. and shares climbing to the highest us year after japan's electronics -- the
talks may not end in a deal. it is looking overseas for r&d acquisitions. coming up. selling itself to a group of chinese investors were $900 million. we will hear from the ceo and founding -- founder of media.net. you can now listen on the bloomberg radio app and on sirius xm. this is bloomberg. ♪ [ clock ticking ]
we should fit into your life. not the other way around. ♪ everything is cool when you're watching a screen ♪ ♪ everything is awesome, ♪ when you're sharing a meme ♪ ♪ a voice remote, "show me angry kings" ♪ ♪ you know what's awesome? everything! ♪ ♪ apps that please, more selfies, ♪ ♪ endless hours of the best tvs ♪ ♪ brand new apps, shows to go, ♪ ♪ awesome internet that's super whoa... ♪ ♪ everything is awesome xfinity. the future of awesome. mark: you are watching "bloomberg west." congressional republicans have issued subpoenas to three technology companies who either made or performed maintenance on the private e-mail server that
hillary clinton used while secretary of state. the gop has been stepping up attacks on mrs. clinton's handling of sensitive information that floated through the server in the basement of her home in upstate new york. hearing inill hold a september of the obama administration's delivery to $400 million of cash to iran. the administration admitted the money was connected to a prisoner exchange. the white house denies the money was "ransom." president erdogan is criticizing the delay in extraditing a cleric accused of masterminding the military coup. president erdogan says it is jeopardizing the country's strategic partnership. he plans to discuss the situation with vice president
biden in turkey on thursday. the u.s. says it needs evidence that gulan did something criminal. if the u.k. drastically lowers taxes before leaving the european union, it could make brexit talks more difficult. philip hammond would like to reset fiscal policy through tax cut and other measures. i am mark crumpton. it is 6:30 in sydney. i am joined by paul allen with a look at the markets. good morning. paul: good morning. trading is already underway in new zealand, underway for 30 minutes. indexes are looking good. we are seeing some weakness for areei futures, and we expecting a flat start on the asx. we saw oil down overnight. for a case study of what the
do, look noces further than malaysia, their state oil company reporting profit down 96%. here in australia, oil search is reporting low as well. this is after comments from reserve bank governor graham wheeler, saying rapid cuts are not justified. i am paul allen in sydney australia. ♪ ramy: this is "bloomberg west." a group of chinese investors says it will pay $900 million
for media.net. the company provides technology , and it may not be as cut and dry as it first seemed. the first agree to sell in a move that closely resembles a private merger that bypasses the formalities of an initial public offering. joining us to talk about the deal is founder, div turakhia. first question -- of all the companies in the world, why did you decide to sell it to a chinese one? >> firstly, thank you for having me. exciting journey it has been for us. this process got started around the end of 2015. we got interest from a u.s. listed company.
we had been building this company several years. we started in 2010. we decided to hire bankers. in the process, we got incredible amounts of interest, seven bidders in the final round of the process. decided this one made the most sense for us. they had the right combination that we were looking for. ramy: what was that right combination? what were you specifically looking for? >> we were not looking in the first place, right? we wanted to continue building this business. with this particular opportunity , we got the opportunity to keep growing the business, the ability to get upside in various different structures that we can work out with the consortium. we get access to additional market that we would never have gotten access to.
it is the world's second-largest advertising market. this year, it will be a $40 billion plus market. next year, it is expected to grow to $50 billion plus. media.net's revenue comes almost entirely from the u.s. a small percentage comes from canada, the u.k., and the rest of the world. we thought this would be great for the company. local partnerght in a country like china, there is absolutely no way you could absolutely scale without local relationships. local relationships will allow us to leverage our technology and grow in a large market. at the same time, less competitive than the u.s.. ramy: the deal was structured a bit unusually, somewhat say. others would say a little more bluntly. it looks like a reverse merger.
i want to give you the opportunity to comment. what do you say to folks who say it is a reverse merger? >> in a reverse merger, we would get stock off the public entities. that is not what is happening. there is a reason this transaction is structured this way. we want to transfer to a global and scalable business. they have the plan and the funding live -- lined up. but it is a time-consuming process. if you are in a competitive bidding process and have to go through a time-consuming regulatory process, there is a good chance you will not make it. this was a competitive process. the only way we could have done this was this particular structure where they start a consortium, get funding into that consortium by media.net
entirely, and once we get the regulatory tools in china, it will become part of mcdonough. basically, in a reverse mortgage, you have the private company getting shares of a public company. made aast year, china call for more investment into the ad tech space. some see it as potentially saying, we need help. howyou walk us through -- far behind is china compared to the united states? >> that happened for a couple reasons. as a globaltising business is a massive business. even at that size, you would need -- $200 billion this year and growing. in china, it is growing faster than the other markets. has natural hurdles that
exist to enter the market, especially for foreign countries. it is less sophisticated. it is behind the u.s.. it will be a year or two behind the u.s., maybe more. at the same time, it has a unique set of challenges. the china mandate may not just be to grow within china, which is obviously great. long-term isandate you will see an increase in outbound investments for companies that are global, that have scale, a real business model that will be long-term sustainable. that is what mcdonagh and chairman zhang want to do. the goal is to not only add china as a market but double down on u.s. and european challenges. ramy: you are an entrepreneur.
what is next? >> my plan is to continue with these guys. that was one of the primary reasons when we had several options -- three options from the u.s., europe, and china. 20%.ighest bid was about the highest u.s. bid was from a well-known pe fund. funds would want to discount the value because they need to make upside on their exit. from a value standpoint, we thought we were at the same point. the primary differentiator was all these different value adds in being able to access additional markets, get access china,edible talent in be able to access the capital market, and look at deals of various sizes. -- we the next few years,
have completed our first phase. we have had a great journey in this first phase. as we enter the second phase of growth, we expect to multiply the business from where it is today. i want to be a part of that. i am going to be a part of that. so is my management team. we are going to get lots of autonomy. ramy: media.net founder and ceo, div turakhia. one of china's most popular selfie app makers is planning a public a view. it aims to raise $100 billion in a listing on the hong kong stock exchange sometime in the fourth quarter this year. that is according to sourcing by the wall street journal. in april, meitu was seeking valuation on the private market of $3 billion. had 270ime, the app million monthly active users.
ramy: flipkart is feeling the heat. regular town hall was tense on friday after employees betrayal.nagement of sachin bansal said the job cuts stemmed from poor performance and he lost his position for the same reason. the pressure is on from amazon. joining us from tokyo is peter l stremme -- elstrom.
to what degree does flipkart's problem showcase the general problems in tech in india? >> this is a very dramatic meeting, as you mentioned. flipkart has gatherings with employees once a month. in this particular one, it grew quite tense because employees were upset that many colleagues have lost their jobs. they had come to the company hoping they were on a growth trajectory. frank withal was them about how they missed performance targets and needed to do better. the reason he lost his ceo job was because of performance targets. he is still chairman, but that was a frank admission that drew applause from employees. ramy: to what degree is it an issue of funding? funding is drying up there. >> it is a broader issue.
there are two things going on in india. there was a boom in investment capital in 2014. off are seeing that taper quite a bit. it is squeezing the startup sector more broadly. the challenges for flipkart are more intense because of the targeting of amazon into the india market. amazon has said it will spend billions of dollars hiring employees. it is marketing aggressively in the market. it wants to take a big slice of e-commerce market in india. that puts pressure on flipkart. they what would specifically need to do in order to take advantage of flipkart turning over? >> well, the market is growing very quickly in amazon. is retail market in india
quite fractured at this point, even more than the u.s.. you need to be able to not just sell goods reliably and get them to customers reliably. you need the infrastructure in place to capitalize on that growth. amazon has lots of experience in the u.s. and has done reasonably well in other markets, but this market is unlike any other they have competed in. ramy: how can flipkart mount a response to amazon? can they? >> flipkart has an advantage here. they are ahead at this point. they also have domestic knowledge that probably works to their advantage in terms of language, customizing apps, recommendations make a big difference, too. they have a bit of a lead, but they need to continue to innovate, expand geographically, and add more merchants to stay ahead of amazon. ramy: peter, stay right there.
i want to get your take on another story, china smartphone makers with their sights set on the u.s. do they really stand a chance? sure.ovide is not so she joins us right here in new york. what is the take away from that piece? we have seenay is in recent weeks a number of chinese handset makers saying they're going after the u.s. huawei are going to go after the u.s. with high-end smartphones. the battle should be really interesting. ramy: the interesting part is in terms of specs? pricing? how can apple and samsung defend themselves? >> apple and samsung in the u.s. divy up the market. they have outsized market share compared to the rest of the world.
the thing that is interesting huawei ismi and they are making high-end phones for not high-end prices. price wen $800 topline have come to expect from samsung and the iphone. barrawith xiaomi, hugo was on bloomberg recently talking about their strong intent to get into play. i want to get into a little of that. >> we will lead with channels that allow us to get in touch with a young generation that is enthusiastic about technology. definitely going to make our way there. ramy: do you think xiaomi will be able to break in? >> huawei will have a better chance. they have incredible expertise in telecom and chips which has allowed them pricing advantage
which xiaomi does not have. inroads, itn make might be them in terms of chinese handset makers. ramy: peter, i want to bring you in. what is your take on what is happening with chinese and u.s. smartphone makers in terms of them trying to get in there? >> i think the chinese smartphone makers are going to have a hard time in the u.s. market for a couple of different reasons. all, you need of to think about which of these companies is going to be able to aggressively moving to the u.s. xiaomi is using a business model that has historically not worked in the u.s. they are trying to bypass carriers without subsidies. u.s. consumers like to get that subsidy when they sign up for a contract. selling to them directly online has been tried in the past and it never works. in terms of huawei, they have some technology advantages. they jumped to the top of the chinese smartphone market serious -- quickly.
but the name sets off alarm bells in the u.s. for a variety of reasons, not all of them necessarily well-founded. u.s. carriers are not going to support huawei coming to the u.s. and a big way and give them the subsidies to take market share. when you look at the other players in china, those companies do not have ambitions to move into the u.s. market. having said that, the u.s. market is tumultuous. you have seen tons of change. apple and samsung's dominance is a bit of an anomaly. ramy: i want to get your thoughts on criticisms about xiaomi. a lot of people are saying it is an all-out copycat of apple. do you think this has any legs to it? d i.p.torically, xiaomi ha problems getting started in china. they did not have the i.p. other
companies had. that has changed. they went to microsoft, which bought the nokia smartphone business, and they bought a ton of patents from them. they will be able to defend that. at industry gatherings, you need i.p. to defend themselves. their business model is a problem. ramy: any thoughts of threats of lawsuits if they come to the u.s.? >> it will be interesting to see if there will be an i.p. battle. we have seen the smartphone wars on the patent front cool down from the days when apple and samsung seem to sue each other everyday. ramy: thank you very much, shira, and peter. up, what happens to one of the greatest basketball players of all time after he retires? about kobel you bryant venture capitalist, next. ♪
nyantec had a big july thanks to pokemon go. they recorded more active u.s. users in july than snapchat, twitter, or pintrest. it remains to be seen whether pokemon go can keep these users engaged long-term. data shows a decline in engagement. daily users have been in a slow decline since they peaked in mid july. another story we are watching. the winner of five nba championships. he is adding something else to his resume -- venture capitalists. byryant has launched a fund
called bryant-stevele. they team up to create a los angeles-based fund that will focus on tech, media, and data companies. we will see if he is as successful at venture capital as he was a basketball. who is having the best they ever? instagram. joined the one billion download club on google play. mind, theto keep in download counter does not differentiate between unique installations, meaning one user could be responsible for multiple downloads. whenis not an easy feat you consider android only had 1.4 billion users as of september 2015.
♪ >> from our studios in new york city, this is "charlie rose." charlie: amy schumer is here. she is a writer, actor, and author. she placed to sold out audiences around the world. she won comedy tour of the year. amy: i showed up to film this movie and i was like, i think i'm a model now. i think a lot of girls are like this. we have a sneaking suspicion in the back of our heads.