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tv   Bloomberg Technology  Bloomberg  November 2, 2016 1:00am-2:01am EDT

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angie: i have an update on your stories. ae seeks to recover from selling scandal. prosecutors want to arrest her cut close friend close to the controversy. has namedminister a new finance minister for south korea. news washington post survey puts donald trump ahead 46% to 45%. thecrats have criticized
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surprise release of documents by the fbi. in tokyo in talks that it is speaking of acquisitions. it is down close to 3%. reveal any more details. it is considering various options for growth and is in talks with several parties. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. afternoon trading getting underway in shanghai and hong kong. this is how they look. ♪
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emily: i'm emily chang and this is "bloomberg technology." a busy tuesday of technology earnings. electronic arts boosting its outlook for the holiday quarter and square with an upbeat revenue forecast. details on how jack dorsey's other company performed in q3. and a stronger yen and earthquake sink sony. we will break down the electronic giant's nosedived. shares of electronic arts are higher in after-hours trading after beating analyst estimates. it's the first of a handful of videogame publishers reporting this week. adjusted earnings fell on revenue that also fell 4%. investors are watching guidance for the holiday quarter. ea raising its forecast lower than some analysts estimated. joining us now to discuss are my guests in new york and l.a.
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what would you say are the high points here, moving into the biggest quarter of the year for all game makers? guest: the key point is ea continues to deliver a very strong results. the core franchises, the sports games are performing very well with fifa engagement up year after year. all in all, the new games are doing very well in the early stages and it looks like the company is executing on its strategy well. emily: ea is mostly known for its sports titles. how do you expect the categories to stack up? guest: sports is pretty stable. fifa is growing. basketball has kind of faded into obscurity.
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overall, you are talking about modest growth. but there are two big games this quarter. the battlefront games, they should be up hundreds of millions of dollars year after year, so it's a much bigger growth vehicle for them. emily: last year at this time, we were focused on the star wars battlefield game. what is the focus this year? guest: the shooters and expansions into new platforms. mobile gaming growth is big. star wars galaxy of heroes launched a year ago and continues to be the driver of mobile growth. they have some new games coming in that area and they have done some new things with virtual reality. emily: we talk about the transformation of these companies in a digital world. how well has ea managed the transition to a digital world?
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guest: i think probably a bit better than everybody. the only company that compares to them in the west is activision and activision purchased king, so that is about one third of their revenue. ea has been doing this model for 15 years. they are not particularly good at it but they are positioned to thrive. they have actually been pretty good in anticipating this shift and they were ahead of the curve. the stock to get out of its own way, but a started to execute and the stock has been on fire. emily: the big gaming conference over the weekend, how are you expecting activision to stack up to ea over the next three months?
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guest: this is probably a down quarter for activision. you have two, last year plus starcraft expansion. you have call of duty after these two big games, one of which is their highest rated game in four years. so activision has to compete against some pretty good games. they will talk about e sports, which is becoming a big deal for them. they are selling some franchises in case you have an exit 10 million dollars and want to buy one. next year is all about paying advertising. they have games like candy crush, but this quarter, ea probably outshines them. emily: zynga coming up this week. they were the hot kid on the block for a little while and sort of fell from grace. are we going to continue to see more hits from zynga over the next couple of years.
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guest: i think it's more about stabilization and growth. they need to stabilize the users they have and get the new games up to scale and offset the legacy business and then we can talk about this. they announced crc racing, but it's all about stabilizing their active user base and offsetting declines. guest: they have stabilized and their legacy businesses almost an afterthought. they are on their third consecutive year of $700 million in revenue. it is really all about the fourth quarter launch, a game called dawn of titans. i assume they mean thanksgiving. but that's going to get the game moving. if it doesn't work, i'm not sure the stock can get out of its own way. emily: thank you both.
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staying with earnings, etsy shares hires -- higher in after-hours, saying they expect to improvement and new seller services to boost sales over the holiday shopping season. the company reported slowing growth through the online marketplace. coming up, square third-quarter earnings out as the company wraps its first year on the public market. we will break down all the numbers you need to know. and what is behind sony's nosedive? we will check in with our tokyo team later this hour. this is bloomberg. ♪
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emily: tesla's balance sheet a boost from solar city. the pending acquisition could add a billion dollars to its cash balance in three years. elon musk, chairman of solar city, has been making the case since the tie up was approved. the proposed deal has been widely criticized with some critics calling the deal a poor use of tesla's cash and a distraction from their carmaking success. square popping in extended trading shares on better-than-expected third-quarter earnings. the company has forecasted revenue with increased transactions. up 32% from 332 million in the same time last year and posted a
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net loss of $32.3 million. the company will ported they extended 35,000 business loans from its square capital division. joining me now, ceo of mobile mobile banking startup, chime. tell us what's happening in terms of payment volume, a slower bump than we saw last quarter. guest: very high expectations, given was a solid the last quarter. they raised forecasts, so you see investors reacting very positively to this. i think it's a boost of confidence for investors because they are moving toward profitability and we saw losses narrow. that was the biggest highlight and ancillary businesses, it
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does not look like they saw a lot of liquidity there and they shared a few data points that are positive, but still not full disclosure. emily: how would you rate the progress given that they are trying to bring on larger companies? guest: the progress is awesome. they showed $12 million of ebit this quarter. it's really attractive. it's a large market and companies in this market generate 40% or 50% margins come so there's no reason they couldn't get to that level over time. if you look at the landscape of players that have tried to be in this category, amazon and into it, they are out. so now, it's square and these traditional companies are more like a dinosaur, feet on the street sales.
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emily: are you referring to paypal? guest: i don't want to name specifics, but the way a small merchant gets a terminal is they have an independent sales guy who goes in there and sells a big block and goes through an ample mentation process. square is self service and it's a beautiful product experience and that's why people are taking it and making huge progress signing up more and more merchants. emily: how about the online lending business? even with what we have seen with other players in the market? guest: we need to separate what square does from lending club. they are using machine learning and algorithms and they are seeing a lot of data from these merchants. they see payment data and sales data. they are only inviting people for these loans if they have the ability to pay it back.
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as well as retaining a loss rate of 4%, this is very positive growth. i think investors were very skeptical and will feel a lot more confident. guest: $200 million of initiated merchant at fences and they have a unique advantage versus other companies that play in this space. they would compete with some a like on deck who has to spend a lot of money to acquire these merchants to give loans to other small businesses. square has almost 3 million merchants and they see all of their transaction data, so it really does give them an advantage. emily: we have the dual role issue and it seems like twitter is having a tough quarter and i was speaking with steve ballmer, who has a very large stake in
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twitter and he said i would love it if jack decided to only run twitter and i'm sure square investors feel the same way about square. do you think what he is doing is tenable? guest: there's no question that square investors would have been happy. i thought jack presented a conference and was super energized about square. what is overlooked around square is the executive team is all-star. it's all the top former google, former yahoo! executives. it would probably be better if he was there more often. in terms of the size, the merchant acquiring businesses is a great business with huge
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margins and i think they have a long way to go. emily: the market cap -- can they double that or triple that? guest: they could easily be generating hundreds of millions of dollars just for the acquiring business. things like square capital, caviar, to some extent, that's just noise. that could result in the company being worse over time but the core merchant business is an extremely attractive thing. emily: we reported square try to sell caviar but jack made some comment on the earnings call. what is your read on what is happening with caviar? guest: there has been some growth. they gave the more earnings volume, but that's to be expected since they have invested so much money into this business and hired hundreds of employees. we need to remember they pulled out of three markets and i've spoken to a lot of people on
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background who says there are only a small handful from some of those places and clearly, they are focused on a few markets where they can gain a substantial share, pulling out of other places where competitors are thriving. this is a niche business and it's unclear how successful caviar can become. emily: thank you, as always for joining us. coming up, we will hear from the ceo adding the internet of things will lead the way to a forced i.t. revolution. all episodes of "bloomberg tech" are streaming on twitter. this is bloomberg. ♪
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emily: tune into bloomberg television in primetime for the latest episode of the david
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rubenstein show, "peer-to-peer conversations." this week's guest is warren buffett. >> we were having 2% or less growth, do you think it's possible to grow 3%, 4% more 5% growth? moran: if you have less than 1% population growth, that means in one generation, we will add maybe 18,000 or $19,000 gdp per capita. so we are just beginning. emily: david rubenstein travels the country talking to leaders to uncover their path to success. catch the third part of this six part series wednesday at 8 p.m. eastern. competition to reign over the internet of things is heating up. one company looking to make it smart is formally c3 energy,
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which closed a funding round. their aim is to connect a fracturing equipment, medical devices and all the other commercial quitman used by the world's largest companies. funding peaked, hitting a whopping 3.2 billion dollars, but the numbers are expected to decrease this year. joining me to discuss the iot landscape is the person who founded steeple systems back in the day and worked at oracle before that. thank you for joining us. how do you respond to this idea that the hype around iot is dissipating and that some of it is just hype? tom: i've been in the information and technology business for decades and i've seen it go from internet computing to cloud -- each of these was an entire replacement market.
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the next generation of computing is all about smart connected devices and the internet of things. this is an entire month -- an entire replacement market just like all the others. emily: we hear everything from there will be chips in our body, chips in our food and chips are close -- where will they not be? tom cole and all of that may be true. in five years, there will be 50 billion and in 10 years, each of us will have embedded in our bodies or be wearing 10 sensors. health care, financial services, telecommunications, transportation, the energy energy -- energy industry, you name it. emily: you are taking on ge and microsoft is backing some of these upstarts, what to you have on that?
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tom: we took on or up goal -- when we took on oracle, we took on all the largest software companies. we did pretty well. we have about 100 million sensors under management today, which is 100 million more than anyone else in the market, so we are doing pretty well. emily: what about security issues and cyber attack issues and the fact that for every chip means another potential vulnerability? tom: this is a critically important issue to which we do not pay enough attention. if you look at the threat the infrastructure is under, there is a myth that data are more secure behind our own firewall
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then in cyberspace and i would argue the opposite is true. see the nsa for details, see the department of state for details. emily: what do you mean by that? tom: data used to be secure in our own data rooms when it took a forklift to move a storage device. it no longer takes a forklift. this is the only opportunity where we can really secure data, using encryption and i think cyberspace is the place where we can secure it. emily: i know you have made big political contributions in the past, mostly to independence and some to republicans. what do you think of the current election having seen many elections and the impact of many presidents on silicon valley? tom: i think this is a very sad state of affairs. i think the united states is in perhaps -- it's just a shame.
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we should be ashamed for ourselves and it's very sad, it's very scary, and very concerning. emily: have you chosen the side and if you have, would you share? tom: i have no comment on what is going on. it's hard to see a good outcome. emily: what do you think a hillary clinton or donald trump presidency, how would it impact silicon valley? tom: silicon valley is unstoppable. government can't get in the way of creativity and innovation. no matter what they do, it won't stop. it is accelerating and it is accelerating at a rapid rate and it's very exciting. emily: we will keep our eye on you guys. thank you for stopping by. still to come, there has never been a u.s. presidential election with as much big data
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analysis as we have seen this year. what kind of impact is it having a week before the election? you can listen on bloomberg radio and in the u.s. on sirius xm. ♪
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angie: it is 1:30 a.m. in hong kong -- 1:30 p.m. in hong kong. sources say chinese investment may make a joint offer for the industrial company. the companies have said to reach out to potential partners to whether interest in joining the consortium. glp says it is currently not in talks with the group overview any opportunity. auto sales in the u.s. could be play telling. they were down 4.4% last month from the previous october. gm, toyota and fiat chrysler saw a decline.
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shares of asian automakers have been following after that report. legislatives in the council in hong kong. this morning's session was halted after they tried to retake an oath. security guards tried to drag him off. oath toered their include insults against china. they have asked the court to vacate their seats. a hearing is scheduled for thursday. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. let's check out the markets are trading in the asia-pacific today. shery: a down day for markets across asia. we are seeing the benchmark index at the lowest level in more than one month. the shanghai composite down 6/10 of 1% while enhancing is losing
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1.5% after a big surge. we are seeing thie chinese on short you one with a gain in more than a month as we see that. there is uncertainty over the outcome of the u.s. presidential election next week. we are seeing the cost down 1.4%. we have the political scandal continuing in south korea. new zealand down more than 1% good a very strong jobs report suggesting there could be fewer or no rate cuts coming from the central bank in the future. the nikkei down 1.8%. a stronger yen union -- weighing on the index. it is actually all about risk of sentiment right now. uncertainty plaguing the market so the dollar-yen strengthening 4/10 of 1%, surging for a second consecutive session. risk of play is happening across
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asia. we are seeing gold up threepence of 1% -- 3/10 of 1%. the fifth consecutive session for gold. daybreak is up next. emily: this is "bloomberg technology ." i'm emily chang. we are focused on what big data technology can tell us about voter sentiment at this moment. crowd packed is a nonpartisan startup whose mission is to make it easier for voters to learn about who is running for office. you can get information about which candidates share your views. all the data is based off funding information from disclosures and information. just days to go before election day. you have been looking into where
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did the tea party go. where do the tea party go? did they all just fold into trump supporters? guest: the short answer is yes. great to be with you. i'm surprised people aren't sick of hearing about the election but i will try to make it interesting. an interesting thing has happened in relation to the people used to support on the republican side those really aggressive challenges to establishment republicans like paul ryan and so on, they seem have too flocked to trump. the tea party has become the trump party. the other thing that has happened on the other side is you have seen a lot of consolidation behind hillary clinton, where a lot of the holdouts like the bernie sanders supporters who could not really bring themselves to get behind her, they finally do seem to be coming her way in terms of at least their donations, if not all of their opinions about what
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she might do as president. there are some interesting changes, but the kind of data we are providing now for our users, where it's going to be most useful is probably not the presidential level but lower down the ballot where people haven't got any idea about who the candidates are for state legislature and so on. those really important positions that affect education, health care and transportation. yet candidates often get on the ballot without anyone understanding where they are coming from. our data, which looks at who is giving the money gives our users a good guide as to where the candidates stand at who might be closest to their view. emily: clinton is finally consolidating the democrats, but it has really happened in the last few weeks. she has also vastly outraised trump in every industry except agriculture. tell us about the trend you saw. guest: to be honest, he has not
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put that much effort into fundraising. it is interesting that the republican candidate is just not getting the support of business across the board apart from that sector. it is of particular interest to our audience, the tech sector is almost completely united behind clinton. peter thiel has been a high profile exception to that. but generally speaking, technology like other industries, is getting behind clinton. emily: what about smaller donors in general? guest: more recently, trump has done better with small donors and has made more of an effort. that seems to have happened over the summer. clinton has diversified her base somewhat but is still very reliant on some of those big donors and trump is the one who
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seems to have done better at mobilizing the donors. i still think that frankly, at the presidential level, there's still far too much influence of the big check writers, the big donors, and we have a long way to go before we get the true democratization of political fundraising, which is one of the reasons we started crowd packed. emily: in the last week before an election, what and if it can fundraising happened? what impact does it really have? guest: there are two really important things to bear in mind. first of all, at this late stage, one of the most familiar things campaigns do colleges spend money on ads, which people get absolutely sick of because they can turn on the tv without seeing a political ad, that does not benefit you that much at this late stage. the really crucial point is because of the electoral college, the fact that the election is decided state by
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state, if you live in one of the many states in america which are solidly democratic or republican, your vote is unlikely to shape the outcome of the election. that's why we hear so much about the battleground states. someone has created a crowdfunding campaign to raise money to give people rides to the polls in those battleground states. they are teaming up with lyft, so if you donate to this crowd funding campaign which is on our homepage right now, if you live somewhere like california, frankly, looking for something to do to support hillary clinton, this is one of the most useful practical things you can do so people who live in the battleground states where the election is going to be decided can be helped to get to the
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polls and vote on election day. emily: crowd packed did not really exist in the last election. your goal is to educate voters and make sure they have more information than ever before. did you see evidence that voters are more educated than they were four years ago? guest: that's definitely a big part of our mission. we want people to participate in politics at every level. especially at the local level, where we want people to engage in be better informed. we don't have the political system so dependent on big donors. there's a real problem though with the fact that summary people are not interested and really turned off in this election season where the candidates at the top of the
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ticket, both of them in their different ways have proved so unattractive. we have a long way to go. we think focusing on the local aspect is probably the best place to start because people can feel if they run for office in their local community, they can make a difference and you can see the difference you make if you run for school board or local counsel. there, there's less artisan bickering. emily: there are concerns that polling might not be representative of the actual results. we saw this with brexit. what are the chances -- hillary is leading in the polls but what are the chances that this election turns out to be different from what we believe them to be? guest: honestly, i think there's a really high chance of that.
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it speaks to the similarities between what's going on in this election and brexit. you've got a huge group of people in america as you have in the u k, who for many years have felt no one is really listening to them. their incomes have fallen and they feel really let down by whoever has been in power, whether it's a labor or conservative in u.k. or republicans and democrats here. their attitude is what difference does it make? they haven't voted in many years. those are the people, here is a chance to make a statement and make a change. they see the same thing with trump and i wouldn't be surprised if there are people who are trump's supporters and who have given up and think he might be the disruptive shakeup that the nation needs that are afraid to say it because of all of the things they have seen in the media. emily: i expect the next few
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days will be a very eventful. steve hilton, thank you as always. sony earnings disappoint as profits plunge 86%. we will discuss what is behind the numbers, next. this is bloomberg. ♪
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emily: on today's tech funding board, india us largest right hailing startup is on track to raise $600 million. that would give the company have capital for at least 18 months. current investor softbank is said to be planning to participate in the round. peter ahlstrom joins us from tokyo with more. uber has said india is its priority after moving on from china. can they fend off uber?
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peter: that's the big question. uber, after exiting china, can prove it can succeed in some of these big international market. india is very careful -- it looked like they were going to be vulnerable because they did have the kind of capital to fight back by subsidizing drivers and customers. if it is able to complete this fundraising, it will give them more firepower to defend their turf against uber. emily: sony's profit falling off a cliff this quarter. what happened? peter: there were a couple of special charges that led to a decline in the net income.
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they had to go through the earthquake and took a charge because of that as well. probably more concerning than the sharp decline in net income because of special one-time items, you see a stronger yen on the camera sensor business. that has been successful and in the games business and smartphone business, that will be an issue to watch in the long-term. emily: can the new products that push into virtual reality, do you see that providing upside to expectations? peter: in terms of financial impact, it's going to be limited to the next quarter. there is a land grab right now for virtual reality headsets. it's priced at bit lower than some of the competition out there and they have their playstation business with an
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established base that they want to capitalize on as they sell these headsets. what investors are going to look for is the potential of the business rather than a specific financial impact. emily: moving on to alibaba which reports before the start of trading on wednesday, were you expecting -- this is a company that says they are trying to bring investors more transparency? jack ma wrote a letter that sort of rattle investors talking about how alibaba needs to make a transition -- it is competing with every e-commerce company in the need to distinguish themselves beyond that. peter: that's right. alibaba has pushed to move beyond the traditional e-commerce business they have. they bought a company in southeast asia that does e-commerce and that's one of the potential expansion areas for them and they are moving
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aggressively into the cloud business following amazon possibly then using the servers they have to deliver crowd services. now they are trying to move those services in china and offer them to others and us this -- this will give us an insight into whether that high-margin business is succeeding. emily: i sat down with the alibaba president a couple of weeks ago and asked from the outside, you see gdp growth and greater concerns about the flatness of the chinese economy. it may never grow as fast as a once did. yet you have alibaba saying the chinese economy is still growing and spending money. what are we seeing on the ground and how are those things not at odds? peter: alibaba has been able to capitalize on that over its
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history and we will get more insight this quarter. the chinese economy is growing steadily even though the growth is slowing down a bit. also, the shift to online commerce in particular. we have november 11 singles day coming up which will give us an insight into how excited consumers are about what alibaba is offering. but we would like to move beyond that and have a more diversified business if we can. emily: singles day on 11/11 -- that's their biggest shopping day of the rough. is it going to be a one-off or -- biggest shopping day of the year. as a going to be a one-off or a boost for the quarter? peter: it is one data point. alibaba has done a good job marketing it. it has become like black friday
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in the u.s. and will become a big media event. but it's only one data point in you need to see if that is sustainable over a longer time and whether they can expand beyond china and capitalize on these opportunities. emily: our bloomberg asia tech managing editor joining us from tokyo. thank you so much. investors are looking to get into softbank's technology fun. and abu dhabi investor is holding talks with japanese telecoms and plans to incorporate money and sovereign investments into a potential $100 million fund. softbank is also in talks with european and north american investors. if the $100 million fundraising target is met, it becomes the biggest private equity fund
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in tact. coming up, facebook report earnings wednesday after the bell. we will tell you what you should be watching for, next. this is bloomberg. ♪
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emily: instagram is launching new shopping tools designed not to interfere with the user's browser experience. the app will be getting 20 select brands to tag products and their photos which navigates users to the retailer's website. this is their first foray into a broader monetization strategy. speaking of facebook, it is a to report wednesday after the bell. ceo mark zuckerberg says he wants facebook to be a video first company is the of helps to fuel growth in mobile advertising.
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scarlet fu has the breakdown. scarlet: the facebook nation is huge. you have daily active users, the yellow bar, mobile monthly active users, the orange bar, and total monthly active users, the blue bar, which amounts to one .7 billion. mobile users are critical since facebook gets 84% of its revenue from handheld devices. the company has morphed from the world's biggest social network to the owner of popular mobile apps ranging from facebook to whatsapp, messenger to instagram. each of these has a billion users except instagram which has half a billion. facebook is capitalizing on all these eyeballs as revenue rose 33%. the metric for north america jump almost 54% while europe grew 38%. facebook is not immune from
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controversy. last month, the company overestimated the average viewing time for video ads. this matters because big brands are pouring big ad dollars online with half of all ad dollars being directed to google and facebook alone. one specific area attracting advertisers is instagram. another potential revenue driver is whatsapp. the number of people using messaging services globally may top 2 billion in 2018. facebook has yet to monetize it platforms but if it is able to crack the code, it stands to garner the largest share of revenue around the world. these potential streams of money allow them to ramp up investment in futuristic things like virtual reality and connecting the world to the internet. emily: that was bloomberg's scarlet fu. in what could be called the ultimate absentee ballot, nasa astronaut kate reubens cast her vote aboard the international
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space station. she used electronic method to send her vote back to earth. astronauts are able to vote this way thanks to a bill that allows space explorers to vote while in orbit. that does it for this edition of "bloomberg tech." tomorrow, another big day of earnings with alibaba, fitbit and zynga. all episodes of "bloomberg tech" are streaming on twitter. this is bloomberg. ♪
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nerveswith selection spook -- u.s. election markets spook markets. will the fed hold fire? no move is expected today but how strong will it be? brushing off brexit. a new survey shows 70% of u.k. bankers think london will remain europe's preeminent banking center. ♪ >>


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