tv Bloomberg Technology Bloomberg November 2, 2016 6:00pm-7:01pm EDT
clinton's focuses on arizona, a reliably republican stronghold that could be in play. donald trump, who has been reinvigorated by the f ei review is in florida, a battleground state whose electoral votes could determine whether he wins the white house. the latest tracking poll has clinton and trump tied at 46%. for the first time, the survey indicates from is seen as more honest. among independent voters, the poll shows hillary clinton with a narrow edge. in a race involving third-party candidate, clinton leads 30% to 27%. a senior russian diplomat is urging the next president to work with moscow to end the war in syria and defended russia's military intervention is a fight against terrorism. decision day over a challenge of theresa may's authority to initiate the country's exit from the european union.
a ruling is expected from a panel of senior judges in the morning. the prime minister wants to begin the process next march. global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. i'm mark crumpton. "bloomberg" is next. emily: i'm emily chang and this is "number technology." a wednesday earnings and and so is facebook leading the charge -- shares down 8%. our expectations just too high? alibaba shrugged off china's slowing economy. how long can the world's biggest e-commerce economy defy estimates? fitbit shares take a nosedive
despite a reasonable third-quarter earnings report. why investors are worried about the road ahead for the activity tracker. facebook shares dropping in after hours. just over $7 billion from the same quarter last year. the sixth straight quarterly revenue beat for facebook has increased over the last four quarters but it doesn't seem to be enough to impress investors as the stock longed. cory is here with me in the studio. what do you make of the stock performance here? i think the expectations for a beat on a lot of metrics were high because she's done so well. this is a fantastic quarter for the company and fantastic year-over-year growth that that gail.
but in particular, there was not an acceleration of mobile revenues. it was hard to find reasons. emily: it remained relatively flat, but it was 04 years ago. statistics you look at, it's a fantastic report. agree it's ad wetastic report that downgraded to neutral and between you and i, i got a lot of heat for it. but the reason we downgraded is coming to fruition because the reason the stock is acting this way is when you look at it through next year, the growth ad load coming from grows and engagement growth and user growth. users and engagement are growing nicely but the ad load will be stalled as we look into 2017 because you just don't have another platform like instagram,
so calm will get more difficult. messenger and whatsapp will take a little more time than i think some investors were hoping. instagram at revenue growth now faster than the website. lot about thea numbers but in general, they are saying the growth has been broad-based. how effective would you say facebook is that this point? would look atg i is the user value. yes, users use the service more and more. two thirds of all users are on the service every single day. you can see the value of the user increasing dramatically and 18 months ago, i think it was
four dollars and $.25. for every single user on the site. that's an astounding number. this service is not an immature business, yet it has yet to show the true seasonality and advertising business might show. it's still growing like a young company. the same time, they continue to take a page rum snapchat. now facebook says they are working on a camera first sharing option. take a listen to what mark zuckerberg said. mark: text box are still the most effective way to we share. soon we believe the camera will be the main way that we share. we are already testing this in an apt with a version with a
camera that would create an effect for your photos and videos and messenger, we are testing new camera and video features. we will be experimenting with more visual messaging tools over the next few months as well. emily: does that sound like snapchat? james: it sounds great, but it's not going to be easy to change behavior. look at digital payments. the watch. watches are intuitive, but it's not taking off. text messaging versus based communication is a novel concept, but it is not easy. the bottom line is this -- i agree with corey. everything looks than testing but when you look at it from an investment than point, the street was looking for $37 billion in revenue. unless you get 10% upside revisions, the stock is not going to move they verbally.
i think that's what you are seeing today. good performance against a great performance expectation backdrop. emily: over a billion daily users. 7 billion people in the world and the majority do not have the internet. at what point do we just reach a ceiling? this asen we looked at an ipo, the things we said they needed to do is a need to get into mobile or get into china. they figured out mobile, you've got 1.66 ilion users. james'point, that quarter over quarter growth show a lack of improvement in terms of mobile revenue.
still, maybe not more and not more not being enough from a wall street perspective. but i'm a business perspective, i think any of us would kill for these kinds of numbers. emily: with the rise of snapchat, we see facebook copy snapchat. does the coolness factor common to play at a certain point? facebook iserned not cool enough to sustain this growth over the next several years? i don't think so. instagram is still incredibly popular. these are heavily used assets. you go where the people are and the people are on facebook, so i'm not worried about the coolness factor. andpoint on engagement potentially hitting a ceiling, if you look at the daily engagement rate, that's holding
was not an issue. oath of our moms are on facebook and it has its own use case scenario. outink facebook has figured and they are parsing the way users use the service and they are using it in the numbers. thank you for joining us. another stock we are watching -- time warner, despite beating analyst estimates and boosting its full-year forecast, the company saw just lukewarm reactions. investors remain skeptical about whether they will get regulatory approval for its planned merger with at&t. both presidential candidates and other washington lawmakers called on regulators to look at the deal closely to make sure it does not concentrate too much power over the media industry in one company's hand. , alibaba outperforms
emily: continuing with tech earnings shares, fitbit collapsing, falling as much as 30% after the company released its third-quarter results. those numbers were roughly in line but investors are reacting to the forecast. it sees adjusted earnings per se or -- per share over the holiday quarter. selina wang joins us from new york. why the dramatic cut to the forecast? guest: this was a seasonal
forecast and they clearly missed for the season. they said over and over on the earnings call that they had softer demand than they expected and they had a new product come out and said the transition from the first version to the second was the reason for a lot of weak demand. another interesting data point is the aipac region. they had a revenue drop of almost 50%. they said on the earnings call that they need to reevaluate their strategy and think about how to target users there. specific this outlook to the effect it ran or does it span the entire wearable universe? there are a ton of competitors out there all doing slightly different things, but it seems enthusiasm around the space has waned. some of the news is
specific to fit it but the overall wearables market has been expanding. the overall market grew about 25% year over year, but while it is growing, it's also getting more crowded. you have samsung, apple on the high-end. you have newer entrants coming in all time and i think the use cases are still being driven out. it's unclear how long users are willing to trade these products for and how big this market can get. that xiaomisay poses the biggest threat. talk to me about how market share breaks down. in at number comes two, so they have a sizable lead, but the numbers in the aipac region show they are going to have a hard time succeeding in asia.
fit it is going to be higher end in the region. this is a company with global ambitions but they have been spending heavily on r&d and marketing and their demand could not keep up with the cost. that market share may shift in the coming quarters. emily: i want to turn to alibaba. china's largest e-commerce operator seems to be shrugging off concerns about a slowdown in the local economy. alibaba posting earnings up from a year ago. the company cited strength in cloud services core e-commerce still by far its largest business. to discuss the takeaway is someone who's largest tolling is alibaba. why is alibaba your biggest holding?
kevin: our thesis is the emerging markets are just now getting the internet. they are getting it on mobile devices and the consumer is the real growth story. just as the mobile and internet has changed the way we consume, is changing how emerging markets consume, china being the largest emerging market. topline growth for a company the size of alibaba is extraordinary. you were reviewing facebook results and they grew at 55%. there's not many companies the size of those two in the history growe world that can faster than 50% on an annualized basis. broaderhere has been growth in the chinese economy. evans,down with mike president of alibaba. listen to what he had to say. china is not in a bubble.
the economy is slowing but not slow. the components of the economy are changing from old industrial and manufacturing to services and consumption. emily: as someone who focuses on emerging markets, duty gdp growth numbers concern you at all? kevin: they don't concern me. they are slowing down and have been slowing down for a decade. said think what was just is absolutely right. i don't think china is in a bubble. there might be pockets of overvaluation or excess, but this is a secular story. this is the chinese consumer, it's a big deal. you are taking those consumers and giving them the internet on a smart phone and they are leapfrogging what we would inc. of as traditional consumption. they do not have the malls like we do. they don't have strip malls and
the suvs to get to the strip mall. broadband, internet access and local entrepreneurs usually backed by u.s. venture capitalists investors, you get this incredible confluence of growth and the whole internet sector is growing at about 40%. breakdown the individual units from e-commerce to the cloud and how each fair individually. guest: e-commerce still has some impressive growth. is something all investors have been watching. ashad triple digit growth did the new digital and media entertainment unit. cloud computing still had some losses this quarter but given the rate of growth, analysts say it could become profitable in the coming quarter. triple digit growth in some of
the faster growing businesses. time, alibabasame is facing questions around transparency. they have they say been making efforts to make financials more transparent. singles day is coming up and how they calculate revenues there. tell us what is going on with that will stop guest: he did not give any details. that we are voluntarily cooperating with the sec on the accounting practices. there is a whistleblower cooperating and giving information. not real newss and we will come out when there is real news to stop not a lot of details on what is going on. it was how they were accounting for their logistics and singles day. transparency issues
is notchinese companies a new issue, but are these things you think about? kevin: i certainly inc. about them. i'm not concerned about them much at all. i think alibaba is a clean company and a well-managed company. one thing investors forget is that everything is relative to stop its a risky proposition in emerging markets. giantt petrobras, the resilience state owned oil company. those companies have serious governance problems. all the chinese state owned enterprises, about 30% of the big emerging market etf's are in state owned enterprises where corruption and fraud are rampant and all you have to do is look at the headlines every day in brazil and you can see there is a lot of risk and corporate
governance risk. i would say alibaba and the other emerging market internet companies backed by u.s. institutional investors have better corporate governance then you find on average. emily: singles day is now just a few days away. mike evans told me they are expecting more revenue than ever before. talk to us about rotter expectations for this particular day and how they will be accounting for it given the additional scrutiny. clear how they will be accounting for this. in your interview, mike evans said he expected the numbers to be even greater. have announced katy perry is one of their global ambassadors and they have a slew of celebrities that will be on stage during singles day. they have virtual-reality shopping they will be testing
show where youon can see what the models are wearing and buy this product ahead of time. they have rolled out many more products and games ahead of singles day so the minute the clock kits november 11, we will see the numbers skyrocket stop emily: our bloomberg tech reporter and kevin carter, thank you so much. stock we are watching -- qualcomm shares down after hours despite each it maker predicting sales growth will stop and all episodes of bloomberg tech are live streaming on twitter. check us out weekdays p.m. in new york, 3:00 p.m. in san francisco. this is bloomberg. ♪
take two with higher after reporting a solid beat for second-quarter sales, adjusted revenue coming in well above estimates. ofe two cited strong sales nba 2k and grand theft auto and boosted its full-year forecast. zynga, on the other hand, down after hours. daily active users falling by 5% from one year ago. the loss share forecast also missed estimates. zynga continues to transition away from desktop games played on facebook and is searching for new hits on. will dig into facebook and what the ceo says about the latest numbers. ♪
attacks overnight in iowa. the president called their deaths shameful acts of violence. a suspect was taken into custody after turning himself into a state employee. renewed tensions between india and pakistan over the disputed kashmir territory. pakistan has withdrawn six diplomats from its and the sea in new delhi. pakistan says there's a network of indian spy agents at islamabad. the come -- the countries have battled over kashmir for seven decades. hundreds of children who stayed at the demolished refugee camps in france were subjected to .nhumane living conditions both france and britain fell short of their obligations because of disagreement over the camps supervision. south african president jacob zuma faces growing calls to
resign after corruption was found at the top levels of government. the report found for the creation of a commission to undueigate allegations of government influence by wealthy family. global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. it just after 6:30 p.m. in new york. a.m. in sydney. i'm joined by my colleague, paul allen, with look at the markets. paul: new zealand has been up and running for 90 minutes and it's not looking too good. 1.5%, following wall street lower. teachers on the nikkei look mixed and we expect declines on of 1%. of one third it could be worse because we just had disappointing results from one of australia's egg for banks.
that does missed estimates as well and is the lowest result since 2011, weighed down by higher bad debt and narrow margins will keep an i on the aussie dollar. the trade balance for september is out. we expect to see the deficit narrow. a slew of earnings out from asia today, including lg electronics and singapore airlines. some gaming stocks. i'm paul allen in sydney. more from bloomberg technology coming up next. emily: this is "bloomberg technology." i'm emily chang.
to people familiar with the matter -- if the deal happens, it would follow a slew of transactions in the rapidly consolidating semi conductor industry. joining me with the latest is ian king. you have been very busy. talk to us about what's going on with micro some a -- micro semi and what this means for the ship industry. guest: this is a company based in southern california. it is kind of an outlier and makes the chips that go into aircrafts called hardin chips and they are radiation safe. the good thing is it is long-term and high-margin stop the bad thing is no big ups and downs. emily: there's a history of attentional takeovers, but what kinds of companies do you think would be interested? guest: we have named sky works as one of the interested parties will stop they got into a
betting more for another chipmaker, so what we are looking at is they are the one primarily interested. emily: is the thinking here these companies need to do bigger deals to play on the field? guest: that is exactly it. the cost in the industry are only going up. fewer customers want them to do more and more. profitability goes down and you are vulnerable and that is what is going on. a.ly: broadcom buying broke tv set-top box, why ok'd? cade?y bro guest: he is pursuing the strategy of get big or die. a big part of his business is
networking within data centers. the kind of thing google would use. of it he has isolated and said he's going to keep his what would be good for that kind of thing. emily: what is he keeping? guest: something called fiber channel, the kinds of chips that convert data into photons and send them around on fiber optics. he wants to get rid of switches and the wi-fi stuff. emily: the ceo is no slouch. what happens to him? what happens to most people who sign on to work at the executive level as they end up looking for work elsewhere. he's good at consolidating and saving costs. emily: qualcomm shares,
fantastic. what is going on? qualcomm had a good quarter and said everything in china is wonderful. they got paid for a lot of licensing. they arelook at what saying about the current quarter, they say it's going to be good again. lost in the iphone and samsung had a problem with its phone and qualcomm was a big part of that. emily: can the industry continue to consolidate and do you expect it to? my base has gone from 30 companies on down. i had the ceo of another company in here saying the small to midsize company, still plenty of
room. still lots in play. thank you for breaking it down. facebook shares dipping in extended trading after the company reported better-than-expected earnings. sarah frier is joining us. whatus the highlights of he had to say. sarah: this has been driven by incredible demand across all sectors. this is a very strong quarter for them. he said instagram started contribute into the growth and has been growing faster than facebook, though facebook and treated the most to the ad revenue this quarter. you mentioned the shares went down, that had to do with comments he gave on the investor call when he said add load
facebook was going to put in the be seed was going to not increased in a the middle of the year. so the revenues were going to be hit materially. emily: explain how that plays out in terms of what we see on the site. sarah: you how when you have an ad, it's mixed in with photos of 80's and an article about trump. they want to keep the news feed the way it is and in the past, increasing that add load has really increased revenues, including in this quarter. this has been a quarter where the add load was responsible for a lot of growth. starting next year, they are not going to pull that letter -- that lever anymore. you have to keep in mind they's book has so many other places they can grow.
they haven't even started to monetize messenger or whatsapp or these other initiatives. oculus is very much in its early days. even despite the comments causing the stocks to go down, facebook has a lot of other things it can do in the future. this is aonder of result of engagement trend and perhaps they don't want to impact any further at this point. he talked about video, saying and isas been important important for our advertisers, but i have to ask about these efforts to take snapchat and integrated into facebook. cameray are working on a first way to share which is basically what snapchat is. what is your take? theh: zuckerberg kicks off earnings call saying that sharing through camera will be the future. froms an interesting tweet
a venture capitalist week ago saying i wonder if there are more people working on snapchat on -- at facebook than snapchat. it's really clear how much facebook respects snapchat and what they have done. they've added stories that it's basically a copy of what they have done where you add videos that disappear. the are doing this with camera on the main happening and they have been testing it in ireland. zuckerberg it seems confident that they will roll it out broadly internationally. this is a big rivalry and remember a few years ago, facebook tried to buy snapchat for $3 billion and was turned they area now preparing for an ipo of their own as early as next year for top emily: do you think any of these moves have impact did snapchat at all? say becausehard to both of these companies are growing so quickly.
maybe snapchat would grow a little faster. maybe there is a slice of the market they could be attracting that they aren't because people are finding the opportunity with in facebook. what we do know is these companies are the future of the growth and social media. we see twitter not growing so snapchat andand facebook are being extremely competitive with one another despite the size difference. this: sarah frier covers book, snapchat and twitter. thank you. competition in corporate messaging is heating up. microsoft unveiling a new app for the work lace that is supposed to facilitate conversations in real time. giantve places the tech squarely against slack which welcomes the competition. these slack ceo took out a full-page ad to give microsoft
2017. explain how this partnership will work. >> we are partnering with toyota in two ways. one is on the tight -- on a technology side and one is on the finance side. you can walk into a toy at it dealership and buy a car or finance or lease a car and pay for the car out of your earnings. i talked to you a couple of times over the years and you saw your first burst of publicity before uber and lyft were anything. i wonder how your business has evolved as ride sharing has taken off? guest: i think the shift you are seeing among consumers and companies like toyota is this move toward accessing transportation through the smartphone on demand. more and more people are living car free and need access to
mobility surfaces -- services. that's great for us because companies like uber are changing how consumers use and consume transportation and that's creating a new market for get around. emily: in a future of self driving cars, why what i want to own a car at all? guest: you have a choice. we are making it easy to own a car for free, integrating our technology with that of toyota to make it that way right out of the factory. you could choose to own because you want a particular car or you might want a car for free. or you could rent the car's and it's giving more power to the consumer. elon musk says he is trying to do something similar. what do you make of his plan? guest: we love it. it's great to see you on
embracing car sharing that way. we have had tesla share on get around for over four years now. for us, it is validation that this is happening and it just going to happen faster and faster. emily: paint a picture for me. in five or 10 years, will people just won't want to have a car and some will want to have a car? what sort of percentage do you see? sometime, five to 10 years from now, sharing cars will be the predominant way people use of vehicle. the concept of everyone buying the car and using it themselves, with the technology advances, that is just going to go away. it's not sustainable. we have 200 50 million cars in the u.s. and we use them 5% of the time. that's a massive waste of resources. consumers is enabling
to be more resourceful. emily: how big a market is this? guest: it is the same as the ownership market. you just see the fragmentation and change out in the value chain of how you own and operate vehicles as an individual consumer. emily: uber just announcing a partnership with gm's maven and they are a major backer of uber .ival, lyft what can you tell us? program now, pilot 90 days in san francisco, but there is interest for the companies to work together more. general motors has been building out its own car sharing business and it wants to find ways to get those cars out to consumers and is mrs.. so you are not just
competing with uber and tesla but also gm. what will truly differentiate get around from all these different options? guest: our model is fundamentally different stop these are people's cars. we don't own the cars, so that's a very big difference. we have been doing it for a number of years and we've developed a lot of unique technology and intellectual property in this space. that's one of the reasons toyota chose to work with get around. they looked at all the partners globally and decided what we have developed and how we see the future, those things were aligned in that puts us in a unique position and we intend to continue innovating. ofly: there are a ton different automakers and ridesharing services. there are different permutations of how they serve customers.
is there room for everyone or will there be some sort of consolidation? some: it will probably be consolidation. but there will be trends that show what they are growing toward. a move to the city, and move away from car ownership. if those things happen and more people are living in cities and they don't want to deal with managing their own cars, you could see a number of successful players. you take uber around the city but then you want to go out for a hike, you use a car share. for multiple types of companies and players in this basis, especially if there is a movement culturally. cars: how do self training fit into your vision for the future? self drivingcome technology. we anticipated this would happen
eventually. maybe starting with a connected car and moving toward autonomous car, but that makes our move more fluid. do you see more people wanting to own a self driving car? is the model for self driving car ownership different than car ownership as we have known it? guest: i think car ownership will change but you will see individuals own cars. you may see micro-entrepreneurs owning small fleets of cars and companies owning fleets of self driving cars. what you will find is the idea of everyone owning a car will change. i don't think it's going to depend on the pendulum swinging the entire way. emily: you are competing with some of the most boldfaced names in the industry. what is that like? andt: we look at ourselves try to be better than we were the day before and continue to
innovate. get around is uniquely positioned in terms of what we offer. to use uber users and get around. it's not that there's one market here. there are a lot of segments. togethert how you work to enable this secular shift in mobility. we think that is a massive shift and there's a lot of room for a lot of to compete together in that space. emily: thank you so much for joining us. eric newcomer thank you as well. coming up tomorrow, do not miss green party candidate, jill stein and her take on the presidential race with less than a week to go. this is bloomberg. ♪
emily: amazon is said to be weighing a bid for a stake in a dubai-based online retailer. people familiar with the matter say the stake would be at least 30% of the company. it would give the company a value of $1.2 billion and would help amazon with its goal of expanding in the middle east. toyota and mazda have discussed
teaming up in 10 potential business areas including electric vehicles. it's the latest indication japan's automakers will join with tech trends to shake up the industry. that does it for this edition of bloomberg technology. tomorrow, we are talking about fundraising and hacking in the election with crowd strike ceo, george kurtz will stop all episodes of "bloomberg technology" are live streaming on twitter. this is bloomberg. ♪
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tier 1 and tier 2 drugs, with home delivery. don't wait, call unitedhealthcare or go online to enroll in aarp medicarecomplete. ♪ announcer: from our studios in new york city, this is "charlie rose." charlie: we begin with fbi director james comey and the decision to come forward with information about a private server. some say he was in a dammed if he did and dammed if did not situation. it ever to mitigate the outrage, justice department officials said no further information will be released until the