tv Bloomberg Technology Bloomberg July 28, 2017 11:00pm-12:00am EDT
>> i'm alisa parenti in washington. you are watching "bloomberg technology." let's check your first word news. president donald trump fired reince preparest and replaced homeland security secretary john kelly. anthony scaramucci suggested recently that reince priebus leaked information to the press. reaction to the failed bid to repeal the u.s. health law. president trump: i said from the beginning, let obamacare employed and then do it.
i turned out to be right. let obamacare implode. sa: senator john mccain is returning to arizona for spring cancer treatment. he cast the decisive vote that collapsed the latest gop effor s to overturn the affordable care act. he will maintain a work schedule during his treatment. called a national security meeting and the pentagon says that president trump has been briefed on a north korea missile launch. it did not pose a threat to north america. global news 24 hours a day powered by over 2700 journalists. i'm alisa parenti and this is bloomberg.
emily: i am emily chang and this is "bloomberg technology." up, uber and redfin's becomes an ipo success story. why the timing was right to go public. and a bloomberg exclusive. merger mania as consolidation soars across the industry. kayak's ceo joins us to discuss the m&a sweeping the travel industry. first to our lead. it is a big day for tesla ceo elon musk. he will be handing over the keys to the model 3. has characterized the model three's men rode to mass-market drivers with a price tag of $30,000. for the masses?
joining us, to discuss caroline hyde in london, alex webb, and the cox automotive senior cox automotive is the parent company of the brands kelley blue book and auto trader. is it really for the masses when a fully loaded car is more expensive than 35 k? >> is hard to think of it as a mass-market car when you think of the bmw three series as similarly priced and it is not a mass-market car. it still does not have the volumes that elon is predicting he wants to assert -- once to sell this one in. do we know about the event? what can we expect? alex: very little. emily: elon is going to be there. alex: they will have 30 cars.
it is proximity to the fremont factory. people who are close to there will be the first. who lives close to the factory? employees. will it be the final trim of the vehicle? what are the aerodynamic performance of it, which we do not know about, the final fiddling around the edges is what we will learn about. lots of analysts are weighing in. what are the pain point is going to be? notably goes from negative to positive and they are pretty split. you have just over a third saying hold on the stock and 20% saying so. if i look at the optimistic areas, one analyst saying this fervor that you will be toutingg -- you will be
later today, that's a positive catalyst, but you have negative comments from citi, worried about the model 3 eating into these sales all of the model s and model acts. inventories will be doubling in the second quarter. facing steady is and intensifying competition. they are going fully electric by 2019 and every single car, vw saying they can push in competitive markets. emily: interestingly, gene munster, who long covered apple says he thinks the model three big asmodel 3 will be as the iphone. he says that apple should buy tesla. take a listen. should buy tesla.
elon musk probably is not going to let it happen, but that could transform apple. emily: alex, what do you make of it? alex: i think a lot of people would be impressed. apple has yet to make any advisable deals -- beats -- emily: which for them was a huge leap. of thehey love the idea visionary ceo. and of course, apple has a track .ecord of visionary ceo's the big question is about the fundamentals. apple is a company that does a 20% net margin. the margins for the automotive industry are dreadfully weak in comparison. be luxury carmakers do a 12% to 15% net margin on a good year and that's a big hurdle to bridge that. emily: carl, what will the biggest challenges before the model 3?
>> i think getting the car out there at the rate he is talking about and finding that audience, we know he has a lot of backlogs deposits,over 350,000 but whether those come to fruition when you put options on it, that is a big question. the bigger one for me though is, supporting those volumes. he's got to support all of those owners, and ask any automaker out there, that can be the toughest part, keep your consumers happy once they have the car. we are expecting $60,000 fully loaded. caroline, give us the global picture. regulations are changing, but they may be more favorable in tesla's favor? caroline: exactly. tesla could steal a march over
the next five or 10 years blowingregulations are a warm breeze. we saw in the united kingdom by 2040 you will not be allowed to buy new cars that are gasoline, diesel -- everything will be going toward a cleaner energy. be buying new ones. the regulatory world is pushing in favor of electric vehicles. the question is, by that point you will have a lot of catch-up. in particularti is saying we want to see a stronger balance sheet. these companies have really deep pockets and they are pushing to play catch-up. auto industry is going through a sea change. what does it look like in 5, 10, bias as, not to mention
well. just but it's hard to make any concrete addictions. one thing we do know, there will in theplus range ev's next 10 years. that something to keep in mind. tesla has owned that market. now they will have competition and it will be interesting to see if they can hold onto a large chunk of the market with others out there. emily: alex? firstit will be their mass-market car and you see that they do not necessarily end up winners. the ability of the german carmakers to flip a switch and they have a huge captive market already, that is really going to -- that will be the winner eventually. see youll right, i will at the tesla factory tonight. caroline hyde for us in london. thank you all for joining us. staying in the auto industry,
meg whitman has taken her name out of the running to become the next ceo of uber. in a tweet the ceo said that i am fully committed to hpe. we have a lot of work to do at hpe and i am not going anywhere. uber's ceo will not be meg whitman. this comes on the heels of a report that jeff and melt is on the heels to take over -- is immel is likely tot take over uber. he is said to be on the short list. bloomberg tech is live streaming on twitter. check us out. this is bloomberg. ♪
emily: the indian government will soon be keeping a closer outon instagram to sniff tax cheats. certain next month, prime minister narendra modi felt government will gather information from social sites to see if lavish purchases match declarations. this is as the company grapples with a loading budget deficit. the real estate brokerage saw 30%, with them opening well above the opening price of $15 per share. i spoke to the redfin ceo and
asked why now was the right time for redfin to take this step. take a listen. >> the markets rewarded now. valuations incorn the private markets. there was no reward for liquidity and now the public markets are just ready to be the most efficient market. how can business sustain itself? >> we will keep on taking shares. i know there are ups and downs in real estate but we have built a better mousetrap. share. keep on taking even if it depresses our revenues a little, it is still going to grow a little. emily: would you say that redfin is recession proof? >> no, no. we will go up and down with the
market. we do offer better service at a better price. your: who do you see as competition? zillow or traditional brokerages? >> it is century 21, these firms that a been around for a long time. it will be a tough fight. we are in it for a long time. does have is him brokers but i wonder if they are losing importance as technology takes a greater role? this might take a wild because they do not buy a house every day. but in the end if you have technology to make it more efficient, if you save people money, better is going to win. so, that is what this day means to us. over time we will take share and make our markets better and that will win out in the end. comes to thet
growth plan is there any more technology you plan to introduce to further differentiate yourself? yeah. we started out with listing search but then we developed these on-demand tors and now we are working on generating a few clicks so you get to the sale first and you can buy the house before anyone else knows it on the market. we are working on the mortgage business. there is so much to do. there is so much to do. what is your line of --ht on probability profitability? >> we've got a line of sight. the main question we have been getting on the road is why not invest more in growth and we are just trying to strike the right balance. it is a big market. that weto make sure
invest in that but still have financial discipline. only: i know you are focused company culture. there's everything going on at uber. you have a diversity campaign. why do think tech can't get this issue right? >> it used to be that computer science classes were just filled with dudes and now it's changing and changing for the better. one of the reasons is changing is we cannot afford to just pay people through the nose. so instead we got to be a better work.to redfin went from having no women to being 30% woman and we make better products as a result. we really do. and we keep our people longer, we keep them happier. it has been the best change that
has happened for our business. there is a lot of political uncertainty. what are your biggest concerns going forward? you can't of things control? >> you know, you can't worry about that. i worry, are we going to show up late for a home tour. serve customers well eventually the stock price will take care of itself. it is a modern thing. sometimes sure told her's will that shareholders will appreciate it. you've got to keep your head down. you've got to keep working. i think if we do that we will be ok. ceo right redfin there. coming up, an exclusive interview -- why he is bullish on the future of travel planning using ai, next. ♪
southeast asia has not gone exactly to plan. 24 hours after introducing its singapore, they were all sold out. this is the first foray into the region and they could face stiff competition from alibaba. this year has seen a time of consolidation and expansion in the online travel industry. earlier, they successfully acquired arrival travel company. debut wasgo's public in december 2016. -- travago. joining us, kayak's ceo steve hafner. kayak is owned by the priceline
group your you have a new partnership with amazon whereby you can make hands-free bookings with alexei for hotel rooms. ai changing the way that bookings happen in the future? to be on,it's good emily. ai is a buzzword nowadays but it is something we have been investing in for many years. ai isy that we look at trying to marry what you liked about a traditional travel agency with the always on capability. we are trying to find a way for consumers to use conversational tones on a platform, whether that is alexei or google tv and to complete travel planning. emily: doesn't this require a
change in behavior if you are booking a hotel room sight unseen? you or me, be for but if you are a millennial, you are used to speaking to your phone. i think it is what the next generation feels comfortable with. if you talk to my grandparents, they never made it to a point and click mouse, much less made it conversational. we like to lead in innovation and we are helping to shape that future. what partnerships should we expect in the future? is engaginghe user in the platform where we think the viewer -- the user could have travel intent, we want to turn that into a booking. but also for the consumer, to have the travel behind this. emily: do you expect m&a in this space to continue? >> we are very focused in the
priceline group. there are a number of brands there. the most important thing for us is making a better product and service and getting scale. to the extent that m&a is a tool we can use to build audience for scale or acquire new technologies or talented teams, we will continue to look at that. your plan tos compete with airbnb in particular. >> if a consumer performs a travel query, we like to show them a complete picture. we show them every hotel and lots of non-hotel accommodations, too. not from airbnb is a brand, but folks like bookings.com. emily: have you talk to airbnb about that? what is their response? >> i talked to their ceo and i have told them that we are more
than happy to do business with them any time. i hope they take me up on that. of your viewers probably are not familiar with the mondo. they have a leadership in europe, reticular really in the nordics and the u.k.. the reason for joining forces is to gain scale and have a folksrm for serving up to worldwide. we are in 65 countries and we have offerings in 28 languages. priceline is the biggest travel agency in the world -- all of these acquisitions -- is this good for the consumer? is this good for me? >> absolutely is good for you. itnot, we would not be doing and regulars would not be giving us a green light. we went through a very thorough review when priceline bought kayak.
that scaleomething is beneficial for consumers. we are not actually providing the flights are offering the hotels. we are providing the search engine on top of that that lets you find those options. bigger is better. you set up.ight, steve hafner, thank you for joining us. coming up. intel is bucking the pc trend with upbeat sales forecast. overhe glory days are not yet. and if you like bloomberg news, check us out on the radio. you can listen to us on the bloomberg radio app and in the u.s. on sirius xm. this is bloomberg. ♪
alisa: alisa parenti in washington. you're watching "bloomberg technology." president trump has fired reince priebus. he is out as white house chief of staff. priebus confirmed he resigned yesterday. the president replaced him with homeland security secretary john kelly. in his tweet, the president calls kelly a great american. communications director anthony scaramucci suggested priebus leaked information to the press. president trump was on long island unveiling the administration's plan to crack down on gang violence. president trump: we're going to destroy the vile criminal cartel ms-13 and many other gangs but ms-13 is particularly violent.
>> the president touched on last night's failed effort to repeal the u.s. health law. he said he was right when he said recently to let obamacare implode. chuck schumer praised john mccain for voting against the g.o.p. health bill. senator schumer: i have not seen a senator who speaks truth to power as strongly, as well and as frequently as john mccain. the very same courage he showed as a naval aviator in vietnam he showed last night and has shown time and time again. alisa: senator schumer also praised maine's susan collins and alaska's lisa murkowski. venezuela's chief prosecutor has raised the death toll from the nearly four months of protests against the president's government to at least 113.
the toll is expected to climb as authorities impose a ban on protests ahead of a vote on sunday. the u.n.'s human rights office is voicing concern about the risk of further violence in venezuela. >> we've repeatedly called on the government to guarantee the freedom of peaceful assembly and association and something we are repeating now. we're speaking out now because given the hugely tense situation venezuela is in, we want to repeat the call for calm and peaceful protest. >> italy has approved sending naval units to back up the libyan coast guards in the fight to limit migrant trafficking. the a.p. report says that italy's support comes at the request of the african country. the f.d.a. has unveiled what it calls a comprehensive plan for regulating tobacco. the agency wants to cut nicotine
in cigarettes to non-addictive levels. global news powered by 2700 journalists and analysts. >> president trump is replacing reince priebus, announcing on twitter he's appointed homeland security secretary kelly has chief of staff. president trump: john kelly will do a fantastic job. general kelly has been a star, done an incredible job thus far, respected by everybody, a great, great american. reince priebus, a good man. thank you very much.
emily: his ouster caps a week of heightened tensions in the white house where priebus was embroiled in a public feud with trump's new communications director, anthony scaramucci. this after an epic report from "the new yorker" where scaramucci calls out reince priebus. what do we know about what went down here? >> i can tell you that members of president trump's most trusted advisers including members of his family over the past several months have grown more frustrated with reince priebus, former chairman of the republican party and communications director sean spicer. last week we saw the removal of sean spicer and then with the arrival of anthony scaramucci, more controversy engulfing the white house in terms of the public display of the infighting in the administration, capped
off with reince priebus leaving but what does this mean for policy, for tax reform, for healthcare? i can tell you this. the reason that sean spicer, the reason that reince priebus were brought into the fold during the transition was because of their connection and relationship with house speaker paul ryan as well as legislators in the republican party on capitol hill. and so for there to be such a crushing defeat on healthcare, less than 24 hours now we learn that reince priebus is out of the administration and that shouldn't be taken lightly. >> reince priebus has been blamed for the lack of legislative successes since trump took office. that said, tell us a little bit more about general john kelly and if he can get more done.
>> he is deemed as someone who has no drama. he is deemed as someone who is one of the least public heads in the cabinet. he's someone who has a very storied military history, someone who is well respected within the military community and someone who frankly does not come with the same political background as you saw with reince priebus. someone like reince priebus, he really embodied the establishment of washington politics and conservative politics even before he was brought on into the administration, even before this 2016 presidential cycle kicked into high gear. but the arrival of general kelly, this is a military pick. >> president trump did speak earlier today about the homeland security secretary. take a listen to what he had to
say about john kelly. president trump: i want to congratulate john kelly who has done an incredible job of secretary of homeland security. incredible. one of our real stars. truly one of our stars. john kelly is one of our great stars. >> so much of the story of this administration has been about the in-fighting and palace intrigue. do we expect that to change now? do all these new guys get along? kevin: i don't think it's going to change, the palace intrigue will continue. quite frankly, i'll be blunt, it's the culture of washington as we know it currently in 2017 and even for quite some years before it. but in terms of how it relates to the trump administration, you
know, i think that the comments of anthony scaramucci to the "new yorker" speak for themselves. he somewhat apologized, not really, in a tweet. but i mean there's just this sense -- i feel like investors are looking at washington right now and kind of confused and don't know what to make of it. they're just watching this, what is going on down there. i can tell you that at a staff level, at a junior staff level all the way up to the principal level, the republican lawmakers i speak with daily on top of the hill are looking at this and very much confused as to what seems to be a lack of organization coming out of 1600 pennsylvania avenue. on a friday evening, a rainy friday evening here in washington. >> kevin cirilli, another not-dull day out of washington. thanks so much. intel reported second-quarter earnings, record second-quarter earnings yesterday after the bell, bucking the industry
decline and posting sales of 4.4 billion dollars. the company gave an upbeat forecast for third quarter and annual revenue. our correspondent spoke with bob swan. >> it's a declining market and we had outstanding performance. 12% top-line growth, 58% improvement in operating income and introduction of new products that we're very excited about so in a declining market what we've found is simply performance sells. the high-end products intel has are increasingly demanded by consumers and surprises alike and that drove outstanding performance from our p.c. business in the quarter. >> is there any concern about inventory buildup? something analysts are floating. are we seeing that? >> looking at going into the second half of the year, we characterize the sentiment index
levels as relatively healthy in the channel so inventory levels had been lean over the last couple of quarters but they're healthy going into the second half of the year and as a result of that we raised our full-year guidance for the company for the year by $1.3 billion, primarily driven by the performance of our p.c. business. so healthy channels with a healthy outlook for our business going into the second half of the year. >> shifting into your server business, that, too, growing up 9%, close but no cigar when it comes to double-digit forecasts longer term. what's the uncertainty about? >> what we saw, what we indicated earlier in the year for our data center business is high single-digit growth. in the second quarter, we were at 9% growth so right on track with what we laid out and
secondly and probably mostly importantly, we launched one of the most high performance products called zon scalable for the second half of the year which we're really excited about. its past -- passed benchmarks for performance in the product ranked us extremely well which we think will drive increased demand with higher performance for our clients in the second half of the year. if you look underneath the covers for the growth rate of the business, we saw very strong cloud growth, up 35%. in the com segment, up 37%. our adjacency businesses up so strong growth for the quarter. the relatively slow growth was in the enterprise sector and as we see more work loads moving to the cloud, we're well positioned
to capitalize so good quarter, excited for the second half of the year. >> is it the shift to the cloud that's stopping corporate spend? or is it global risk, uncertainty? what are you getting the feeling for? >> we have to put it into context. global g.d.p. that's probably in the 2% to 3% range, our data center business did grow by 9% in the quarter so that's pretty strong, healthy growth for a business of this size. again, there's a fairly dramatic shift in terms of how c.i.o.'s of our customers are spending their money with an increased component of their work loads moving to the cloud and we are well positioned to help cloud
performance drive incremental value for their customers. >> well positioned but the second half analysts are expecting slowdown in your revenue. we are expecting competition coming from a.m.d., when it comes to the base end part of the business and nvidia hot on your heals -- heels. can you be pricing confident with such competition? >> one thing that's been consistent across all of our businesses, whether p.c., whether data center, whether it's internet of things, is we're at a stage where performance delivers and the higher performance of your products, the more customers are willing to pay for it. so that's what we have been experiencing and going into the second half, we know we'll continue to deal with competition. we feel very good about our product lineup and i would say performance sells and that's what's allowed us to deliver strong performance and exciting second half of 2017.
black hat security council wrapped up this week in las vegas. the annual conference in las vegas is the biggest gathering of hackers in the world. it aims to provide its attendees with the latest in security and research, development and trends. joining us to discuss the biggest themes emerging from the black hat conference, peter chan, who spoke at the conference. black hat now, defcon next week. peter: right now. what are the big themes coming out of this conference? peter: the 15,000 that there
are, it's like "the hunger games" of hacking. there were chaos, competition, surreptitious -- any two miles radius, you stood the chance of being a target but there were business focused themes and industry players going there to collaborate and learn because it's important for business to learn what is the context of my cyber risk, i need to understand how that will impact my business instead of the tech itself. you had tech, artificial intelligence, mobile, car hacking. this year in particular i saw more leather shoes and suits than i ever saw before. emily: all right. so, you started your career as a federal agent and worked your way up. i'm curious what you think are the biggest risks out there right new on the cyber battlefield?
peter: i think it's a changing landscape of where enterprises are going from an i.p. platform. we're going into the platform of materializing the connect canning the living and driven device so we're looking at 50 billion i.o.t. devices connected. that's the next wild west. i don't know one app i'm not using all the time so we're elevating to another platform. we're no longer hardware based but software defined hosted in the cloud. so we're migrating so fast, that security tends to have gaps in catching up to monitor and detective proactively. >> how concerned are you about russia and state sponsored hacking? peter: i think state sponsored hacking is a global challenge. we have been battling this since
the late 1990's. i was in that seat myself. it's par for the course. i think the acceleration and complexity we see now, you start to see more sophistication, more frequency and attackers are treating it like a business so they have a business model by which they approach attacks. it's no longer let's throw everything at the wall and see what sticks. and maybe we'll get something, maybe we don't. the now they're more concerned about can i disrupt data, is there a destruction there? and manipulate data in such a way, just like trading for a market. if you get minute changes in data, you shape economic models, cyber economics. >> was the theme of the hackers bolder than ever? when it comes to the hacking of the u.s. election, it seemed so brazen. peter: there's two camps, the loud and proud, i can do it because i can. and the others that scare me the most are low and slow and more quiet that you don't hear about
until something happens. the longest i've seen a hacker go undetected in a network is seven years. and that's with the data we know about. so imagine it can be 10, we don't know. but we know they're in it for the long haul. they establish a foothold and want to be able to weaponize when they want to not when we can detective them. >> defcon playing out over this weekend. peter: we shall see. >> we'll see what happens. peter chan, thank you so much for joining us. coming up, it's virtual reality meets laser tag. we will take you behind the scenes of the virtual reality arena, next. this is bloomberg. ♪
have seen sluggish sales but one east coast company is convinced they'll have success bringing people together. this virtual reality arena is outside of austin. ♪ it's virtual reality on a larger, more social scale. >> ok, shoot. reporter: in this warehouse, 12 miles outside of boston, mind trek is one of the nation's first multiplayer virtual reality arenas. >> virtual reality by and large is a very isolating experience. we've created it in a format where it's more of a social experience and we think that can sell. reporter: here, up to 16 players move and communicate wirelessly
to fight 3-d zombies. david o'connor is co-owner of the facility. >> the backpacks are a military grade backpack and carries a small portable computer that's battery operated. >> unlike some forms of v.r., the players are untethered. >> 128 machine cameras gather the data and replay -- relay it to the servers, back to the players. reporter: the technology was developed by australia based zero latency. mind trek has licensing exclusivity in massachusetts and also has rights and hopes to open soon in pennsylvania and new jersey. virtual reality has struggled to go mainstream and may not until 2021. insufficient content, clumsy
hardware and pricey headgear are cited as reasons. o'connor says any form of adoption brings more business. >> this clearly feels different than it did a few years ago as far as how much virtual reality is being adopted so as far as the life cycle, although it's been around in some form for 20 years, i think we're in the first inning of a nine-inning game. >> there's a robot coming at me. shoot, shoot. emily: sticking with gaming, 10 cent is hoping its bet on a u.k. video game maker won't be as wild a ride as the game it produces. china's largest internet media company has bought a stake in frontier developments. the studio best known for the the rollercoaster tycoon franchise. update to news we told you about earlier.
president trump has replaced his chief of staff, announcing on twitter that he had appointed homeland security secretary john kelly to the job. the ouster of reince priebus who said he resigned, caps a week of heightened in-fighting at the white house. priebus was embroiled in a public fight with communications director anthony scaramucci. "bloomberg technology" is live streaming on twitter. check us out. next week we will delve into earnings from apple and tesla. that is all for now. have a wonderful weekend. this is bloomberg. ♪
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