tv Bloomberg Technology Bloomberg May 10, 2019 11:00pm-12:00am EDT
♪ emily: uber's rocky debut meets market anxiety. we will sit down with the ceo to talk about the underwhelming first day. plus, the u.s. delivers on its threat to hike tariffs on more than $200 billion of chinese goods after talks fizzled in washington. president trump says there is no rest for a deal. a major player is making waves in the lucrative apple supply
chain. what we can tell you about the next generation of iphones. first, to our top stories. uber shares fall into the red on their first day of trading. shares closing at $41.55, falling 7% on the day. that gives you great market appetite 61 point -- 69 $.7 billion. well off the 120 billion it's -- $69.7 billion, well off the $120 billion banks had. let's bring in romaine bostick for more. i was on the floor. it was not a good scene. every half hour, the indicated price seemed to drop. then we got the open at $42 a share. romaine: two big issues. you have a lot of potential
investors who saw this for what it was. a liquidity event for existing folks. a lot of folks to that want to get involved too soon. they knew this was primarily being sold to institutions. a lot of individual traders were saying, it's good to wait this out. you had it against the backdrop of the worst week we have had since december for the broader market. we did rebound today. there was a sweet spot we had in february 2 about mid april. you could sell anything you wanted in this market. there was a high risk appetite. people were willing to buy into the growth there too. you have seen people get more skeptical about the market as a whole. uber came into the middle of that. emily: the market rebounded as it were closed below the $42 price, which was still below the low end of the range that they price that yesterday. i think about pinterest, zoom, lyft, all of these other tech ipos that had a first-day pop. i can be number the last time you saw drop.
romaine: moderno, a big biotech company, and adt, they both fell on their first days of trading. they have done poorly since their ipo although they are both still in the red. there were different stories, but they have the same issue, where people were buying the narrative that the company was spinning. emily: is this going to be the start of a not good run? or, will this just be the bottom and only up from here? romaine: someone said to me that we are toward the end of an economic cycle. that is the belief. you have a company coming to market that is saying, we are a long term growth story. we are not profitable, but we will be. investors are asking, can they still need that growth narrative if the global economy softens or goes into recession? emily: the ceo has been trying to compare the company to amazon. clearly investors were not buying it today.
maybe in the future, investors will be about to take on more long-term risk. amazon is a company that was not profitable for a long time. uber, not profitable, but growth is slowing. growth that amazon was not slowing. romaine: the first year amazon came public was at 97. their growth rate was at -- 800%. the next year, 300%. the year after that, city 2%. uber is coming at a 40% revenue growth rate. the other thing is scale. amazon can scale up. for every new customer, how much do they think they dashed you think they pay to get the customer? what is the company acquisition cost for a company like uber. i can guarantee you it is higher. a company like amazon, a company like match.com, they can scale up to new customers at a faster pace with minimum cost. uber does not have that luxury. that's where the concern is. how do you continue to scale up
and gain market share and keep your capital expenditures under control. emily: and keep your riders and drivers. that is part of the problem. romaine: we know the drop -- we know the drivers aren't happy. we have heard from the ceo that says they will have to think about that relationship if they want to keep costs under control. how will they do that without making these drivers even more unhappy? emily: thank you so much for breaking that down. i want to turn to my conversation with the uber ceo. i spoke with him at the new york stock exchange moments after uber's stock opened at $42 a share. still below the $45 initial price tag. the ceo was taken -- was -- took over in 2016. i asked him about the debut, which big, was not as big as he was hoping for. >> you can't fix the timing and would you go public. today is a tough day for the
markets. with all the china uncertainty, nobody knows where that is going. you cannot pick when you go public. you can control how you execute as a company. are you building a great service and are you bringing in happy consumers all over the world? we will focus on what we can control. we raised a lot of capital to invest in for many years. that is what we are focused on now. emily: the president said the markets a plane with his tweets this morning. we have trade talks on the rocks. how much do you think this has to do with that and how much do you think has to do with uber? it's still losing billions of dollars a year. dara: it is. we have a road to improve profitability though. the markets are an amalgamation of lots of things. there are external and internal issues. i don't spend too much time worrying about what the thing was.
the key is focusing on creating a great service. now we have a freight service and a food service that is growing. if we focus on that, we will provide value. emily: you were on the road, and the price dropped to the lower end of the range. lower than what your bankers had a floated a couple of months ago. what were investors responding to? dara: there was a group of investors that absolutely loved the story, the platform story, our transportation as a service platform, a $12 trillion market play. how hard it is to execute on that vision, how expensive it is, how capital intensive it is, those are all challenges. the good news about the road is we have found a set of investors who are long-term oriented and believe in our vision and now we have to execute to make sure that the but they made is worth it. emily: you compared the company to amazon. you have some investors who think it may be more like ebay.
there are questions about how big the ride-hailing market will be? how can you deliver? dara: we have to execute. when you think about what amazon did, it went beyond the booksellers and other categories to retail. we are doing the same thing. rides are to us what books were to amazon. we are expanding beyond rides into eat and freight. we expand our audience all around the world as we do that. the investors who bet on us long-term will be happy. emily: one thing we did not see with amazon is growth slowing down. growth is slowing down. how much do you think you can grow revenue and your five most mature markets? dara: when you look at the platform in general, audience growth is coming in at 33% year on year. trip growth is 36%. on a $15 billion size. there are very few companies in the universe that can carry that
kind of growth and -- at a $50 billion scale. when you have a trail -- $12 trillion market ahead of you, your plenty of room to grow. you have to put much or with a quote. i think a lot of companies would grow for our growth, even in a mature market. emily: risk has troubled debt struggled in an open market. how did that in fact -- affect the pricing we saw today and the poor sentiment? dara: there were certainly some affects in our category. we are a global player. we are the category position leader. we are also getting into a number of different transportation categories. while we don't think we are injured -- direct cop, some people might look at it. for both companies, going after
car ownership, debundling all of these cars, it's a thing we can achieve long-term. emily: wendy you think you will get losses below $1 billion a year? dara: we are not specific about losses one way or the other. we have plenty of markets that are contribution margin positive. i think that, going forward, we can grow the business and the margins. emily: lots of pages are risk factors. one of them is you may never be profitable. how much of a prior -- priority is profitability? dara: it's a very significant profit --significant priority. companies can grow off of their internal actions. that is a goal for us. we don't want to depend on public markets were capital.
this was a very important capital race for us. we book -- raise for us. we believe our business can be profitable over time. emily: let's talk about drivers. thousands of drivers struck around the world this week. they say they don't make a living wage. is there a way you could implement a living wage, a longer term plan to keep drivers more engaged and make them happy? dara: you have over 3 million drivers and couriers on your platform. it works out for some of them, and it doesn't work out for others. what we have to make sure is that our platform is a little variable right now, and we have to make sure it works out for all of our driver partners. that's what we are working toward. we need to make sure that they are their own bosses and can work whenever they want to. there is an enormous amount of flight stability, but there is also variability of earnings. we want to make sure that every driver can be their own micro entrepreneur but make sure that opportunity works out. we are adding in some markets, like in europe, health benefits. we want to layer on the kinds of benefits that our driver
partners and couriers want. long-term, we want their lives to get better. emily: the cofounder and former ceo was here. he was not on the podium today, keeping some distance from the path -- past. he is still the board, do you think you should be in a year? dara: he is a huge shareholder. he has been responsible for creating enormous value. i don't see this company being where it is without his efforts. he is a great board member. i hope he is there in a year. what will you be reporting on a quarterly basis -- emily: what will you be reporting on a quarterly basis? dara: we will be including bookings. that's important for any investor. emily: for the quarterly
watchers, wearable uber be in a quarter? how do you want to be judged? dara: if you are a quarterly watcher, you should not be an investor in us. we are going to announce quarterly results, but this business is going to be volatile. if you are quarterly sensitive, we're probably not for you. if you want a business of significant value over the next 3-5 years and for the world, then we are your company. emily: where is it were in a year? dara: i think uber will be bigger and better. i think we have a great plan to get there. emily: if you're on a mile marker, which one rb at? -- which one are we at? dara: just beyond the start. emily: early days. that was my conversation with uber ceo dara khosrowshahi. much more about uber coming up. first, to trade warriors. higher tariffs officially in effect, and china says it will strike back. we will talk about the derailed talks in washington. if you like bloomberg news, check us out on the radio, listen on the bloomberg app,
♪ emily: china has vowed to riyadh -- retaliate after the u.s. went ahead with a new round of tariff hikes. the hike to 25% has a slew of tech products. telecom italia, computer circuit boards, processing units. delegations wrapped up high-level trade talks on friday, with no deal. there was not a complete breakdown in negotiations. investors waited throughout the day. >> this trade war is getting more serious. >> it is not good for global growth. >> it is a process ongoing. >> it will not be good. >> i would be happy they will continue talking and working.
>> it would create some ongoing business uncertainty. >> they are finding some common ground. >> a deal will get done. >> we should not be moving in some exuberance to a panic mode. >> it is probably time for repository a >> the next stage gets more painful. emily: to discuss, we have sarah mcgregor and here in the studio's isaac stonefaced. good to see you in person. we just got some new comments from the vice premier. he said the talks were constructive and candid and they will continue, and yet, no deal. what is your take? isaac: i think we are in a situation where things are probably not going -- going to get worse before they get better. emily: why do you say that? isaac: i think the markets and people following this thought they would get a superficial deal.
then we will move on to the host of other issues they need to solve. not being able to come up with any sort of symbolic optimize means -- compromise means they are further apart than we thought. it doesn't feel like either side wants to be the want to compromise. emily: the premier also saying china will never come from eyes on principle. -- compromise on principles. it doesn't sound too cooperative. sara, break down the talks. sarah: the day started with trump tweeting he was in no rush for a trade deal before the markets open. he set the expectations for the day that if anyone had any shred of an idea that there may be a deal announced, that was not going to happen. i think what is clear to us now is that there wasn't a breakdown in talks, but the stakes are higher than ever. we have heard that the trump
administration has said to china, you give us a deal in the next four weeks or we will move ahead with the threat that trump gave us on sunday of imposing an additional 25% tariff on three to $25 billion of chinese goods -- $325 billion of chinese goods. it would be virtually every import. that's where you will see the silicon valley types be hit. that will be iphones, toys, tv's. everything, unless there is some exclusion. the stakes have risen. emily: one of the president's tweets from this morning, says that talks with china continue. he says there is no rush as tariffs are now being paid of 20 5% on $250 billion of goods and products. these payments go directly to the treasury of the united
states. correction, these payments do not go to the treasury as trump claims. they are passed on to the consumer. isaac, i have a chart here on the bloomberg. we see the trade deficit has narrowed between the u.s. and china and the last several weeks and months. where does this leave us? isaac: the message the government wants to send is that u.s. investors, u.s. corporations, should think twice about increasing their investments in china. it seems like the trump administration, i don't think trump himself, maybe thinking this through subtly, but others in the administration what the u.s. to start decoupling its economy with china. this would be devastating for a lot of people in the tech community on both sides. there is a real desire among some sectors in washington to see the u.s. far less reliant on china. emily: what happens next? we know the u.s. has told china you have to rev it up within four weeks, or things will get worse.
sarah: we have heard these ultimatums before. what we expect is there will be some low-level talks are you there have been video conferences. there is no scheduled meeting between these high-level officials yet. not to say that won't happen, but it was not immediately scheduled. provided that things progress, we expect some high-level meetings. trump will be at the g20 meeting in japan at the end of june. that has always been a target date that he might even meet with president xi jinping at the time. we are keeping our eyes on a day-to-day basis.
we are waiting to see what the next beat is. emily: what is your sense of what is going on on the chinese side? perhaps they miscalculated the u.s.'s willingness to do a deal on their terms. there was also the discussion of some of these compromises would require a change to chinese law, or did they just bluff? isaac: it's worth remembering that the chinese system is not so dictatorial that whatever chairman she -- xi says, is law. there are a lot of special interests he has to corral. there is certainly a conservative old guard that would rather see china going alone. where we are today is that it is hard to know what president xi wants. we have a much better understanding of what trump wants. it could be he is all for this, and he is very reserved and using other ways of communicating.
♪ emily: symantec's shares plunged 12% after their ceo steps down and is leaving the board. it forecasted first quarter profits that fell short of estimates. many reacted negatively. jd.com, the second largest e-commerce operator top estimates as chinese consumers defied a slowing economy. revenue rose to $18 billion in a. -- in a period where they have invested heavily in warehouses and distribution.
that flex is stepping up efforts to serve chinese speaking viewers around the world. it has acquired rights from alibaba's video service. it will be streamed in 190 countries and regions. that folks has been investing in chinese language programming for dissertation outside china. coming up, and the most highly anticipated ipo, uber closes below its ipo price. we will talk about their rocky first day. we are live streaming on twitter. check us out @technology. this is bloomberg. ♪
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♪ emily: this is "bloomberg technology." i'm emily chang. uber fell more than 7% on its first day of trading. this, as china u.s. trade talks hit the skids and markets sunk across the board. i asked the uber ceo, dara khosrowshahi, about it. >> you can control this as a company, are you bringing in good service, happy consumers around the world?
it is a very significant priority for us, what we can control. so the companies can grow off the base of their internal capital, so to speak, and that is absolutely gold for us. we don't want to be dependent on public markets for capital. he is a huge shareholder. he has been responsible for creating enormous value. i don't think this company could be where it is without travis' effort. emily: he's talking about the former ceo of bloomberg. the markets still ended the day flat and uber ended the day 7% down. joining us to discuss this is our correspondent who covers uber now. describe the mood for us, the opening price kept dropping and finally it opened at $42.
>> are watching the board members coming up with numbers, and they had this indicated range. it started off with $46 to $48, and then it just moved down, and down, and before you know it, it is below the ipo price. that process of sort of slowly admitting a bit of defeat was just hard to believe given all the ramp up to the ipo. like you said, talk of $120 billion at one point. pitching the idea, that is clearly where uber wanted to end up. dara khosrowshahi, the cfo, have incentives to get the company to 120. i think it is the 74 ballpark market cap right now. a long way until they get to -- emily: i think it is 69
according to the bloomberg terminal. dan? >> thing fundamentally part of it is car crash coming out of the ipo has made investors hesitant on uber. this is a risk off trade we are seeing. timing was not ideal. fundamentally, it comes down to the 100 million dollar question, it continues to be -- will investors bind to the value? in our opinion, we believe this is a near-term speedbump. we think this is going to be more of a blip rather than the start of a trend. emily: you pulled dara aside after my interview, did you get more indication about what the plan is now? >> we got into some of the technicalities of the ipo process. for instance, i asked him what
metric you think investors should watch over the next period, he said bookings. it was interesting from your interview, sort of saying they are getting to probability at some point, but it is a matter of when. emily: then, you pointed out lyft, dara is saying we are going to report bookings, do you think that greater transparency leads to helping over? >> they're going to have a brighter spotlight because i view them as a different animal matches globally, but in terms of the value we are seeing, in terms of ridesharing, but transparency needs to be key.
right now, it is not just investors they need to keep happy, but on the other side, they need to be a transparent company. it is something that with regulation and other issues potentially around the corner, they need to do a balancing act. to get a $100 billion valuation, amazon, facebook, when you go back, this continues to be a show-me story. that is not what we saw today. emily: can we really compare it to amazon? uber's growth is slowing. >> uber is the amazon of transportation. i think you have to look at how investors are viewing ridesharing. it is 90 million consumers, each as 50% penetrated. it is a 3% pay and trade market across the board. they are doing their method, trying to figure out some of the
parts, where this is worse. right now in ridesharing, it continues to have a negative impact on overstock. emily: lyft also ended the day down more than 7%, so they felt in tandem. what are investors telling you? do they think it is the next amazon of transportation or is it the ebay? >> i have said it all along, we are going to freak out today,
but there are investors that remain in the story and understood that they did not get everything about amazon when it came along and now jeff looks like a genius. there is no way you can model how this company makes a profit. you are depending on total transformation in the transportation industry. so when you have these really dueling approaches to looking at the stock, we had lyft beat analyst expectations and the stock still went down. there is a disconnect between the market that wants to think about this in terms of revenue and then a lot of skepticism outside of the. emily: you put out a note last night before the company went out of the gate, dan. -- >> this is not an ideal stock coming out. especially given the microscope uber is under. in our opinion, in terms of what we see in the next 24 months, this does not move the needle, but it speaks to the hypersensitivity to what we have
seen with lyft with that sort of train wreck so far coming out of the gates. you will get an uber, you will get the stock, why can't it happen again? that is why transparency is key. they have to make sure they don't make the same mistake. emily: let's talk about the personal drama. dara asking travis not to be on the podium, he was trying to hide from reporters. what was your take on dara's answer to whether travis will be on the board in a year? >> he has a very tough decision. there are a lot of new investors coming into over who have to be told this is a different company. on the one hand, he needs to say
i am the leader now, i am the face of the company, we reformed. on the other hand, travis is a major shareholder. he is the one that got into the 76, but that price in the round. a lot of the valuation gains are under the leadership of travis. dara has this hard position where he needs to keep a sort of hostile force close to him while also signaling publicly distance. honestly, i give credit to dara being able to thread the needle, distancing himself. you put many longtime employee is that travis likes in the box. he made a smart move. uber people have run a lot of the core business is being celebrated. it just was not the guy we all heard of, travis kalanick. emily: dan, are you confident in dara's leadership?
>> they all had special leaders, google, amazon, so he is under a microscope for when he needs to do for uber. in terms of just executing fundamentally on the vision, there is pressure on him now to execute the show me story. emily: we will see if they can show us. eric, dan, we will be relying on both of you a lot. thank you. pinterest -- was called the fastest growing company, which includes netflix and facebook. he expects international active users to increase at a more significant pace. coming up, apple iphones are
♪ emily: later this year, apple is expected to unveil three new models to exceed the iphone 10r, 10x, and 10x max. they have a new processor for the next round of iphones. production of the chip dubbed a13 can be in as early as this month. joining us from los angeles and san francisco, we have our bloomberg correspondents, dan
and eric. what is the significance of this? >> for a long time, the processor has been a key differentiator for apple. they have been able to make a tight link between hardware and software, which is really the best way right now. these things just have not really changed in function or form for the last two or three years. it is a way of fine-tuning it and getting their operating system to work much better than the alternatives. emily: is this something that we would see as consumers notice the difference in the iphone? >> i hope so. i hope the next iphones will be faster. i think that would be a drawback if they were not. these chips each year they add new functionality. a couple of years ago, we got this machine learning component for ai.
there is talk about them integrating more of the processing for augmented reality onto the cpu itself, the main chip. they have been working on main chips for macs. we learned now it is going into mass production, which essentially means the phones are in trek to launch in the september timeframe like last year. this is apple's most important product, but in the grand scheme of things, we would be surprised if they did not go into production. emily: meantime, apple has been focusing on designing their own chip. how has that changed the industry and how will that change the industry going forward? >> that is a very good question. pretty much everybody else in the industry has really focused their efforts on the operating system. they have left really the goods of the semi conductor components to qualcomm. apple and qualcomm have had a
rocky relationship because apple is able to sort of tweak itself, its components, into a large part of the brains of the phone itself, and it has enabled them to say iphones are better. a lot of the reviews say that is basically true. you have seen samsung, huawei go out and start designing their own processors so they can make that claim themselves. emily: what's next? over the course of the next three months, you're going to try to figure out what is in these new iphones. >> i have to be honest with you, this year in terms of new hardware products for apple, it is a pretty mediocre year. especially on the iphone. i don't anticipate ios 13 being that big of a jump like ios 7 or ios 10. iphone hardware itself, this is going to be the third year in a
row the iphone x, 10s, this is going to be another update, maybe they will call it the 11. the next change will be around the camera. sort of mediocre not major changes, but the important thing is you do not really see any other phone makers doing something great, either. you saw samsung was going to try it with their new phone, but as you know, at $2000, it basically was becoming nonfunctional, pretty much a dud. that shouldn't be concerning for apple. we will see a new design, a new augmented reality focus -- i think 2019 is going to pull people over to the year after. next year is going to be the really big year for apple, i
think. emily: didn't apple just agree to use qualcomm chips? >> they did, but only in a limited way, emily. this has been the relationship between the two companies. apple makes its own processors, the main brain of the phone is still designed by apple. that has been qualcomm's forte, because they are very good at that and 5g is coming, and intel could not get the job done for apple. looks like apple is going to use qualcomm for now, but is going to try to develop their own modems and bring everything to half. emily: i know you will continue to watch the supply teams for us. thank you both. france welcomes mark zuckerberg friday with the threat of sweeping new regulations.
just hours before a meeting between president emmanuel macron and mark zuckerberg, we had the tools from paris. reporter: facebook is not doing enough to prevent hate speech from spreading on social media. mark zuckerberg met with president emmanuel macron on friday. they met exactly one year ago and tried to come up with some kind of regulation. for seven months, french regulators were allowed into the face of offices in paris, dublin, and barcelona to observe facebook's extremist, sexist, and homophobic content online. french experts or not convinced and say that new legislation needs to be put in place.
something similar they say to the banking system, one measure could force social media to delete unlawful content within 24 hours or face heavy fines. the french president wants to take the lead in what he calls the tech for good initiative, something he says could empower other countries in europe and the rest of the world. this comes at a very critical time just two weeks before the european elections, which have been the target of a series of fake news. it is, of course, another critical time for facebook, as well, just one day after the facebook co-founder called for the break-up of facebook and said mark zuckerberg's drive for growth sacrificed security for clicks. bloomberg news, paris. emily: still ahead, our ipo
♪ emily: returning now to uber coverage, i am with the president of the new york stock exchange. i asked her what she thinks. >> i think it is important to recognize that while today is the first day for uber as a public company, they are in it for the long haul. we will see how investor demand sets up for the years to come. emily: you said in it for the long haul leading up to this. how long has your relationship with uber been? what went into developing that relationship and this idea? >> our team has had a long-standing relationship with uber. i have been involved with uber
for the past year since i stepped into this role. we work together to figure out how can we help them be the most successful public company out there. emily: tell us what goes into this. >> the first thing that goes into this is one of a time to achieve in the public offering and understanding their goals, being able to leverage our tools to make them more successful. that is part of the process, and understanding what they need and working with them to delivering a day that showcases them in a way that is the maximum visibility. emily: lyft had a rocky opening, the stock down, down below the ipo price, the private valuation, how much have you been watching what happened with lyft to figure out how to run the day?
>> every company is unique. each company is going to have their own experience in the public market with their own investor base and teams that are working on that project. religious focus on how we can help them. i think if you look at -- really just focus on how we can help them. you heard of uber, but they had just started 10 years ago. and so, this is a long game. they completely revolutionized mobility. to have really built a platform. we are excited to see how that platform will be put to use. emily: you have had some of the biggest ipo's this year, pinterest or example, how does that affect companies' readiness or willingness to lyft? >> we saw a lot of companies starting to get ready to become public because they wanted to make sure that when the time was right for them, they were ready. we saw that happening throughout the first quarter even despite the government shutdown.
a lot of work went into getting that process ready. now we have seen a lot of companies come to the public market. pinterest, uber today, levi's. -- what they are seeing is, we are going to have that first opening trade on the exchange. the process is overseen here in the nyse. the offering process last year --
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