tv Bloomberg Technology Bloomberg August 12, 2019 5:00pm-6:00pm EDT
but, is it spreading to a robust tech startup scene? icahn weilds influence. what he has agreed to. our top story. the theme of big tech is hitting the public market. wework is planning to make public its perspex this for -- ipo thiss for an week. it said in april it had filed paperwork confidentially. by two guests. then, as we await
prospectus, what are the key bullet points you are looking for? ellen: everyone will be looking to see the financial performance of wework. unprofitable. it is a company that spends a lot of money to grow very quickly. i think people are concerned that the business model can't stand a downturn. taylor: we talk about -- ellen talks about the financials behind this company. what do you make of the valuations here? ellen is spot on, people will be looking through it to get the numbers and figure out the evaluation.
oft valuation is based off intbank's investment back january. it is hard for me to emphatically say that is a high valuation, but it feels high. i think real estate investors scrutinizing of any kind of high-profile and high valuation ipo. what point do you want to start to see some profitability from this company> ? barry: it is understandable that if you have a company that is growing, you want to give them that time to create the market share they want to create. at the same time, there has to be a limit of how much you can canin the red for investors
see some profit. i would hope that, within the next 12-18 months, i would start to see some profitability. thing that really stood out to me, top line is about $1.8 but bottom line, they are losing about $1.9 billion. at what point are investors getting excited about topline growth versus being nervous about how much they are losing on the bottom line? ellen: i think that is the major divide. some people will look at it and say, this company has incredible growth. commercial real estate, one of the biggest financial opportunities in the world. others will look at their spending and say, i'm not sure
this is sustainable. certainly, it's growth is essential to the value of the company. it is so valuable and so much different to what other companies and providers might be able to provide. are their biggest competitors? ellen: other companies are trying to follow. as convene,ch industrious, they are really can forward to an -- really looking forward to an ipo. i think the biggest competitor enterprises,arge in-house. if your amazon or google, you look for places for your company
to expand. taylor: we were talking a little commercialhat on the break. you analyze real estate companies. is this a real estate story more than a tech story? barry: we believe it leans more towards the real estate story because their fundamental is they lease office space. there is a large technology component that is very unique. regis is in that space. they don't bring quite the technology that wework brings. most of their spaces are fairly well leased, and very positive comments. their tenantrd of companies,tune 500
who use it when they enter a new marketplace, especially internationally. taylor: we've been also looking ipos, uber, tech lyft. how much of an impact do you think the marketplaces on this given the volatility we've seen and the fundamentals you are highlighting. at what point is this shaky given how volatile the market is? barry: you are spot on. this is not the market that uber came public in. given the performance of uber, not living up to expectations, investors will be really scrutinizing big, high-profile ipos and their valuation. taylor: when we talk about some of the business models here, in
terms of runway for growth, is this a u.s. story? expandingy have been overseas, especially in asia. i think they will be putting forth a strong international growth story. looking at the founder or ceo letter, try to get a better sense from management how they want to spin their story for investor. look how much growth opportunity we have. this is something you want to be a part of. taylor: thank you. huet,oxford and ellen thank you for joining me. roku. up, a rally for rise as much as 6%.
we are joined by mark mahaney from san francisco. thank you for joining me. i think my first consensus, reading all the analyst notes, everyone seems pretty bullish on the stock. where do you stand? mark: this was a strong by -- strong buy for us earlier this year. we downgraded it. given that the stock has moved up an additional 30% since the downgrade, it was premature or wrong. it is a major beneficiary of the upcoming streaming wars. it is a partner with disney for the upcoming disney plus service. fragmentation of viewing away doesnetflix, anything that that is a win for roku. play to expand
into other markets. are definitely within this company's sails.. here becauseyers of valuation. always invited back. we won't call you wrong, we will just call you early. talk about the valuation. there have been concerns, eight 30% run alone in the last eight days. fromis the concern aside valuations on the fundamental level of this company? mark: we think most of that move has been very well warranted. times isnow if 13
rational and 12 times is perfect. the fundamentals are about the best you can buy. growth forer-year the platform revenue with about 70% gross margins. that is very rare air. this company is a little bit on the smaller side, so that helps. on the device side, there is competition from amazon and google. there are a lot of these internet advertising behemoths. the june quarter has been a phenomenal quarter. every platform including roku showed accelerating and revenue growth. there is something going on. i have theories as to what it is. willme point, the business run into the fact that it is
competing for ad dollars with the google and facebook's of the world. taylor: in my terminal, i have a really interesting chart showing roku versus netflix. you talked about some of the competitors. apple, amazon. some of these things could become competitors year to date. ?oes roku have any competitors if you are an unowned content provider, there is nowhere to go except release it on roku. mark: there certainly are some competitors but they are clearly in the captain's seat. supported streaming platform, they are kind of a switzerland in that world.
now they already leading -- now they are the leading tv streaming form. they have surpassed samsung in terms of -- not their brand, but the number of dvds that have their streaming operating system embedded in there. they have really well positioned themselves over the years. to roku.off taylor: he also cover netflix. 12 months from now, he you will have -- from now, you will have a lot of competitors. what is the cost to netflix, spending on new content, keeping up with slowing subscriber growth? mark: i think you just mentioned it, all of these new launches. november 12, we have disney
plus. apple streaming services, at&t, comcast. pringles i can tell, is going to launch a streaming service. the concern near-term is that the launch of all these services will steal away growth. one of the reasons netflix missed its numbers is because of a price increase. that is all the debate around netflix. the fang stocks. i would argue netflix is the most contrarian long ball here, which is one of the reasons we like it i think, in the back half of the year, the content coming out of netflix is so strong and my guess is that will
translate and i think the shares will be materially higher at the end of the year than they are now. taylor: one thing you mentioned was pricing power. i can join who for five dollars $5.99.ed hulu for when are we going to see these services pricing for five dollars? a month or so? mark: i don't think we will. this is a very expensive business. you are competing against netflix, which is spending well year,of $10 billion a they are still not cash flow positive. it tells you that this is a business where scale matters, so whoever has the most subscribers
can advertise commerce cost. if netflix can't make this work, nobody else can. i think that five dollar offer will be few and far between. i think it is a scale game. whether there are slowdowns, that may be the case. after that, i don't think you will have 10 streaming companies that went or five streaming companies that win. my bet is you will have three. it will come back and seller content to amazon, maybe disney, and netflix. taylor: bold calls. thank you so much. coming up, with more of your personal data online, identity theft is on the rise. what needs to change.
years it tookg him to get his good name and credit rating back after identity theft. and hisated the ordeal ofay is in the new edition bloomberg businessweek. walk me through what happened. ordeal i went through in 2013 went i got a call from a police department in florida, asking me if i had ever lived in florida. i was living i believe in brooklyn at the time. what happened, a person used a
fake id with my name and information on it, they had gone bank to bank in florida opening up accounts. they then sold an rv in texas and wired the money to russia. thati didn't realize was this was going to have ripples throughout my life for years to come. it would destroy my credit rating entirely, make it impossible to get a new loan, credit card, it put me on a list with the national security apparatus. it took me years of dealing with financial institutions to try and get this cleaned up. it is very frustrating. it should be very scary for anybody who is at risk for this. taylor: you are a health care
reporter but you are now well-versed in cybersecurity and credit card companies, fact checking companies. why aren't we seeing more companies double authenticating like on gmail. why aren't we seeing more of that? abouti want you to think how easy it is to sign up for a credit card. we make it really easy to get credit. we basically require you to have a name, date of birth, social security number, then you are ready to go. it is harder for me to sign up for my gmail or long gone to owitter -- or log back on t twitter. system tohave a great verify that the financial
transaction actually do represent us in terms of transitioning those things. taylor: when you talk about the equifax heck, what was your experience about not only that but then in your case with some of the online credit monitoring companies. how responsive where they? drew: about as responsive as you would inspect them to be, which is not at all. what is the purpose of a credit ratings agency? it is to say, we want to make sure you are a potential loan holder in good faith. we also want to make sure, if you haven't paid your debt, that others know that. they are there to help out lenders. that also means that, when you
have your identity stolen and it wasn't your fault, they make it really hard to go about undoing that. hack, 147 the equifax million people in this country, almost everybody with a credit profile. we probably don't have enough criminals to keep up with the fast supply of raw material? taylor: -- drew: he took a plea deal right before i was supposed to go to miami and testify. i mostly got my life back. taylor: what a nightmare. that was bloomberg's drew armstrong, fascinating story. coming, the tensions in hong kong are reaching a new level. protesters have shut down the airport. the latest, next. fascinating photos from the
>> this is bloomberg technology. hong kong airport authorities canceled all remaining flights on monday after protester swarmed the building for a fourth day. disruptionst yet. >> hong kong international airport slowly getting back to part, here for the most we've seen protesters have night.it a they've left some of the signage here. this is something we've never before where we saw up to
4000 -- demonstrators packed through the halls. multiple flights canceled on monday evening and afternoon. flights comesome back online and set to take off tuesday morning. there's a hectic one given that like chinaairlines eastern flights to hong kong on tuesday.celed in this interesting latest development the police presence. there were no officers showed up. they left at their own will. bit moreking a little cautious response after another violent weekend where we saw injured. both sides hardening their escalationhis recent here in beijing. also ramping up the rhetoric and that these serious crimes
are committed by protesters. seeing signs of terrorism. all eyes out on the executive she meets with them tuesday morning. >> for more i want to bring if f stone fish and tom jyles. on thefascinating photos ground. what changed for you in terms of investments tech companies on there in hong kong after the last sort of heightened tension in the last 72 hours? >> people in hong kong are really upset at the way that both the hong kong government the beijing government has been responding. can glean what's happening, this is not a short-term story. this is not something where investors can wake up on wednesday and thursday and everything in hong kong is back to normal. oasis of stable investing.
this is a long-term story. don if the protesters disband on their own and the as chaotic ast they've been, it's still going to be a lot. talkm, you heard isaac about how this is going to be a long-term story. that you'veverage been looking at overseas here and back to your reporting in what are local tech companies starting to brace tensions ratchet up? >> they are really looking at this as isaac pointed out. long-term. we thought initially, the signs this beingtially to something that was in regard to a specific piece of legislation that sense been shelved. deeper. this goes much rest ofhing up on the the world shores. this is not something that's there in hongto
kong. this is affecting flights in and out of hong kong. sending aters are signal that they are looking to asrupt hong kong's role as global financial center. china. to they're sending a very strong signal. are the chinese authorities. something that didn't come up the broadcast with the pictures that we're seeing, appearso images of what chineseassing of military over the border. those haven't been verified. of images and video aroundaking their way twitter that are also china sending a signal to the that they mean business and they are not going protestaway and let the continue. >> isaac, you're an investor in company in hong kong,
technology company, do you have to close your money out? start to play out what the political risk, what different scenarios could be moving forward. for so long, really sense the teenman square. what this is showing us and what other tensions we're seeing in china, showing us with muchs --ne million concentration camp. it is possible some of the seen in the middle east over the last decades, could be the new normal for the and hong in china kong. >> tom, we are mindful of the protest in hong kong and also aware there's broader, global waye economic story under
as well between china and u.s. look we turn to asia and at the global trade story. there's september one deadlines are coming on that the president tweeted about with additional tariffs. are thoseh, what additional tariffs has you concern the most? >> anything that's going to -- it's already showing up across the tech sector. this had big shock waves, most recently in all of the companies business with huawei. no longer you can source your components to huawei. there's been this process where caught up.en it affects the chip makers. questions about whether and to what extent tariffs will be slapped on apple's devices. iphones, etcetera. you had foxconn say this is foxconn is the manufacture of a lot of apple products on the
mainland. you had them say, apple can its production outside of mainland china. but that kind of thing does not happen overnight. the tech industry is very concerned about how much further war is going to go, how much it's going to affect will seeow much you their ownbstitute product, smartphones, for example, instead of the apple devices. you're starting to see it show up in apple's results. to see all kinds of changes in terms of do go toe capitalist want to china. you seen a dropoff in interest there in recent months. the ripple effect it's deepen. >> isaac, you heard tom mention smartphones, huawei, where do they stand? >> tom made excellent points. one possibility we have to
consider, in the medium to long-term, this could be good for huawei. this could provide an incentive for them to act in a way that's smarter for their business. it provide themalso with added support domestically. chinese consumers and chinese government decide to make huawei the rise of china and for china's proud global really seeld riehl positive numbers for huawei in terms of purchases and contracts. >> well, story that's not going away. thank you. stone fish and tom giles you. argentina are voicing their anger about the economy at box.t what it all means for the start-up and d.c. community. that's next. far, it has flourished. we'll see what's on tap for next.
>> argentina saw a massive market selloff monday after defeatg primary election for the president. sinked 30% a record low against the dollar. argentina bonds and stocks plunged globally following the results. argentina's tech start-up theme managed to flourish in the face of the economy's financial crises in the last year. prognosis now is for the start of space, giving the continued recession inflation.ing
it's great to have you. so much of your investments have been centered in and around argentina. i have to ask you, what changed for you today? what changes for these technology companies down there ground? >> the reality is we've been operate argentina in the last 20 years. you've seen it all. the dollar and statistics.nflation as start-up priority, you had a deal with all of these things. operating -- reality revenues inl their nothing really change if anything you might be in a better position.
problem is more for the tech ecosystem to go forward basis. venture capitalist will be more hisy of investing over reelection in october. for theterrible news country but these are still the primary and we'll see what happens. >> do we know anything about the potentially new incoming assumingt in october president loses that. policiesew government could be around financial start-uppings in the tech community. do we have details? very sensitive detail. i will be skeptical in promises make. the concern is that she's controlling and pulling the the scenes. behind de-- de factodepac
president. her presidency has been horrible the country creating environment of uncertainty, andting on statistics inflation. regardless of reassurances have trying to make to the public market. i'd be skeptical in their claims their past history. >> fabrice, do i have any more certainty that if i invest in ground,any there on the i can get my money out? past, current -- in the you always had ways to deal with that. you can structure around how the where theare owned or parent company is. theyot too concerned if preintroduce capital control, out.an get money the issue is, will any one want to buy a company that is argentine, will prospects be
there. in general, economic environment is negative. if a company fails you can sell it. >> wonderful, we'll continue to follow this. cofounder fabrice grinda joining us from argentina. the story i continue to watch. icahn.l about carl he disclosed his position in the enterprise earlier in month. arguing that it was undervalue. icahn has been building his andtion slowly since roughly about 18.4% of the company as of last week. now to discuss lee baker. give me the low down what is win today? >> this is a quick fight with carl icahn.
this one is relatively quickly. he built up a position now owns under 20% of the company. in this agreement, he cannot go than 20% and two of his associates will get a seat on the board. expanded byll be two directors. >> what does he say? carl icahn say it's undervalued. the company maybe get little nervous. them out.o hear what's the under value to him? >> because the fight happened so quickly, we never heard from carl what the billing plan was. did say on tv, he thought the hoarded work. almostcks has been down 50% in the past year. he was little critical but nothing as bad as he said about oxtenth. >> some of the analysis saying,
futureompany has been for the company could be one of acquisition. muchanalyst saying this cloudera.ibm to look carl icahn's directors will serve on the m&a committee for the company. formed already. the press release today did say cloudera is working with morgan stanley on the announcement. they do have a banker. say whether it's a target. it is of that size, software companies that do get taken out by bigger companies. small value. were the other investors.
who is else is behind this company? >> a czech investor saying he icahn.s carl i never heard of him. of cloudera investorinvestors are frustrate. >> especially for cloud competing company. we hear about how good the cloud is. any other exit strategies. let's say ibm investing. >> cloudera has all the buzz words. from what i understand talking experts, the focus that they it's been commoditized. they were forced combine with competitor.t we'll see what the future holds for them. they have new products coming out. >> we'll keep an eye on those products. thank you so much. thank you for joining me. up, peter kiel is at odds
>> conservative peter kiel is never shy about throwing his weight behind the trump administration. on sunday he found a topic about the u.s. government. >> do you encrypt everything? >> i get the informationing that people get it. >> i don't trust the fbi to keep fbi. the >> top attorney general william barr last month on the very same topic. suggesting it is well
pastime that some in the tech a technical solution is not worth exploring, their comfortable talent to developing products that will reconcile cybersecurity to public safety and national security. >> let's go to washington and bloomberg's ben brody for more. complicated story. i'm here you're here to break it down. us what peter thiel is toking about when it relates encryption. >> thiel saying if you have messages that are only visible to send to recipient, if you start putting in backdoors into so that law enforcement can get into those with a warrant, maybe just to do a going to imperil privacy. it's going to make bad actors through those backdoors. whether that's identity thieves or people like that. he's saying, i want strong
encryption. taking the privacy line here. i want to push back on the thing that the trump administration is doing. should say is a long-standing tension between tech companies goinge u.s. government back into the obama administration. >> what are tech companies saying? i imagine companies like facebook are pushing back pretty hard. are they claiming. rights? how much are they pushing back? >> this is this has been a simmering tension. something they have been talking to about enforcers. here -- fbi is looking to do more social media monitoring. that's a public post. it's not an encryption. it's the same kind of pressure
these companies are under to be basically part of the solution it comes to crimes that are happening that the federal government is investigating. dangers letting the u.s. government have sort of backdoor in? the threat of bad actors a real issue? bad actors doof seem to be a real issue at least tech company.he get intothey've will their -- there are lot of actors.cated bad many of them with government oneort to get into people's on one communication. i do think there is a tension is can itthe question be resolved while making both sides happy. can't. it probably there maybe compromises that can
be made around the edges. >> what i like about this story, it centers around the character that we know. which is peter thiel who is trump missionthe and sometimes according to the trump administration, has said the big tech is more less leaning. where does this put peter thiel trump? big tech and >> he has been sort of fanning these flames particularly on google. say that peterto thiel is a board member of facebook. he's notomes to tech t going to go against the company that he was an early investor in helps to lead. he goes against google for their ambition in china. called for the u.s. government and fbi to be probing those things as well as developments of artificial intelligence. he's doubling down on that. talked about the tension between big tech and center mcconnell last week. said, conservatives never believed the tech companies because the tech companies as filled with these filled
liberal employees. ishink what's important here that peter thiel has the president's ear. he advises donald trump on technology issues. he regularly speaks to him. hold kinds of issues can weight. it's a view that the president, which a the white house will seriously. >> thank you. that was bloomberg ben brody from washington. for joining us. that does it for this edition of technology." "bloomberg technology" is live streaming on twitter. us out.check be sure to follow our global network at tictoc on twitter. this is bloomberg. ♪ from the couldn't be prouders
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