that ibm investment has been one of berkshire's worst investments. buffett bought it at a high point for the stock, and since then, ibm has basically turned in quarter after quarter after quarter of revenue declines. the stock price, as you said, is down about 20% from the point buffett disclosed his investment. he has made one not very good investment. let's hope that todd and ted make a better deal with apple. emily: buffett has made many great investments and a few not great ones. the question is, is apple the next candor morgan or 21st century foxy? noah: it certainly seems like it is more in that range. you know, maybe it does well. the one thing we can say about ted and todd is they have similar long-term horizons like buffett does. they are going to be less interested in apple's next quarter results then they will be in where apple is a couple years from now. one theme i heard repeatedly from investors i spoke with today is that they are likely going to let some of these bets that apple has beyond self driving cars or other things they have in

david: the deviled with ibm for a while. ellen: he finally did invest in ibm. mostly he stayed away from tech. this looks like it's an exception. what we say is it is a really. if you look at yahoo! in certain ways, it's really a media company. carol: and he likes media properties. david: and he is the savior of some newspapers not long ago. stan gilbert. a lot of bids for this company. anybody gaming out how likely he is to go get it? ellen: he is against verizon so you don't know. buffett is a next project getting in there and figure out ways where he can profit because of the size of the d can muster. he has a lot of money to put the work. david: cover story this week, so much about the price of pharmaceuticals. you look at charities that help people pay for co-pays and how a lot of pharmaceuticals are working with them. ellen: drug prices having going up for a while. there are charities that been developed that can help people who can't swing the cost of these rising drug prices who use co-pays. what happened is that the charity pays the co-pay, and with a

emily: you do not see them -- apple and ibm as a competitor? meg: ibm, yes, in many cases. apple a little bit different. apple is more about the devices in the enterprise, and they would very much like to go into the enterprise, and we obviously need to defend. more on the hp inc. side, but we need to defend. let me give you the perfect example. as you migrate -- say you are a cio. as you migrate infrastructure into the next generation that will be required for you to be cheaper and faster and more nimble, the ability to write applications in a new environment, cloud dative and mobile, it is going to be important for you to have orchestration, monitoring software. everything has to be automated today. and so we have those kinds of opportunities in our software portfolio. so we play in quite specific areas of software that is a little different than, you know, erp systems, like an oracle or s.a.p. or salesforce. this is not really our market. emily: what about the cloud? what is the hp strategy when it comes to the public cloud? are you going to be a cloud, or sell to the cl

from my days at ibm, we never seem to be running fast snap. that is always the case with an established enterprise. while you believe you are moving fast, you are not moving as fast as the start of who wants to eat your lunch. emily: how aggressive would you want to see the company be in terms of monetizing the cloud, which seems to be the future? john: it's not common to have something of that size and scale in triple digits, but it could grow it twice that rate. it's possible, given there seems to be a titanic shift going on in the industry were everyone is moving to the cloud. so why should we not capture more of that? if we invested more, how much more would our revenue growth be? that is a topic of discussion we are always going to have. are we moving fast enough to take advantage of this incredible opportunity that's ahead of us. emily: how do you see the cloud war playing out? >> if you look at history, what you see is that in a category typically there are two or three leaders in that category. theind ourselves in interesting and lofty

older companies like ibm, if you will, has done a terrific job of raising the issue and trying to do something about it. it ultimately comes down to the numbers, not the words. numbers do not necessarily support the words right now. i was quite shocked when i came to the valley in 1999 when everyone was so enamored with the fact that i was the highest-ranking african-american in the valley. i was like, what is the big deal? i now recognize it is a big deal. we need to do a better job of diversity and inclusion, and i think companies like microsoft, google are working hard at it, but they have to double down a triple down to make real progress. emily: that was john thompson, microsoft chairman and investor. coming up, the company that reimagined the vacuum cleaner is after your hairdryer. how this appliance has been reimagined. for more of our best interviews, check out our podcast. subscribe on itunes and sound cloud. coming up monday, we will talk to twitter cofounder and makers of hbo's silicon valley about the changing world of social media. ♪ emily: dyson, the pioneering britis

from my days at ibm, we never seem to be moving fast enough. and i think that is the case when you are established. while you believe you are moving fast, in fact, you are not moving as fast as a startup. emily: how aggressive would you want to see the company being in monetizing the cloud, which seems to be the future? john: business as triple digit growth, and it is not common to have something that size still growing at triple digits. but could it grow twice that rate? it is possible. given that there seems to be a titanic, tectonic shift going on in the industry, where everyone is moving to the cloud, why shouldn't we capture more of that? should we invest more of that? if we invest more, how much more would revenue growth be? that's a possibility we will always have. re: moving fast enough to take advantage of the incredible front of us?n emily: how do you see the cloud wars playing out? history, whatat you see in a category is that there are two or three lite eaders in the category. we find ourselves in the lofty position of being of the

he finally did invest in ibm. mostly he stayed away from tech. this looks like it's an exception only we say it's not really because you can look at yahoo! in certain ways and it's really a media company. carol: and he likes media. >> he feels he understands media. david: he is teaming up with dan gilbert. a lot of bids for this company. how likely is it they will get this? >> they are up against verizon. warren buffett is an expert at getting in there and figuring out ways where he can profit because of the size of the capital he can muster. he has a lot of money to put to work. david: the cover story this week -- you look at charities and their co-pays and how pharmaceutical companies are working. >> drug prices have been going up for a while and there are charities that have been developed that will help people who cannot swing the cost of these drug prices with copilot -- co-pays. co-pay and pays the with a lot of these patients, if thee pays the rest drug companies give people the drugs, that's it. if they donate to these charities, they mor

ibm is a big investment. betty: he is friends with bill gates and everyone at microsoft. reporter: that is true. this is a guy that set out the.com run in the 1990's. really, that was a surprise from that standpoint. but some investors i spoke with this morning were really talking about how apple is a consumer products company. and on the other hand, this could have been an investment initiated by one of buffett deputy investment managers, the two guys, one is todd, the other is tim. they have been at berkshire a couple of years. they do not talk in public as much. we are not as sure about buffett, what they like and dislike. i am using the hgf function on apple. in acan show holders certain stock. i am certain you are familiar with it. if i look at berkshire's holdings and apple historically, this is a much bigger holding, 9.8 million shares. historically they have earned some apple, selling in and out of it. is that just for trading purposes, or have they been sniffing around for a while? no, i am not familiar with that data, but that could be in perhaps some pension fu

ibm has infrastructure outsourcing. you have a $900 billion market for i.t. services, and ibm only has about $50 billion in revenue. it's less than 6% of market share. the rest is scattered through hundreds of vendors out there. alix: because of that, you aren't anticipating regulatory issues? >> it's too small, 6% of the total market. it should not spark any problems. scarlet: nevertheless, watch this space. thank you so much. it is time now for the bloomberg business flash, a look at some of the biggest business stories. ogle's self driving car project is headed for the motor city. the company is opening a self driving car center in detroit. google says having a facility in michigan will help them access top talent. regulators say they freeze the lender from restrictions last year. the u.s. accused wells fargo of not fixing problems fast enough. scarlet: lufthansa is struggling to find workers to fill hundreds of flight attendant jobs. low wages and years of labor conflict are complicating the airline's recruiting. but times a wants to hire 1400 cabin and c

and in new york, ibm researchers have developed watson, an intelligent software system at the forefront of this revolution. >> it can understand somebody's personality type. it can look at e-mail and tell you what is the tone of the e-mail, you know what kind of , messages are coming through. if you want to read them or not. they can look at, for example a , big encyclopedia, extract the concepts among those concepts. narrator: watson operates in the world of big data extracting , knowledge from the billions of facts and figures from inside cyberspace. >> i look at the world from the point of view of the amount of data that there is and the amount of knowledge that is embedded or inside the data that we are not able to extract today. therefore we are not able to make the right decisions. so for the industrial revolution to me the ability to , have a much better understanding of the world through all of the data, making and therefore making better decisions for it. narrator: ibm is currently running a research project in which watson augments the intelligence of medical professionals, he

ibm makes toasters. google at some point will look like they make toasters. vonnie: do you even look at their charts? jeff: absolutely. but the difference between what tom wants to talk about and what he does not want to talk about arehe ones that look great under pressure, but most of the technology names are vulnerable. tom: jeff degraaf and carl weinberg. tomorrow, we synthesize across economics, finance, investment. our guest will join us with a distinctive emerging-market view with dell tech. upures of three, dow futures 24. this is "bloomberg surveillance." ♪ tom: good morning, everyone. "bloomberg surveillance." economics.t week for jobs day. here is funny quinn. chrysler's ceo is about to take more responsibilities on. he is about and be named ceo of ferrari. entrepreneur claims he is the creator of bitcoin. that is according to the bbc. the network says craig wright provided technical proof to back up his claim. he kept quite in december when two magazines said he was likely bitcoin's creator. it is the first day on the job for the ceo of delta air

microsoft beat ibm, google beat microsoft, facebook is beating google in mobile. john: mark is using market cap. he used 10% of his market cap to buy whatsapp. he is really aggressively using the asset that he has, market capitalization, to find the next wave and make sure he is there. david: and in most of those examples, eventually complacency snuck in. mark is the least complacent guy you're going to meet. emily: chamath palihapitiya, social capital partnership, early facebook employee, just said he thinks the facebook killer is going to be built in two or three years. it's going to happen. john: i do not think that is right. you really need a new platform to emerge. it is not obvious to me what the platform is. we are still relively early on mobile. what is possible is that we are starting to finally internalize what it means to have a tiny supercomputer connected to the global internet in our pockets all the time. all the time. or strapped to your wrist or whatever. it is not vr, ar that will suddenly disrupt the market. something that looks like a toy for a

my dad had just taken this -- this big thing out of a box, and it was an ibm pc junior. my parents have pictures of me -- i was not very tall, so i had to sit in a chair and reach up and over to get the keyboard, and my parents have pictures of me trying to mash the keys. and so i think i was mesmerized from an early age by this glowing screen. my dad showed me how to write my first lines of code when i was really little. emily: he was an engineer. drew: he was an engineer. emily: and your mom kind of resisted this, right? drew: i think she was sort of puzzled. she was like, aren't kids supposed to be playing with legos and going outside? and they -- and they definitely urged me to -- or made sure that my siblings and i had that kind of balance. emily: so you went on to m.i.t. tell me about this founding story, the line of code that was written on a bus. drew: i was on a trip to new york and i forgot my thumb drive. this was in the days before the iphone. so this was in the era where you really didn't have anything to do. right? god, i hate myself. i keep doing this. i a

the steak was already at about a percent of ibm's share, they were the top shareholder in the company. the share has not yet changed too much in that. moves that other berkshire is making this moving -- this morning, we are seeing some decreases for berkshire hathaway in walmart. at&t, in which berkshire was a fairly significant holder, that state is being eliminated entirely. that is notable, as well. there is the situation with yahoo! that we have been talking about this morning trade there is news that redshirt is backing a group led by 10 gilbert of quicken loads -- dan gilbert of quicken loans. there are about 10 bidders in the running for yahoo!. 4-8ial bids range from million dollars. it is interesting that berkshire would be identifying -- appling in technology in that way as well. it has been a long-running situation with yahoo!. we will find out eventually who will be the winner in that process. >> joining us to talk about the wider markets is jonathan. it as a, you spoke of weapon will market. >> we know it started with energy and materials in the late 2014. we saw it moved

and then you see our relationship with the corporate verizon,like fidelity, microsoft, ibm, cisco, we have g cominginto town -- ge into town. we have access to doctors and health care, investors. we are a nonprofit support foundation. and you can have those companies work with mass challenge? is right. we have had those companies come through and that is one of the vintages of our model grid we don't complicate that process. we are not trying to take a slice of that pie. we just want them to be successful. emily: mass challenge is actually home to more than 40 startups. i'm wondering what is the accelerator seem like here? >> look, i think that was ,issing was tech investors incubators when we started smart capital. that part of the ecosystem was not that vibrant. -- for us andrful this ecosystem. emily: what are the most underrated boston startups? john: there are so many. it is hard to pick. you will see later on the show -- a phenomenal company to invest in. a lot do not make a lot of noise early on. we have a lot of pharmaceuticals that are promising. there's a really novel techno

japan is still closed. .25%.korea down about a double dose of stimulus coming from the ibm. we will check in on a lot of these stocks, which analysts have a flag of the main beneficiaries. cents.dollar, 75 u.s. check out the dollar yen. we are still trading at around these levels. we heard from several fed officials overnight. june is live.ng don't discount it might happen. in chance the fed moves june. a look at oil. at the moment, up 44. on big data point out of asia, the gdp print coming out of indonesia. expecting scores there over 5%. rough estimate from analysts. it usually comes out in the afternoon. will help sway some of the negative sentiment at the moment. it is really consolidation so far is what we have seen across markets so far this week. angie: thank you. the australian government has kicked off the campaign for an expected july 2 election with a double shot of stimulus. the treasurer delivered a budget focused on jobs and growth after the rba head cut rates for the first time in a year. paul allen standing by with the story. : getting this under control goal

if you look across world hardware, you see what is happening to ibm and the oracle sun hardware business. they declined in europe. the oil and that really uses them is cisco. oliver: you talked about the team and their contingency plan. reporter: they really thought they would win this one. even though it was the same judge from the last trial. alix: thank you very much. cory johnson from bloomberg. scarlet: charts you cannot miss on the u.s. economy. ♪ alix: three charts you cannot miss on the u.s. economy. matt vogler joins us now. you are looking at financial conditions. the third is the fed hike telegraphing that financial conditions will tighten and hurt the fed, but you are not seeing it? matt: if you look at important financial expressions that cause a lot of tightening a few months ago, you can kind of see that in this chart, equity volatility, treasury market liquidity, and then you also have the probability of deflation implied by markets and investment-grade credit threat. this shows the biggest tightening essentially in at least four years. scarlet: and it goes up. matt: ex

>> some of the more established companies have clearly done a better job, older companies like ibm and companies like intel have done a terrific job of at least raising the issue and trying to do something about it. it ultimately comes down to the numbers, not the words. numbers do not necessarily support the words right now. i was quite shocked when i came to the valley in 1999 when everyone was so enamored with the fact that i was the highest ranking african-american in the valley and i said what the big deal. i now recognize that it is a big deal. we need to do a better job of diversity and inclusion. i think companies like microsoft and google are working hard at they've got to double down or triple down if they want to make real progress. emily: that was john thompson, microsoft chairman and investor. coming up, the company that reimagined the vacuum cleaner is after your hairdryer. for more of our best interviews, 1.0heck out our studio podcast. pioneeringn, the vacuum company is the middle of a transformation and wants to re-do the way we think about appliances. now they are up

emily: of course, they took a stake in ibm in 2011. they have increased that to about $20 billion, only increased about 1%. not really the greatest investment for warren buffett. this investment in apple was made by one of his two investment managers. we don't know who. buffett says they did not consult with him about the investment. it has lost money already. apple could be at a low right now on his way back up. that is what many analysts have said. it is interesting because, as you said, warren buffett has to do we not taking investment in technology. he says he does not really understand it, but apple is not your average tech company. another story we are watching is a potentially backing dan gilbert, the founder of quicken loans, his bid for yahoo!. buffett says he is not taking a stake in yahoo! but would provide financing for gilbert yahoo!'s core media assets, which is a potentially more interesting development, given the way the yahoo! story has played out. david: he has been getting into more media. seems like fertile ground a

oracle and ibm are not doing it as well and outgoing that space. they have a number of brand-new releases server-side, i brand-new launch of their database which i think will help them in the application portfolio, they have a whole suite of new apps they focus on. analytics, communications -- there are different ways they are going down that we think again are more back to the core of microsoft was, which was coming true enterprise software company. yes, do they care about the consumer? if they do? but they understand what they are good at and they are going back to their core, in my opinion, from wall street's view, is a good thing. they don't want to accept the operating margin decline they have seen. we are starting to see the operating margin stabilize and improve slowly on the operating margin line. we think, this will be a multiyear shift, this hybrid cloud. last quarter was one of the last quarter they had in years. you will see the weight of the perpetual cloud and they are pulling along a big business. we think they are architecting the r

oracle and ibm are not doing that quite as well, they are outgrowing that space. they have a number of brand-new releases server-side, a brand-new launch of their database which i think will help them in the application portfolio, they have a whole suite of new apps they focus on. analytics, communications, there are different ways that they are going down that we think are more back to the core of what microsoft was, which was a true enterprise software company. yes, do they care about the consumer, they do. but they understand what they are good at and they are going back to their core, in my opinion, from wall street's view, is a good thing. they do not want to accept the decline that they have seen. we are starting to see the operating margin stabilize and improve slowly on the operating margin line. we think, this will be a multiyear shift, this hybrid cloud, last quarter was one of the last -- worst quarters they have had. he will see the weight of the perpetual cloud and they are pulling along a big business. we think they are architecting the right future,

it is pricing like ibm in 1990. [laughter] >> there is a lot of concern about whether this new product is going to be able to deliver growth in the fourth quarter. there is also may be some flagging hope about what new products a credit now to return the company to growth. last night, you saw this $1 billion investment in china. you wonder whether that is to get better access into china or indication of their long rumored interest of a car. it seems kind of like a random time to all of a sudden spend $1 billion. over the past year, they spend less than $400 million on acquisitions. we do believe they are going to return to growth. amanda: there is some new product, some new thing around the corner we have not seen yet. >> it is the fact that this is the most important product of your life and a lot of customers already have an ios phone and the upgrade rate in the fourth quarter should deliver some level of growth. we have modeled this out for the or major operators in the u.s., brazil, and china. we can believe the

and in new york, ibm researchers have developed watson, an intelligent software system at the forefront of this revolution. >> it can understand somebody's personality type. it can look at e-mail and tell you what is the tone of the e-mail, you know, what kind of messages are coming through. whether you intended them were not. if you want to read them or not. they can look at, for example, a big encyclopedia, extract the concepts among those concepts. narrator: watson operates in the world of big data, extracting knowledge from the billions of facts and figures from inside cyberspace. >> i look at the world from the point of view of the amount of data that there is and the amount of knowledge that is embedded or inside the data that we are not able to extract today. therefore we are not able to make the right decisions. so for the industrial revolution to me is the ability to have a much better understanding of the world through all of the data, and therefore making better decisions for it. narrator: ibm is currently running a research project in which watson augments the intelligence o

switch to services is a decadeson made famous ago by ibm, the company that steve jobs loved to hate. alix: much more coming up on apple. what the latest results from key suppliers are predicting about the future. ♪ scarlet: let's head over now to abigail doolittle live at the nasdaq, taking a closer look at apple shares. abigail: today, we have shares of apple trading demo slated one of the top -- trading down slightly. feweris attracting first-time smartphone buyers good one analyst believes the by 14% inll grow 2017. but there are two currents left in the current fiscal year. things could just get worse for apple before they get better. alix: the last time i looked at the chart, you said shares were holding the support line. abigail: apple is still holding the support but just barely holding, very precarious. investors do see compelling value at those levels, but they appeared to be growing tired or losing resolved as the current lows are slyly below the lows in january and february, telling us there could be some bearish action ahead for apple. scarlet: thanks so much. there is

intelligence analyst says he thinks it is the macro weakness in technology overall, citing oracle, ibm, and engine among others. he sees microsoft as a top pick for the long term, but relative to the near term, he would like to see the stock really consolidate before putting new money into the shares. alix: thanks so much, abigail, for joining us from the nasdaq. doeset: coming up, what the plo environment look like? ♪ show me top new artist. ah, ha ha. show me top male artist. my whole belieber fan group. it's not a competition, but if it was i won. xfinity x1 lets you access the greatest library of billboard music awards moments, simply by using your voice. the billboard music awards, live sunday may 22nd, 8/5 pacific, only on abc. scarlet: live from bloomberg world headquarters in new york, i'm scarlet fu. this is "bloomberg markets." mark crumpton has more from our news desk. mark: the white house says it is too early to say what caused today's egypt air crash, but eb -- agent aviation minister says it was more likely caused by a terror attack than a technical problem. the plane

oracle and ibm are not doing that quite as well, they are outgrowing that space. they have a number of brand-new releases server-side, a brand-new launch of their database which i think will help them in the application portfolio, they have a whole suite of new apps they focus on. analytics, communications, there are different ways that they are going down that we think are more back to the core of what microsoft was, which was a true enterprise software company. yes, do they care about the consumer, they do. but they understand what they are good at and they are going back to their core, in my opinion, from wall street's view, is a good thing. they do not want to accept the decline that they have seen. we are starting to see the operating margin stabilize and improve slowly on the operating margin line. we think, this will be a multiyear shift, this hybrid cloud, last quarter was one of the last -- worst quarters they have had. he will see the weight of the perpetual cloud and they are pulling along a big business. we think they are architecting the right future,