tv Bloomberg West Bloomberg April 17, 2014 6:00pm-7:01pm EDT
>> live from pier three in san francisco, welcome to bloomberg west. i am emily chang. facebook wants to help you find and connect with friends when they are nearby. will the move helped the company make more revenue? waiting into the ipo market, despite the recent -- recent tech selloff. i will speak to the chairman of what many call the twitter of china.
a $20 million loss in the first quarter after posting profits the past two quarters, but sales did rise 28% due to strong revenues from the company's videogame console business. use the chips.ne netflix and vodafone are talking about giving vodafone subscribers access to netflix movies and tv shows. the netflix content would be free for a time, according to people familiar with those matters. contentdy has similar deals with spotify. edward snowden has made an appearance on russian tv. for my video link, he asked intercept, russia store, or analyze the can -- communications of individuals?
russia answered that cannot afford such surveillance. now to our lead story of the day. facebook has added a new feature called nearby friends. it will let mobile users know when their facebook friends are physically nearby with messages on their smart phone. the tool is optional and will be available in the coming weeks. facebook has been making a big push into location sharing. it added check-in ability similar to foursquare. sarah covers facebook for bloomberg news. is this opt in or opt out? do all my friends know where i am right now? >> it is opt in. turn on, turn off, customized to certain groups of friends and set the times you can have those friends around you. you can manage how much you want to be stocked. kenexa money said this is the
first significant product feature they have added to the product in a long time. would you say that? >> facebook has been trying to play down some of the significant product features it has been launching. we have heard about creative labs and facebook paper. this has all been sort of branding. this was launched sort of quietly. creative labs is a way of saying some of the things we are experiencing -- experiment with might not work out. an interesting quote saying facebook is far and away the best site for sharing photos with friends, but pretending the acquaintances we have accumulated during life is our friends is an outdated way to think that social networking. in foursquare ceo weighed saying he is not concerned because of that, because facebook isn't a real friend. >> foursquare has had some trouble remaining popular.
their user growth is pretty flat. they finally figured out their business models and maybe dennis crowley feels that he has some weight now by which to say if are going to survive this facebook push. >> i wonder about the idea of how many people really want everybody to know where they are. sara, thanks so much. eibo is known as the twitter of china and now it is a publicly traded company here in the united states. up next we talk to the chairman about the company's wall street debut.
spoke with the chairman of weibo in the chairman and ceo about going public during such a volatile stock market. >> i think it has the intense market aspect for the entire u.s. market. we are lucky that we can price today and have very good trading results and am very happy about that. selloff,ntioned the why go public now? why not wait a little while? process,e started the it was back in december. at that time, the market was great. we did have some rough times in the last couple of week, but i think the timing is important. i think we are really here for
the long term and we are very confident we can do well and increase shareholder value over the longer term. it really doesn't matter when we are getting here. endou did price at the low of the range. you opened lower than that price at $16.27 a share. why do you think that is, and why do you think you had difficulty selling as many shares as you wanted to? i think it is a bull market. if you think about it, there are a lot of ipos this week and last week. most are actually priced below the range and not being treated very well. on a relative basis, we have been having a great result. i would say that. weiboot of people called the twitter of china. is that a fair comparison? x in some ways we have a lot of similarities in product features and functionality, but actually there are a lot of differences
also. when you have 140 chinese characters, has a lot more meaning than 140 english characters. comment on ale to post and make a comment when they are reposting. multimediae a lot of function attached to it. in a way we are more rich in content and more conversational in user engagement. >> do you consider twitter a competitor? >> not really. we are competing in different markets. i think we are dominant in the chinese language community and twitter has been doing well also in china. there is not too much overlap. the only areas would probably have some competition are in
taiwan and hong kong. for these markets we are doing much better. >> let's talk about that. you're mostly in the chinese language, you do have some english content. in 190 accessed different countries. do you have plans to increase your english or international content? >> i think for now, we do not have a plan to get into the international market in time. weibo is accessed by people in 190 countries recently, and i think that includes chinese living and traveling abroad and also includes unleashed piquing people who connect to the chinese people and the chinese community. we haven't english version mobile app in the apple store and the android store also. if you like it you can download it and try it. it is a very good product. right now we do not intend to get into the international market big time, but in the future we may consider. >> where you expect to see the
biggest growth of weibo going forward? is it on the chinese mainland or abroad? >> we still have room to expand our market. 140 think about it, we have 4 million active users in the munchak -- in the month of march. 100 mobile -- 100 million mobile phone users on a monthly basis. billionalking about a mobile phone users. there is still a lot of room to grow there. if we can establish a bigger scale in china in terms of social media and the mobile platform, that is enough for us opportunities. >> within the chinese market, who do you view as your biggest competition? tech are these giant titans in china that are sort of trying to do everything.
>> there is a very strong player in the chinese internet market especially in the area of social platforms. dominant in their platform based on communication. sense, weibo is competing with them and other social platforms in terms of time span. a lot of people have both applications on their mobile phone. they use weibo for media demand and the other for private nature of sharing among friends and communication. they are not really directly competitive products. >> you guys have taken a big which ist from alibaba on the road to going public. why take money from alibaba? what do they bring to the table?
resultsu look at the just published, they have been doing great in terms of growth and profitability. allows is not only to get more chances for business opportunity, but more importantly, if you really think connecting to the social mobile platform is of great value -- great value with potential growth. we are trying to do the ecosystem together for mobile social commerce. it is already happening and we see great potential in that area. >> would you consider selling to alibaba out right? structure the current , we do not plan to change that structure. i think that works very well. >> how much would you be willing to increase their share of the
company? yourpeople said that maybe ipo hasn't been as good as you might want it to be because investors are waiting for alibaba and they can get exposure to weibo that way? >> i think different people have different views. there'surrent stage, not much room for other shareholders to increase. i think were not going to change the shareholder too much, but in the future, any change will be ,ood for the shareholder value there is a possibility, but not now. >> you started your career in news. i was a journalist in china. i was there when twitter and facebook were blocked. they are still blocked today.
the chinese government has been cracking down on weibo more than they used to. how do you deal with those issues going forward and make sure that they don't impact weibo's growth? it's probably a misunderstanding on the -- this issue people always talk about, but on the other hand people always see that our platform and other media platforms and internet platforms continue to and very nicely on scale use activities. i think the issue is probably exaggerated by a lot of people here at of china. that have to recognize china is no exception and our comply withs how to the laws and regulations in a
more experienced way we will continue to grow the business. >> there are new leaders. at the top of the communist party and there has been some talk that maybe this administration is more conservative than the last. what do you think? how will they approach censorship issues? >> i am not in a position to comment. all we know is that the business will continue to grow. i do not see any reason that we should not be growing faster than that. >> will facebook and twitter ever be unblocked? >> i do not know. if one day, they get into china, we will welcome their entrance. with most companies, we can grow faster and be better. >> and lastly, your revenue did decline sequentially. what should we be looking for in terms of the revenue picture for next year?
>> if you look at 14, there is a decline in revenues. this is normal. we generate most revenue through advertising. this is a low season. q4 is high season. you have this pattern. they forget their revenue. this is no exception. year-over-year, we look for growth. in terms of total revenue -- i think we can take a look at this. when it comes to the ipo, we will grow more than 200% over last year. we will not continue this pace, but it will be high.
>> our interview with the chairman of weibo. weibo did in the day up after opening below its ipo price at $16.27 a share. tech companies have taken center stage in the income inequality debate. what can they do to actually help the problem, to help the community? that story next on "bloomberg west." ♪
breaks given to tech companies to keep them in the city. they complain at tech companies are not paying their fair share. supporters say that companies like twitter create jobs. willie brown had a cameo in the "godfather" movie, two term mayor, he has stayed active since leaving office. thank you for joining us. where do you fall on the tax breaks that mayor lee has given to these companies? >> i actually orchestrated that tax break that twitter got. i certainly have been supportive of all of the other incentives to get tech companies and others to move to san francisco to create jobs and build the economy of the city. this is the most interesting place in which to live. >> to the protesters have a point? real estate prices have shot up. buses on the way down to silicon valley can be inconvenient.
>> they are completely wrong. if they were engaged in this activity because of race or religious freedoms, point of origin, sexual preference, we would all be outraged and speaking with one voice and condemning them. unfortunately, we are not doing that when we should be. the foundation of what they are doing is essentially the same. we got ours and we want to stay here. >> is there anything that the city can do more? to appease the concerns? is there anything they can do to create affordable housing? >> the city has to continuously work to create the opportunity for everybody to live in san francisco. whether rent control laws or restrictions imposed.
whether enhancing the opportunity of community to deliver people. all those are things that we need to do to make the city interesting. same for making the schools more interesting. simultaneously, you have to make it possible for people to work and earn a living. when you do that, you're in a position where you can talk about expanding the supply, expanding the opportunities. that keeps the competition stable and cost down. >> you say the protesters are wrong. i interviewed tom perkins, who compared these protests to the demonization of jews in nazi germany and the war on the one percent. he called it a war. what do you think of that? >> tom perkins should not have been interviewed. he put a spin on this struggle
that made every aspect of what the tech world is trying to do suspect. the tech world is not unlike the medical world. you have mission bay. that is the biotech world. that is where medical science is making great progress and new people are coming in. all those are things that need to be done. >> what responsibility do companies like twitter have? and companies like google that are not based in san francisco? >> they have the same responsibility that bg&e has. the same that wells fargo or bank of america has -- every aspect that people who produce would have. they need to give back and participate and have their employees live here. they need to pay them a good wage so they can live here. that is what they need to do.
>> look back to "bloomberg west." i am emily chang. disney is on a roll at the box office with films like "captain america" and "frozen." for one of the biggest drivers remained espn. they had investor day today and jon erlichman me now with more from l.a. give us a sense how important espn is to disney. it is like the crown jewel. >> it is. it is amazing. there's a lot to disney, with films, parks, products. when you look at the numbers,
espn and the cable networks really blow everything else away. revenue in 2013, about one third came from the cable group. not just espn, but the cable channels overall. when you look at the operating income, the profitability -- more than 55% of the operating cost is coming from cable, with espn being a large piece. we understand why they host investor day at espn. there are two forms of profit -- advertising and what they are able to charge to the tv providers so that you can be assured you will get espn. those are the huge drivers for the business of espn. >> the president talked about how there is a lot more competition for sports rights. it is driving cost up. what does that mean? >> it means that when there are sports rights available, the cost will be higher.
and a lot of leaks, espn has rights locked up for a long time. they have monday night football for a long time, sunday night baseball. there is a lot of focus on the nba. the rights there will be available in the next couple of years. i think they are saying to all of the cable providers, look, we have a lot of rights locked up. if there is anything that people are willing to tune in to and hold on to their cable package, it is sports. they are trying to say that is the power position we are in. fox and nbc are hungry too. >> all right, jon erlichman, thank you so much for keeping us posted on disney's investor day. apple is embedding a song id feature in your device. they are teaming up with shazam to make an app to identify songs
by picking a sound from your microphone. they will be released on the next operating system, ios8. they will preview it in june. right now, i want to bring in the man who covers this for bloomberg. >> if you want to know what a song is, you can either activate it through siri or you can click a button. it is basically, instead of using the shazam app, they will make it into their own software. >> why shazam? >> they were one of the early hits on the iphone when it came out in 2008. they were one of the first ones with that wow factor. they could tell you what song was playing and steer the purchases to itunes.
they had a relationship. >> maybe every company dreams of the partnership, but isn't this a threat to their business? >> they have to weigh the financial things involved. they are steering me people to buy songs through itunes. they will get something out of it. at some point, you have to weigh that there are others out there. >> what about apple? they pioneered the digital music business. now they are playing catch-up with spotify and pandora. can a feature like this help itunes get back on top? >> itunes is still the biggest seller of music in the world. there is nobody that close, but it is slowing down. spotify, youtube, and other players are growing. this is sort of an add-on to that. it is not necessarily a groundbreaking product, but it
shows that apple still adds to the music offerings. >> they're playing catch-up with the innovation part of it, right? where does apple go from here with the itunes business? this sounds like a feature. >> it is just a feature. they have been doing a little bit of catch-up in music. they introduced itunes radio, which is what pandora does. they also considered a subscription service like spotify. they have a template or model built internally that is ready to go. they have been holding off because the downloads are still huge. they have the lion's share of that margin. >> anything else exciting that we should look out for? >> there have been a lot of rumors, including reports about
>> i am emily chang and this is "bloomberg west." time now for the office hours section. webb formerly served as the coo of ebay and currently sits on the board of visa and yahoo!. thank you for joining us. you are here to talk about when companies decide to go public. how do they make that decision? there has been a lot of talk about the environment. is it the right time.
is the window, the ipo window, closing? i wait to listen to something that bill mcdermott had to say earlier. >> i think it might very well be seeing a repeat of 2000. today, we declared nearly one billion euros in profit to the shareholders. we're guiding 5.8 to 6 billion profit. those companies are growing pretty fast. they're losing money faster than the topline growth rate. >> are we in a bubble? >> i don't believe we are in a bubble. i disagree with bill. i was around in 2000. a lot of companies that went out had no revenue at all and just went down on eyeballs. we're in a different place today. if you go public, you have to
have recurring revenue. a lot of new companies in this model are still working hard to generate growth, so they do sacrifice some profit. i do not think that is a bad thing. i also do agree that there are -- there is some frothiness out there with acquisitions. we should not let one or two of those paint everybody. >> what has been frothy? >> well, i think there was a recent acquisition that was done at a high valuation. >> which one? >> you can probably guess. >> when you advise companies on going public, with two they take into account? do they take into account market conditions? >> i think market conditions matter, but they should not be the first thing you worry about. the first thing you have to worry about is do you have a company that is sustainable and ready for the glare of the public eye?
the next several quarters are in good shape and i feel great about this company. i also try to make sure the companies know that, while it is exciting to go public, and everybody gets spun up about that, it is just a day. it is just like getting married. the wedding is important, but it is what you do with the rest of your life that matters more. if you build a great and enduring company, hopefully the first is the worst it will ever be. >> is it all about fundraising? >> i think fundraising is a big piece of it. i also think that having the help of shareholders guide you and hold you honest to where you are trying to go is an important part of growing up. so, i think the fundraising is a big piece of it, but it is also working in the public eye in a way that has the right structure.
>> what about a company like box? they're losing money and spending a lot on the marketing. they have some money left in the bank, but not a ton. >> i am a fan of aaron levy. if i have the opportunity to participate, i would be all in. i am not worried about whether he is losing money. people talked about us in the same way at salesforce when we went public. >> what about when a company is not ready? how do you incentivize the employee? is it about a secondary offering? sometimes they can incentivize them in the wrong way, maybe in the short but not the long. >> we have to incent people to be builders. that is not a long-term solution. i would work on trying to get people fired up about the mission of the company. make sure that we talk about how ready we are or are not and they
are connected and they have more options now, at a lower price. there are things you can do. if you get in the situation where they need some liquidity, there are secondary markets that exist but did not used to exist. it does take longer to go public. >> how do you keep employees from leaving? once they cash out, why not move on? >> you have options over a long period of time. if i got a grant today, i do not get all of the benefit until 4 years. hopefully next year i get another grant. you can lay out additional protections. you cannot keep people based on money. you have to speak to their hearts and minds. they are learning and growing and connected to the mission. >> i have to ask you, as chairman of yahoo!, you just nominated three new people to the board.
why these guys and how will they fit in? >> that is a great question. i had a public release that spoke to how excited i am about them. i have a policy that says i cannot speak an yahoo! anywhere else. the board is not allowed to talk about it. it is a great question and stay tuned. >> i thought i would give it a try. thank you so much for joining us. yahoo! chairman, always great to have you here. >> thank you. >> still ahead, a former nasa astronaut will join us to talk about an expensive taxi ride to the international space station. ♪
tomorrow to launch a rocket to the international space station after being scrubbed due to a helium leak earlier this week. they will carry material from an organization that helps people on earth with research experiments. joining us now in the studio is colonel greg johnson, a former nasa astronaut who has gone to the iss. he is now the president and executive director of the center for advancement of science in space. >> thank you for inviting us here. this is awesome. >> thank you for stopping by. how could we not want to chat with you? you have a partnership with spaceex? is this being scrubbed of any concern? >> it is a concern. our partners, these are the
companies that construct vehicles. they fly project to and back from the space station. when the launches are delayed, that impacts the science on board. >> is this a standard delay? is there anything more wrong? i recently interviewed richard branson. he has virgin galactic, they still have not taken off with passengers. are there some broader challenges? >> flying into space is hard. we have only been doing it for a few years now. it is expensive. these challenges are daunting. getting past the pull of gravity and up into orbit. we have been building the space station for a decade and a half now. it is up there and it is important for our nation and the
world to get to and from the international space station. >> what is it going to take to overcome the challenges? will this happen over decades? >> we keep working on it and getting better. spaceex has impressed us with how they deliver payloads to and bring projects back from the space station. the japanese, the europeans, the russians, all have vehicles that can get to and from the space station. >> they are doing this while you're doing this -- what is your mission, what is the goal? >> we were formed a couple of years ago i the congress. we are focusing on the research that will benefit our planet. nasa does the up and out. they wanted to go to the moon, to mars. we are trying to solve serious problems on earth. >> like what? >> we have health issues.
there are pharmaceutical companies that, when you take the gravity vector out of the equation, they can build more huge, perfect crystals. protein crystals. they can map their drug to those crystals to cure disease. we hope to cure huntingdon disease, cancer, diabetes. >> what can you do in space that you cannot do on earth? >> we cannot turn the gravity vector off. we can freefall for a few seconds or do parabolic flights for 30 seconds or maybe even a minute, but we cannot turn gravity off like a light switch. in space, we have the capability of microgravity, zero gravity. gravity is now pulling on these physical structures.
we also orbit every 90 minutes. we cover over 95% of the population of the planet, from 250 miles up on the space station. >> how many times have you been to space? >> twice. >> when it comes to private space travel, do you have any concerns about safety? >> flying in space is hard. safety is a great concern. i believe that my last shuttle flight was much safer than my previous shuttle flight. i know that that play was much safer than some of the early apollo flights. virgin galactic is the first commercial space travelers. >> describe the moment before takeoff. are you freaking out? does adrenaline takeover? >> we cannot freak out. the heart starts pounding at that moment. i remember my first launch. if was like my first combat
mission. it is the unknown. you train, you are ready. all of the training does not prepare you for it. >> you have a family, they are ok with that? >> absolutely. >> elon musk wants to colonize mars. what do you think is the future of space travel? >> we're just on the start. we are at the beginning of this emerging market of being in space. the great thinkers like elon musk and richard branson, those are the guys who are the leaders. i am trying to invite academic institutions and for-profit corporations to join in this. the first folks that get up there, they will be the leaders in this effort. we have investors who are building platforms in space.
we will commercialize those. >> what will be the most exciting development in space in our lifetime? >> i think that we will have breakthroughs in medicine. i think we will have insight into predictive medicine, to predict when people are likely to get diabetes. i hope that we can make rakers and curing cancer. >> we will be watching. colonel gregory johnson, thank you so much for sharing that vision with us. >> thank you. time now for the bwest byte. one number that tells a whole lot. jon, what do you have? >> i would most certainly freak out if i want to space. >> no way. not for me, i tell you that. maybe in another life. >> 1.2 billion is the number of wireless accounts in china. the dominant players are china
mobile and telecom and unicom. alibaba is getting into it. they were interested in getting some private players in the business, some competition. alibaba joins the game. >> making some strong moves ahead of a potential ipo. big strategic investment. we will keep our eye on them. thank you so much and thank you all for watching this edition of "bloomberg west." we will see you later. ♪ . .
>> welcome to "lunch money" where we tie together the best stories, interviews and video. i'm matt miller. take a look at the menu. in motors, the new rolls-royce ghost rolls into new york, where it still has an umbrella in the door. in nation, paul krugman talks income inequality and jobs. there's still something left over for a list of things that makes him very angry. in company, earnings-palooza. the good, the bad and the ugly of earnings season. turning a penniless nonprofit in s