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tv   Bloomberg West  Bloomberg  October 30, 2014 1:00pm-2:01pm EDT

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>> welcome to "bloomberg west" where we cover technology and innovation. the u.s. economy grew at a 3.5% annualized rate in the third quarter, beating estimates. look, america is in much better shape than europe. i think the american economy is in decent shape. it's a too long to do it.
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rising rates will help all the banks. but what it will help more than all the banks is the m&a business. four-week average of jobless claims just hit its lowest level since may 2000. kaci hickox, break serve quarantine again. state officials are planning to go to work today to have her forcibly confined to her home. she calls the move unconstitutional. time warner has cut its sales forecast for next year, blaming the rising cost of sports programming. lost thousands of customers in the third quarter. can google help predict home prices? will use google's big data capability.
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the company has been successful so far by sitting search results right before a home is but. million in$50 last month. no incredible rise shows signs of slowing down. upstart start has become the third-biggest smartphone maker in the world. withkes inexpensive phones features. coming at the expense of samsung. how did the company come up so fast? >> it may be a new kid on the block, but the scrappy cell phone maker known as little rice is no longer little. the ceo helped found the company in 2010.
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a few months later, they launched their first android-based firmware. it took on apple with its first smart phone, the mi1. it has introduced new products every year with the great fanfare. how did it rise so far so fast? first, there is the price. at $270, it costs less than half the cheapest iphone in china. then there is the business strategy. it sells directly to consumers online with limited quantity available. a recent web sale in china brought in 203 $1 million in orders. -- $231 million in orders. it sold 100,000 phones in under 90 seconds. it plans to expand outside of china to the new markets. the little from its domain name, proving this $10 billion startup is starting
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to think a lot bigger. rise, iore on xiaomi's want to bring in the director of mobile devices at idc. cory johnson with us here at the studio as well. how did xiaomi do this specifically? is it because of the mi first smart phone? >> it is the portfolio altogether. it is selling devices at quarter of the cost of apple. it is competing with all chinese manufacturers across the board. focuses note profitability on the device but where they can make revenue on services and starch -- and such. >> how does it compare to apple or samsung? >> they are using materials that are not quite up to apple standards. apple's premium is justified to some extent. a portion of it, they are using plastics that some sun and others are using -- that samsung
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and others are using. >> you can bend it like the iphone. >> i know. >> when i see these numbers come out quarterly, i have to go back and think when these big product releases happen. how much of these numbers are skewed by certain product releases? >> that is a good question. xiaomi has done a lot around individual product launches. last quarter, they had eight products in market at once. new of those were probably products that were driving the majority of all you. not based ons individual product launches. >> they got the boost from a couple of launches in the last quarter. >> they have a well-rounded portfolio from $200 to $300 at the top. >> at the same time, you say a company like apple, you see sustained demand for the apple
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5s and the apple ic. >> apple is making more money on these devices than anyone. if you look at markets are, they will continue to lose market share and you will see people like xiaomi and others gain market share. but it is where you make your money from. they've got very different business models. >> what about samsung reporting its worst quarter since 2011? how big a threat is samsung facing? are we going to see their dominance truly challenged? >> in terms of market share, you will continue to see it come down somewhat. you have to keep in mind that samsung is in the majority of the markets around the world. whereave the threshold retailers will continue to cell phones. when you look from an investors standpoint, they will not make as much as they made on each device in the past. they will come to grips with that reality. >> apple might have 20% or 30% global market share, they will
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have 80% of the profit in the business. companies like xiaomi will be operating with a 1% profit. they will sell a lot of phones and not make any money. >> samsung will have to come to terms with that. it will be a tough road ahead in terms of often ability with the device. >> what other companies are you looking at? lenovo and lg also did very well. >> this morning, the formal announcement of motorola coming together with lenovo. doing the right things. that is the smartphone maker to watch. they need to execute with motorola and make sure that things come together well. but lenovo has acquired a number of different companies in the past. >> obviously, xiaomi, there may market is china. how successful have they been elsewhere? i know they are looking at india and beyond. >> they hope to grow 5% of their
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business outside of china now. it is very small but they have their eyes focused on very big markets. he has talked about india, brazil, mexico. they are tried to understand the local dynamics rather than just force what they know into these markets. ryan, thank you so much for joining us. coming up, tim cook announces he is gay and says he is willing to trade his privacy to help others. nexus of op-ed in "bloomberg businessweek."
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>> i am emily chang and this is
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"bloomberg west." he invented the world's first popular web browser and has become one of the most inspected and influential investors in technology. he is mark andreessen. here is a sneak peek of my sit down with the sage of silicon valley. what is the future of elon musk? >> obviously, he will build the iron man suit. [laughter] i think it's obvious. obviously, in the suit, he will fly to mars. [laughter] so he has some work to do between here and there. guys -- theree are three sort of founders who i think are really revolutionizing. we are a look industry. we have all these people who are incredibly well-known known who built these amazing companies. it's peter teal and elon and
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larry page. you talk to those three are you listen to what they say or read the stuff they write and their ambitions and aspirations, what they are trying to do is another step up from all the rest of us. , you look at elon's career, the audacity of starting an electric car company, people forget -- the one thing you knew in 2005 or whenever he started it, the one company you should never start in the united states is a new car company. and the other company you know you do not start is a rocket ship company. he is in his mid-40's. he has another -- who knows? here on earth, he has another 30 years. [laughter] [applause] peter teal can discover the cure for them are talented, he well. on twitter, you said more startup is not the next [indiscernible] you right back to people. someone said to you what is the next big thing and you said something you.
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what is something you? [laughter] >> we are trying our best to find it. the big thing is just -- peter teel also talks about this. the point he makes and i agree is there never is won. there will never be another microsoft. there will never be another google. there was just one. up -- look at what's whatsapp. never be another one. nobody is going to think they are the next big thing. it will be something out in the friends, something considered bizarre. people will be, let, no way. that could never possibly work in 10 years later, it will be the next big thing. >> do not miss the interview ath marc and recent tonight 8:30 p.m. eastern and pacific.
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apple ceo tim cook discloses that he is gay. he writes "while i have never denied my sexuality, i have not publicly acknowledged it either until now. let me be clear. i am proud to be gay and i consider being gay would've the greatest gifts god has given me." such an important read. such an important moment. he talks about how he valued his privacy. but if this helps a single person with their own struggle, then this is worth it. >> it is interesting that he would choose not to do this. this morning. the essay is really neat to sort of see him express himself. i was intrigued that in his office he has pictures of martin luther king and john kennedy for inspiration. it is a non-thing in this generation, especially he was a young man when they both died. >> he found himself constantly
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thinking to himself -- what are you doing for others? what am i doing for others? one of the most interesting parts of the peace for me was how this has affected him in a great way, saying being gay has given me a deeper understanding of what it means to be in the minority and provided a window into the challenges that people in other minority groups deal with everyday. it has always -- it has also given me the skin of a rhinoceros which comes in handy when you are the ceo of apple. our colleague was on surveillance this morning talking with tom keene. he asked josh white cook did this now. listen to what josh had to say. it isy ultimately decided more important for him to step out, to represent not only within the business community but within the world because apple is a global company, and to say to people i am gay, i am proud. it is an important moment.
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and greatting stuff for us to get that in "businessweek" this week. that -- whatings are the things that really motivate him, how does he see apple's place in the world and that underdog mentality is something that really drives apple. you can start to see how that comes from tim cook and who he is also and helps them drive that company even though it is the biggest company in the world. i still feel like the underdogs. >> he ends the piece this way -- tim cook, wonderful read in "bloomberg is a sweet." big news today.
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it should not be news at all. nobody should have to talk about this or explain this. level is a at some minority. it is great to see him express that and explain how that is a motivation for him to do what he does that apple. >> what is the biggest threat to the future of the internet? is it hackers or something else? we will ask the ceo of akamai next.
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>> welcome back. deliveringsinesses content over the web and fast. demand for internet video drove akamai for a strong quarter. it was up 26% year-over-year. net income up 14%.
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i am joined in new york by tom leighton, ceo. one of the interesting things you have been talking about is, before grand challenges to the internet coming over the next several years, i would like you in a nutshell to tell me what the biggest threat and .hallenges are >> delivering high quality internet. websites and of her structure against attackers who are mounting service attacks are trying to steal sensitive information. and in a billing and a president works to embrace the cloud, to make their applications be fast and to make the network the scale and affordable. >> talk specifically about video. there are a couple of big events in the course of the last year, not least of which the world cup. and much of those one-time
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events are unique or are they driving consumption, helping you platforms get launched and continue to grow? >> any single event by itself doesn't make a huge difference. but when you have a series of events of events that drives more people online, drives more video online. overall, the growth rate right now in traffic on the internet is increasing at a substantial rate. example, netflix, for a big bandwidth user, these to be a customer of yours and then they got two big. they went off -- they got too big. they went off on their own. we got into this big debate. what is your position on it? >> we don't get involved in that debate. our job is to provide the technology that enables a video to be delivered at scale, at quality and at lower costs. a lot of what you see about the debate today is the congestion , where peoplents
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can i get high-quality video. that is a technical problem. the way akamai delivers video is to deliver video and software at much higher quality levels and at lower costs because you do have a lot of connectivity available in the last mile and you have congestion in those peering points to become bottlenecks today. >> as i understand it, akamai does charge more for better service over that last mile. is that correct? >> no. akamai charges for our technology and carriers can buy it or content providers can pay for our services. the net effect is actually we decrease the cost not only for our customers and our carrier partners but the entire internet. as we offload traffic from the congested peering points, everybody gets better quality, whether they are paying akamai or not. >> talk to me about how much
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money you have to spend to make that happen. we saw this fantastic rise in revenues but not a rise in net income because you're having to spend too much -- spent so much to do that. do you see expenditures going to continue on forever or start to get some leverage? >> we are getting a lot of leverage today. rmb -- in rlot in &d. i think you will always see us investing in and investing have -- and investing heavily in r&d. >> attacks are almost 400%. what is your role in protecting your customers given the increasing threat of cyber hacking? their attacks are up in
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frequency and their scale and sophistication. 'sat is helping to make akamai security business the fastest-growing business. we defend 100 of the world's largest banks today. you see a lot fewer headlines now of banks being taken down by groups with political agendas and that is because they are using akamai. we also defend the leading brands against web application layer attacks where they are trying to sneak in and steal sensitive information or to corrupt the website. >> thanks so much for joining us. the center of so many important and compensated issues right now when it comes to the future of the internet. it is home to blockbuster hits like madden nfl, fee for -- and fifa. next, an exclusive interview with andrew wilson.
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x you are watching "bloomberg west" where we focus on an ovation and the nature of business. cashing in on the rise of mobile gaming with the new generation of mobile's, sony playstation and microsoft's xbox. mobile sportsf titles have more than tripled from a year ago. kari, you spoke with andrew wilson. are you surprised by that -- cory, you spoke with andrew wilson. are you surprised by that?
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>> the analysts are saying how do we pencil this out? it is growing so fast. digital, mobile, and they console -- he spoke with me exclusively on a wide range of topics. atis hers -- his first year the helm. have months to think about the evolution of technology. passive form of entertainment because you are involved. in that world of more devices, more gamers and more content, a company like electronic arts who has a position across all those devices, who has a portfolio of content that maps across those devices and has a breath of ip that speaks to some of the largest gaming published on the
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planet, we have a unique position to curate that players journey and help them find what is meaningful to them at that moment in time which delivers just a lot greater than content. >> the way that game developers create this content and create ,n immersive experience managing that creative process and those creative people are really a pain in the but. >> it depends who you are. for me, it is a lot of fun. i look at people who run sports teams, these highly athletic alpha-type individuals who are supremely talented but very distinct and very strong personalities. getting the chemistry right and making them work and win, not just one game or one season, but multiple seasons, building that dynasty, that is the value. what i am really proud of is we have a leadership team here and we have creative leaders across the organization that have
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really gelled at a chemistry level and are doing amazing things. do we have alpha-type creative's? yeah. do we have super strong personalities that don't always agree? absolutely. but you put that together and you have amazing games coming out. that doesn't come from ordinary people. havecomes from people who a deep passion to deliver amazing entertainment. first spreadsheet jockeys like myself, you look at cost control. they are really pleased at what they are seeing in your first year as ceo. do you measure yourself on those statistics? >> absolutely. it has to be part of the recipe. it is not the entire recipe. cost control to growth and you can't cut to growth. growth is important for a publicly traded company. it absolutely has to be part of what we do and how we do things.
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cost control comes with focus. >> why do so many games have lousy ratings? s, soy, basketball, sim many have subpar ratings. is that related to too much cost? what do you do about their problem? >> nhl is a terminus the wonderful game. anyone who has played it understands that it is probably the best nhl game ever made. feedback scores represent is did you get it right for them on all levels. what we learn from the nhl community and critics was this is an amazing game, probably the best playing nhl you have ever made but it is missing things that is really important to us. >> things that you took out of the game and added in an add-on pack. >> not an add-on pack but things are reengineered for a new generation. we didn't think it would be good enough.
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we hoped we would get that out and understand how great the game was and it is great. we want all that other stuff as well. what we have been doing since then is putting that back into the game, not as paid content, but as an ongoing live service. it is a real shift in our business from being a fire and forget, throw it over the fence and go on vacation model to a luncheon service model. --more people are buying our and more people are playing our games much longer. grown consistently since we have shown a readiness to service their need at the player base. they are not going to give you anything you don't earn. i am proud of what the team has done. we are at a mid-way through journey. it will get better next year. we have been on this journey before. i am confident it will be the principal game in the market >
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jidd -- in the market. >> you have more than half the revenues from digital now. 80% ofnd that, more than our player base is connected digitally. when i grow up reading games, you had to live with that for a whole year. there was nothing you could do if you got it wrong. capis this emotional value chelation of enjoyment overtime that is different for every person. sometimes you have a disconnect. >> what is it about this console release [indiscernible] the new xbox, new playstation for the next year. it has really taken off for consumers so much more than previous iterations. >> as you look at the history of our industry and i have had the ittune of operating in for a while -- for the most part, every platform generation is bigger than the one before. >> this one in particular is
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really -- >> it has taken off fast. >> i think the world is waking up and recognizing that interactive entertainment is the best form of entertainment. we seek out entertainment for a reason, inspiration, escape, socializing. it brings that inspiration and escape element. movies are wonderful things. i consume a lot of movies. music is a wonderful thing and i listen to a lot of music. but for the most part, you are bound by the director or the musician as to how you experience that. games, you are the director. you are the artist that gets it going. i think people are starting to see that. mobile tamers are growing rapidly through the globe -- mobile gamers are growing rapidly throughout the globe. sec chairman arthur
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levitt is running the board of two bitcoin agencies. find out why.
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>> i am emily chang and this is "bloomberg west." the longest-serving chairman of the security exchange commission is joining bitcoin. can levitt support or add legitimacy to the currency? what does arthur levitt bring to the table for you? >> it was great talking to arthur. somethingrecognized that is important to him, bringing instance element to the financial industry. when he saw bitcoin, that is what he saw and he understands the value that has. having his experience advising us and helping us communicate that message to wall street and
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others i think will be invaluable. >> everybody knows the price has plunged. supporters say it doesn't matter. but doesn't it remain a roadblock to popular adoption, all of the sola tilley? >> we are in the -- all of this volatility? >> we are in the fourth or fifth bubble. it does not matter in a transaction medium. no matter what the prices, people can still exchange value no matter what the prices. everybody pays attention to the price. it goes up. it goes down. >> how does it affect the volume you see when it does drop? >> when the price goes up, people like to spend their bitcoins and buy things with that additional wealth they have. when it falls, you see the transaction all useful with it because people decided they want to save more. it becomes the savings versus consumption preference sort of thing. you have peter teal who has a
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lot of extreme. experience --t of a lot of experience saying that it will not work. >> i don't think he is saying that. that is a good outlook to have. he wants to see more progress. >> he told me it was very unlikely that it would work. >> ok. [laughter] anduld agree with marc recent >> why the diversity of opinion? >> i think a lot of people don't know what to make of it. there is a lot of excitement and a lot of hype, but people want to see more actual, real progress. >> what do you think of apple pay? >> it is doing what apple does best. they will optimize that payment flow. they are partnering with the banks to make that happen. it's good. we saw an uptick interest in bitcoin as a result. >> the chinese government
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crackdown on bitcoin. >> we would like to operate everywhere in the world. but when governments take a stance where they don't want it to be used, then obviously we have to abide by that. >> how can someone like arthur levitt help with the legal issues? >> when we talk with arthur, what we really want to help him with or have him help us with is how do you get the banking industry to warm up to using this technology? what do we need to do? what are the steps we need to do to a copper set? i think he will work backwards. that is the goal and we will figure out what all the steps to make that happen. >> you said we are in the fourth bitcoin bubble. tammany will there be? -- how many will there be? >> there will be bubble after bubble. you get a lot of interest. a lot of people decide they want to buy bitcoins. they buy them and it might be there for six periods with them. now what i do with them -- their
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first experience with them. now what will i do with them? then it stabilizes at some point. it forms a bottom and then the next wave comes when something happens. i think the next way will be triggered by some truly unique applications of the technology that people have not thought about. >> where will we see that? >> we will see that in the next six months. >> what do you mean by that? >> there are things you can do with a client payment system that you cannot do with another payment system. it is a record of history. record -- there is a great website, internet archive. they timestamp or take snapshots of websites. it would be great if you could snapshot those websites and the history of bitcoin so you have an indisputable record of history that no one can alter. that is just one application. there will be things like that
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that people have not thought of. once they see that, they will get excited all over again. weall right, stephen pair, will see if you right. thank you for joining us. "bottom line" coming up at the top of the hour. tomorrow is halloween. according to the national retail federation, halloween is a $7 billion retail industry. ricky's is a company that sees on the concept of pop-up stores for holidays. looked upon with skepticism is now paying dividends for landlords and real estate owners. ofhard parrott, the owner ricky's nyc will join us. emily, i have to tell folks. i texted you last night around 11:48 new york time and said congratulations.
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you sent me a message back and it said, ok, we can be friends again because i gave you grief when kansas city won that 10-0 game. [laughter] congratulations. goodappreciate you being a sport about it. we have been skipping around here all day. [laughter] >> good. >> we are happy about the giants win. it was a great game. [laughter] mark crumpton, thank you. americans suffer from chronic diseases like arthritis and asthma. a new company wants to help people manage their conditions with their smartphone. that is next. ♪
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>> welcome back. get ready for another fitness tracker come of this time from microsoft. it adjusts unveiled a new
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wristband called microsoft band, a device that can track and analyze your health stats and exercise moves. it costs $199. it is on sale today. microsoft also unveiled a health out. -- health ap. -- health app. demandst launched, an on health benefits platform to help manage diseases. founder andow, the longtime tech executive who has had roles at google and kleiner perkins. stephanie, i will start with you. how can vida helpmate? >> you can -- help me? to the store and
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get a health expert. we have health experts across the nation that will instantly connect with voice and video and chat and cater to your conditions and your needs. there are 133 million americans who have chronic conditions. >> what kind? heartgh loss, diabetes, disease, cancer, arthritis, asthma -- anything. it is a backend platform that allows us to tailor the program to the consumer. >> how much does it cost? >> it is $15 a week. the first week is free. you can sign up a friend and get another for a week. >> jennifer, you have been investing a long time. what attracted you? >> i am a long-time investor in health care. vida as a continuum in the global health space particularly. as you may know, you mentioned the microsoft band, there have been -- health applications have
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been growing. hat vida health is doing is quite unique in health care problems. for someone with a heart attack he went through cancer treatment, just because you leave the hospital does not mean you are well. working with the hospital staff m protocols -- staff and protocols, those are things that vida is working with to help consumers get back to wellness. >> do i have to be the one saying, hey, i need help or is there a coach saying, hey, don't eat that doughnut? >> it really depends. it is very coach-driven actually. if you have cancer, like leukemia or bladder cancer, you are on a post-surgery protocol. the coaches giving you day by day text messages, videos of
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exercisetelling you to and focus on nutrition. compliance,any med sleep or stress disorders, a lot of these people are on multiple medications. if you have expertise in cancer and ids and heart disease, you can handle a lot of the different issues that people have. one in four people have core morbidities. one in two have a chronic condition. we can handle over 20 different conditions. and aach on the platform crm for health. we can customize and personalize the care you get based on your needs. >> this works with apple's health get? -- health kit? >> that's right. >> do you see this as a consumer or enterprise product? >> it is absolutely a consumer
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product because consumers have to use it. but it very much worse with that,rises in the sense especially after a post events, you need to get workers back to work so they are motivated to have their employees using a health coach and working with health platform in order to drive back to wellness quickly. >> thank you. thanks so much for sharing this with us on "bloomberg west." it is time now for the bwest byte where we focus on one number that tells a whole lot. what have you got? >> the bwest byte today is one. it is the number of pockets where is i am wearing right now. this -- pocket squares i am wearing right now. ais is the visualization of
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cell.n it is breast cancer awareness month. it is to remind people to take the steps to detect early breast cancer. >> i noticed it. i thought it was a unique pocket square. how did you come across that? >> from a company called the stain. a recent business grad operates it. some of the proceeds for some of these pocket squares and ties goes to breast cancer awareness as well. >> incredibly important, especially with this month being breast-cancer awareness month. thank you for making us all aware. thank you all for watching this edition of "bloomberg west." we will see you later.
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>> from bloomberg world headquarters in new york, i'm mark crumpton. ," thes "bottom line intersection of business and economics with a main street perspective. ♪ to our viewers here in the united states and to those of you joining us from around the world, welcome. we have full coverage of the stocks and stories making headlines on this thursday. matt miller tells us that the world series ratings match the excitement of game seven between the royals and san francisco giants. julie hyman tracks new developments from department store giant sears


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