tv Bloomberg West Bloomberg August 20, 2015 4:30pm-5:01pm EDT
>> hewlett-packard takes>> a hit. what to expect when the business splits later this year. matt: i'm matt miller for emily chang in this is "bloomberg west." salesforce boost its profit forecast and elon musk hyperloop taking two steps closer to becoming a reality. we take you to the world's first solar powered airport. all of that and more on "bloomberg west."
lead. to the hp shares are sliding as they issued a profit forecast missing estimates. they are being hit hard by islam in pc business and its revenue in personal systems dropping 13% year-over-year -- they are being hit hard by a slump. what are we learning as they prepared to split into two? cory johnson is here with me and we also have idc chief research officer on us with skype. think about hp results? disappointing, but is there a silver lining? the results were mixed. if you start digging and you do see some areas where the company clearly has issues. they saw a real cause particularly on consumer down 22 percent. we expected that in terms of people waiting for windows 10. if you did get into the
enterprise group, there they saw significant improvement, if you will, in storage and steady demand, or improved, for industry-standard servers being 8%. enterprise services has been a drag for a long time. a lot of people have been cut out of the organizations have been services. to see margins up, that says there is light of the end of the tunnel and there are starting to improve. the other area they are getting crushed is in printers. the effect of strong dollar and a weak yen has made their japanese can editors very can additive. that's meeting they have to -- japanese competitors very competitive. must bee strong dollar tough. they have to buy most of their components in asia. have competitors
willing to sell a single-digit margin. it's just getting harder and harder. we've known that for a while which is why they weren't that that off to the side. the rest of the business, as crawford points out, it's not the worst they've ever been, but worse than all of the major competitors out there. this is a company that spent vast fortunes and acquisitions in recent years, over $10 billion in software acquisitions . software is doing worse. a lot of the investments they made are not only paying off but they are spending billions to do this. your big take away is revenue is -8% year-over-year. as it continues to get smaller across all business units, not just the ones they want to pond off, it's doing so much worse -- off.want to pauwn matt: that's the bad bank.
cory: theoretically. bank who is the good competitors? who will compete against them? cory: ibm. going to havely some sort of cloud service offering. cisco make some sort of not in that general direction and saving some hardware stuff. let me uncoupled at work and maybe crawford can help. one of the biggest development is a company like facebook, apple, google, amazon web services take their own. they buy specialty disk drives and routing equipment. they are buying the circuit boards. they are not buying up data centers. hb has doneoint,
some interesting points. they partnered with foxconn to develop a set of servers they can move out a lower margin and they've had some success with that. you are also seeing places like absolute customers on the data center side for hewlett-packard. they are making progress in that area. to that point, a lot of these guys roll their own. hp was able to grow that business in a world where supposedly everyone is going to the cloud. that says people are building out privately as well as and hp is holding their own or able to grow the business in a segment of this growing data center space. it's across the whole board, but i'm actually pleased with that number. cory: roll your own, grow, space. matt: sounds like he's in california but he's in massachusetts.
are they going to need to compete against oracle and sap as well? ways.they do in small the conference call will be interesting. how big will the restructuring be going forward? one-time restructuring charges last decade. and now there is more restructuring to come even after this list where they have the right businesses in place. least one will continue. those questions will come up. is this therd, never-ending restructuring story? >> there is definitely probably more to come probably on the services side. that's why i'm so focused on the services margin. i think it's an indicator that you will see a meaningful and to a lot of the restructuring going forward. to the first part of our conversation, when these companies split, the whole story
will be about growth. can they asked and faster? -- can they expand faster? matt: that's probably part of the reason why the stock is down 32% year to date. crawford del prete, and cory johnson, thinks. it's a pleasure to see you. big loser, today's market selloff sending twitter shares below the ipo price. $26 even.closed at if you bought the shares and went on theu market november 2013 you are now even. jack dorsey warned it would take a while before the company. that was their last leg down. they've obviously had issues with fat. a story we are watching also, test losla and airbnb.
they are starting with 30 .tations at airbnb properties tesla has donated and installed these stations and plans to add more. a status update. republican presidential candidate donald trump taking aim at the thousands of foreign engineers working at silicon valley. his immigration plan would h-1rease the amount paid to visas. a group o representing mark zuckerberg in bill gates heading back at his plan. the group forward u.s. wrote in a blog post, "the idea we should restrict them is just wrong."
the h-1b visa program is hugely popular among these take u.s. companies. this year, 65,000 slots were filled within the first week employers could apply for them. love technology companies to employ people from overseas. coming up, the new product behind salesforce better than expected forecast. yelp gives taxpayers a place to how much they love the irs or tsa. stay with us on "bloomberg west." ♪
matt: hot storymatt: we are watching today, california regulators say they have evidence uber field to read out 25 drivers with serious criminal records. fromfailed to prevent it hiring registered sex offenders, identity thieves, burglars, a kit wrapper, and a convicted murderer. -- a kidnapper. to full themwsuit forgiven giving. assurances that its drivers are safe. --they filed a lawsuit for
failing to give assurances. in ubse, let's bring managing director of software and still here with me is cory johnson. stock trended down, down, down all day. now it's getting a nice little bounce in the aftermarket trade. did no one expect this? >> the market is doing its own .hing i think investors continued to be pretty positive about the outlook for salesforce. we've said it multiple times inside the software stream that they are the most innovative company and they have the right pricing model. everyone in the industry, including larry ellison, is chasing salesforce. they are the business model everyone is trying to copy.
they are the apple, if you will, of the software industry. the quarter looked very good. the backlog was up 26%. cash flow growth was up plus 44%. the service cloud leading the charge had the best growth. a lot of the metrics continue to exceed what analysts expected and we believe that the consistency of the results have kept investors in the stock. they've really continuously delivered on the numbers. matt: microsoft reportedly offered $55 billion for salesforce and now they are having a real competitive right. are a lot of there other companies trying to get into this closet space. -- cloud space.
cory: it could have been far below the market cap of the company. it could have been all-star. it could have been a merger not attract it to them. -- it could have been all stock. matt: even if it's the whole company, -- was it cash? do you want $55 billion in microsoft stock? matt: i would take it. cory: the board did not what the deal. we do not know the components of the deal. for whatever it is, that offers up the table right now. microsoft made an offer for yahoo! at $35 per share. matt: they should have taken that. cory: all of the value of yahoo! is alibaba. i don't think we should imagine there will be another offer with the components of that deal that will come back. matt: well we talking about this, let me ask friends.
use of larry ellison is after them. i think you meant in a competitive way. his oracle after them to purchase? -- you said larry ellison is after them. it's costly talked about as a night position target. it's constantly talked about as an acquisition target. >> salesforce does not need anyone. arm'sre growing with an margin improvement over time. everyone thinks the margins are good that i think they can double. i don't think salesforce needs anyone. everyone else needs salesforce because they have the right model. cory: it would hurt their earnings to do this deal. matt: let's talk about that. cory: as a momentum stock want
to growing at 38%, now we are at revenue growth of 24% gap revenue growth. with billings growth just about thaname, if it is slower the growth of revenue it's kind of like putting less gas and the temperature line to go a little further. this thing is getting stretched. done $1 billion in acquisitions at revenue growth is slowing. the massive growth story on this was a few years ago. it ain't anymore. thill, managing director at ubs, thanks for joining us as well. if you have a beef with the irs or the tsa, you can now go to yell. it's a partnership between the consumer review site and the u.s. government to rate government services like the
any becausedmv or they are all horrible. in march gallup poll found americans biggest problem was dissatisfaction with government ranking were spent terrorism or unemployment. among the first to take advantage was former hp ceo carly fiorina giving the tsa a one star rating. body scanners have a 96% failure rate in her post. the scoop on the hyperloop. i will sit down with the ceo. ♪
matt: time now for the daily byte. this is how many solar panels coaching airport, the first airport to run fully on solar power. it has a peak capacity of 12 megawatts and saves millions of admissions. it's the same as planting 3 million trees are not driving 750 miles in my truck -- 750 million miles. prime minister narendra modi wants to increase that by 100 gigawatts by 2022. hyperloop, the project to revolutionize the way we travel, has unveiled heavyweight partners as they prepare to build a test track for a capsule that might one day carry
7 >>ngers at speeds of >> miles per hour. they have partnered with aecom and oerlikon. they are both working in exchange for equity. a team of 400 people are working on a test track in the central valley. has hyperloop is taken a big step closer to a reality? i'm's he can now with hyperloop ceo dirk ahlborn. us.ks so much for joining until today, i was not clear whether hyperloop was an actual possibility or just a pipe dream . it seems like a lot of people are still skeptical it can ever happen. do you have all of the realistic components to genuinely make this work? we finished our feasibility
study the end of last year. right after basically we went ahead and look at the different solutions to problems. we did the final decision to move forward and announced we would start to build in the central valley of california the first of menstruation -- demonstration track. construction will start the beginning of next year. "wired"think i read in that they say they have tackled or more difficult problems as problems areilding concerned. the only issues here are to some costs.power usage and are those the biggest problems, getting cost under control? >> no. the exciting part about this theect is you can imagine
rail industry as a dinosaur. there is no passenger railway now that is profitable. they are all getting subsidies from the governments all over the world. the hyperloop concept is actually able to be profitable within eight years. we are creating far more energy than we are using therefore operating cost is very low. you can imagine how large of a market it is. the markets we have been looking in terms of construction, the pylons and the tubes, everything is looking good. it's not the amount of money but how fast you can recover. it's a really exciting business opportunity. you will have solar panels on the tubes, windmills set up along the route and that is why you're saying it will be energy positive, right?
2-3miles per hour which is times faster than ice trains. when will people be able to ride? >> starting construction the beginning of next year and we expect by 2018 to open to the public. matt: as far as the test track? it is not the test track but it's actually a local hyperloop. it will be five miles long. his full-scale moving more than 10 million people. it's a new lead to be developed community with a large entertainment district. we will have movement towards theme parks and plenty of people that will be able to ride the hyperloop. it will be important for us to passenger optimize boarding, capsule handling.
it will actually be the first. matt: hopefully you are not going full speed because of it only take you 20 seconds. you have an interesting ownership structure. .nowing, nasa, spacex i noticed you wanted to do an ipo may be by the end of this quarter. is that still the plan? >> the companies that you just mentioned are not part of our company. we have people, our engineers working on the project, have background working for these companies but they are not involved in the project. in terms of the public offering, the reason behind that is our structure is very unique. us. really important for they have the opportunity to be in very early on. we're looking at different possibilities and opportunities to make that happen.