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tv   Bloomberg West  Bloomberg  December 9, 2015 6:00pm-7:01pm EST

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today's march is the latest in several weeks of protests following the release of video showing a white police officer shooting laquan mcdonald, a black teenager, 16 times. the mayor apologized for the circumstances surrounding mcdonald's death. almost two thirds of likely 2016 republican primary voters toored donald trump's call temporarily ban muslims from entering the united states. those are some of the findings from the bloomberg politics strategy paul. poll.ple strategy john kerry says the u.s. will increase the amount of money it supplies for climate grants. the money will be part of an existing promise by wealthy countries to mobilize $100 billion a year in climate finance. by money must be approved
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congress. angela merkel is time's person of the year. the magazine says she showed leadership during the refugee crisis and the greek debt crisis. i am emily chang and this is "bloomberg west." the spin cycle at yahoo!, the company changing gears -- again. it will hold on to its alibaba stake after all. apple changes channels, the company pulling the plug on plans for a live tv service. ramping up efforts to develop apps for tv providers. notou work at airbnb, do
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make any plans to leave. the company topping a new list of best places to work. another change of course at internethe legacy portal announcing it is shelving plans to spin off its stake in alibaba. it will focus on the possible spinoff of its core business and its stake in alibaba japan. marissa mayer said the move will give investors a better sense of the value of yahoo!'s core business. marissa mayer: a large part of our market capitalization, a separation will provide greater transparency to ensure yahoo!'s business operations are accurately valued. especially as we continue to improve yahoo!'s products. seem to be more questions than answers following this announcement, including whether the spin off as just a precursor to an outright sale. joining me from new york is the managing director of suntrust.
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bob follows yahoo! for suntrust. one of my favorite headlines, yahoo! has gifted us another year of confusion. what is your reaction to this? bob: we thought it was a positive defining moment for the company and something they needed to do. the tax risks were just too large, a $20 billion risk. you really cannot afford to take that risk. they had to pause the process. they may be going for a spin, but we think the sale is more likely. we think all the strategic alternatives will be pursued and maximize shareholder value. likely -- aost combination of softbank and
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alibaba. alibaba would love to bring those shares back in. those two together go after the vast valley of yahoo!. emily: eric, you have a slight less positive take. againstey're back was the wall. they should have announced this a few weeks after the irs made its ruling. it was clear that you cannot take a 10 to $20 billion risk. it would be a third to half of their market cap. why wait for the activists to get back into the stock? the disappointing part of the news today, and there might be other reasons, why not just announce that you will review your strategic alternatives? it could include a sale, it could include a merger, or maintaining your core business. you have to announce to your shareholders that you will
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review this because you will have to do this anyway. why wait until your back is against the wall? emily: marissa mayer said separating the core business from the alibaba stake is the key to the future of the core business. marissa mayer: the separation will further enhance our ability to attract new talent, to grow both revenue and user engagement with more direct value creation. emily: bob, how would you value the core business at this point? bob: we put a number out for investors, we think it is worth about six to $8 billion. a multiple of five to seven times. there are some other assets. contribute tot the eve.
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emily: eric, marissa mayer has restated her commitment to the company. the board has restated its commitment to mercer mayer. -- marissa mayer. eric: she has had three years to prove she can turn around the business. it is not rocket science. you have a core business that is still substantial, but it has been declining for a number of quarters. you have to run the business for cash. that is what a private equity buyer would do. i doubt you need 10,000 people to run that business. you need to rationalize this, run it for cash. yes, you still have plenty of
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cash and you can do a strategic acquisition. prove to the street and the shareholders that you know how to run the core business. have been outu there suggesting possible new ceo's for yahoo!. do you think marissa really does stay on or sometime over the course of next year, she leaves and is replaced? bob: it will be decided on who ultimately buys the core asset. if it is verizon, they have a phenomenal x-unit -- execute ive in tim armstrong. cannot -- we have publicly said we do not think it is likely that marissa is the ceo of yahoo! in the next 12 months. emily: the board has remained mostly intact.
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max saying, i am stepping down from other boards as well. eric, what do you imagine the next year looks like at yahoo!? are we going to be talking about this over and over and over again? eric: the board needs to get real. they are working for the shareholders and the shareholders are dissatisfied with the performance of the company. the company is in silicon valley, they might believe they can do some sort of hail mary and produce some new technology. they should abandon all hope that will save the company. what will save the company is a process that is rigorous, looks at maximizing the value of the assets with an outside buyer or
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by changing the way you manage them. it is not complicated. this is the only thing they have to do. emily: marissa mayer has made a lot of acquisitions, she has spent a lot of money. should she have conserved cash and done something different? bob: we think she needs to do some m&a. she spent about $7 billion and m&a. we think the best -- when they did make those bets, they did not execute the way they needed to do. there were other things she could have looked at -- instagram, netflix, other players that could have been more creative. tumblr has not worked out the way she would have wanted. emily: there is an interesting sidebar to this whole drama. shares of yahoo! are down more than 10% since february of last year. it is not hurting her bottom line.
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the stock options she got last year had a strike price of $18.87 a share, the level. moustakas that when she joined at whene level she was she joined. normally, executives are granted options each year. only one other executive has the same set up. reaction to this? the she deserve it? it is pay for performance, the answer has to be no. i imagine the members of the compensation committee are not going to be too happy. emily: what is your take on this? your assessment of whether yahoo! is setting itself up for another proxy fight? bob: i agree with eric.
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revenues are down 10%. it really has not come through. the financials are early metrics. look at the data, and it is best -- it is just not there. investors are not happy with the performance. you could see a change done then. emily: it sounds like you believe we will be playing this out over the course of the year, you believe the yahoo! story is mostly written and the ending is not great. how do you think this is going to play out? eric: i think the core assets have real value. wait until you maximize the value of these assets, the more they will decline. nobody talks about the value of the stake in yahoo! japan. it is very valuable.
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there is a lot of the pieces within yahoo! that are valuable that need to be maximized. the board needs to get serious about analyzing where they belong. bob: we will be looking to see public interest from third parties interested in the assets. and ultimately, comments from the company about exploring alternative options. outcome the most likely will be a sale of the core or the overall business and that can happen as early as in the first half of 2016. emily: shaping up to be another eventful yahoo! year. thank you both for weighing in. stern up, will howard
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stay with sirius xm? the impending contract negotiations. apples live tv service, is it over? we will discuss with two of the best researchers in the industry later this hour. ♪
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emily: iac continues to reorganize after the ipo. they have formed a new unit called iac publishing. the point is to make the most successful advertising and data practices from each business available to the entire group and to reveal more detailed financial information about
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these businesses. up four properties will make about $300 million in sales in 2015 and are profitable. ceo said yahoo!'s core business is not on his radar right now. interview on bloomberg, he subscriptiones on businesses. howard stern's contract is up for renewal. >> a lot of reasons why people subscribe to sirius xm. people love the genres of music. people also love the ease of use in the car, lack of commercials. they love exclusive content like howard stern.
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>> is he stating? we wille optimistic continue to have howard. we have a lot of exclusive content. >> you cannot make that much money on nfl or baseball. yours xm may have been best acquisition ever. >> the department of justice, the attitude towards mergers. famously, the justice moved to reject the at&t-t-mobile deal. what are you looking at in terms of time warner and charter? always beill discussions with the department of justice and fcc about why this is the public interest and why it is not anti-competitive. i think we have a very good case.
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>> do you know what you might have to get rid of to make the case bulletproof? >> i do not believe we will have to get rid of every -- of anything. >> really? i want to go back to sirius xm. they only have 30% of listeners. do you believe in the radio why are you so positive about the radio business? >> people who are willing to pay a premium for a subscription, whether it be hbo or starz or showtime or sirius xm in the radio world. or people who are not willing to pay. listenership is strong. i heart has a strong balance sheet. >> i feel like that is been the narrative for the last seven years.
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targeting anbably older audience than that younger person who does not pay. people who buy new cars, the early 40's.is they are willing to pay good numbers. 29 million subscribers in united states. >> how do you grow? if you already have old people. >> young people do get older. and they begin to pay, that is the hope. coming up, with the price of oil plummeting, our tech stocks becoming the new save haven investment? carter -- troyh
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carter. we will bring you a sneak peek of that chat later this hour. ♪
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emily: oil is plunging, drillers are freefalling, and retailers cannot find the floor. how has the entire stock market managed to avoid caving in? the answer is tech stocks. joining us from new york is our stocks reporter. also with me is tom giles. what sort of trends are you seeing? >> we have seen investors come back to tech, especially after the september 29 bottom. a large reason for that is because investors are chasing growth prospects. emily: what names specifically?
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tom: anna louise pointed out microsoft is a big part of it. a lot of optimism, an opportunity to show his stuff. a lot of enthusiasm around microsoft right now. that is a big part of it. look at facebook, the facebook story is full and positive energy right now. there is a belief that mark zuckerberg and sheryl sandberg are doing the right thing. they have overcome all of the concerns about mobile. louise, talk about how what we are seeing in tech compares to the smb -- s&p? anna-louise: the s&p forecasts are calling for contraction in
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the current fiscal year. tech for earnings, i believe it is 12% growth. revenue, 4.7%. we are seeing higher growth prospects. we are seeing investors come back to tech. the tech group is beating the consumer discretionary group. , an end ton op-ed bait.ch bubble he writes, this line of thinking ignores the value digital technologies have created. journalists are to cast a critical eye. what do you make of his comments? tom: he raises some really good
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points when you think about the long-term. all this talk about are we in a bubble, are we not in a bubble, it is not relevant. we talk to entrepreneurs and they will admit some of these things are very artificial. it is a temporary thing. you will start to see the valuations come down a little bit more and people will start focusing on, what is the core technology these folks are focusing on? think that is what he is getting at in that discussion. emily: what trends will you be watching for in 2016? what we really need to watch is to see if there is followthrough. the tech stocks were down 1.5% today, so they did hit a 15-year high on friday.
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whether or not we can see continuation of that remains to be seen. i am not saying this is necessarily a top, but some people may see today's weakness -- asething indicative indicative of something broader. you.: always great to have watson called it. if the apple watch supposed to be the number one gift this season?
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wednesdayis 3:30 p.m. in san francisco, 7:30 a.m. thursday morning in hong kong. what is going on in your neck of
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the woods? surgedthe kiwi dollar after the reserve bank of new zealand returned the official cash rate to an official low. a 25 basis point cut this morning. it is the fourth cut this year. governor wheeler signaled this move should be sufficient to bring inflation to the target. u.s. regulators downgraded the countries aviation safety ready earlier this month. bangkok is awaiting a european assessment, which is due later today. a ban on flying to europe would be a big blow to thailand's economy. -- china outlined securities regulator act as a
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gatekeeper. the new system will see offerings go through a registration process. one of china's newest smartphone makers is warning the shakeup in the industry will get worse before it gets better. dozens of companies are battling for a place an apple still collects most of the profits to be made. some companies will be forced to pull out of the game. emily: how can a startup company against apple and samsung? and also chinese companies like xiaomi? creating is all about an emotional bond with a customer, being culturally relevant. cheap phones could
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stand out is ending. one plus, only two years old, is trying to build that. the problem is almost no one is making money and smartphones anymore. apple takes up most of the profit along with samsung. what chinese manufacturers have to do is to create a strong global brand and that is what oneplus is trying to do. emily: thank you so much for that update. one stock we are watching, apple, the tech giant slipped
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2%. confirmed a nonchalant remark made by les moonves. this is a plan to sell a package of 14 or so channels for 30 to $40 a month. studio is here in the a sim cofounder. founder. what do you think is really happening? sure.cannot really be the fact is it has always been a tough fit. apple is a devices company and the software company and a services company. only to the united states, which is not the biggest market
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anymore. they would have to do deals, not just with individuals license holders, but on the global scale. it has never been that apple has launched products locally that much. you can see the struggle they have been through trying to get these deals done. emily: apple tv is the new thing. just went on sale. is this a blow to the apple tv set-top box service? >> in some ways, it is. that is the one product they of contenteeds a lot for it. they are moving it into the app donating. that is one thing this new device has. it is serving up things like games, shopping apps. not having a broadcast or
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streaming service on top of that is a little bit of a knock against it. it has never been a big volume business for them. emily: do you have any idea how well the apple tv is selling? ordering it, it literally arrived the next day. understanding, it is not the sort of product that moves in the tens of millions. i would think they do 2 million a quarter on a great quarter. 4-5.apple watch is selling 12.the holiday, as many as
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emily: let's move on to the watch. -- are in town for the watch for a conference devoted to the watch. how well is it really doing? >> it is doing rather well. 20 million in the first 12 months. they sold between three and five per quarter so far. we do not have actual figures from apple, so we have to read between the lines. aboutk it is safe to say 3.5 million per quarter. the big question is what they will do this holiday period. the holiday quarter will bring them well above 7 million.
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we do not know if it is a promotion they are running. line is likely to hold the on their pricing. they have done it with the ipad before. emily: is it because the merchandise is not moving? >> most of their orders are on demand. there is not a lot of inventory to worry about, i suspect. andt of that is promotion sales momentum. the watch has been doing well. 7% of adults estimated by storys -- they just ran a where 61% of those who buy an apple watch are buying another one as a gift. we are seeing potentially over 10 million units this quarter. emily: what about ipad pro?
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>> i really have no handle on that. i do carry one. we will not be able to get that data. we will know a little bit about the average selling price. emily: apple is planning another event in march. we could see a second-generation watch? what do you think? >> rumors, we do not know. emily: you are the smartest apple analyst on the street. >> i only work with public information. the likelihood of a new c product is very high. i think there has to be something at the lower end. there is likely to be something filling in the lower price points. as far as a new watch version, there will be a watch version
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next year. this is an unusual situation. we have only seen march events for brand-new products. the first ipad and the first watch. emily: maybe a car? gears.nt to switch on intended. -- pun intended. samsung says they will spend more energy on driverless technology. they are hoping to take market share from its south korean rival lg. of course, also apple, panasonic. it brings us to the apple car. you were one of the first people to suggest that apple take this project on. carsbegan talking about
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three years ago as an interesting topic for technology analysts. as the car business is due for a recognizes, everyone this. as far as the leadership role, apple is in a wonderful position. manufacturing scale, knowledge of integration systems. they are able to put their hands around the whole problem. i am very bullish on an apple car. as far as when, i think the more important question is how many rather than when. how many units are they willing to ship. i think they need to be targeting a million units a year. we have to put that into perspective. tesla is at 55,000 units after how many years? i am thinking apple can get to one million units. emily: tesla makes cars.
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and the battery. and it has a huge head start. can apple really take on tesla? can apple make a car that much better than the competition? cars.borghini makes good but the only make 3000 a year. it is easy to make great supercars. in very small numbers. the question is always about how many. it is easier to make a ferrari than to make a ford. the investment required to make a ford is in the billions of dollars. sense, i would say the performance is going to be adequate in terms of range. well they set up the manufacturing capacity to make a difference in a market with over 80 million cars a year?
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the wearables market in general is very exciting. that is a proxy for the internet of things. how many more devices can become "smart"? those are the three elements that make something smart. how many things can get injected? emily: what devices would make the most sense? something -- :00, what about a clock, something that is a piece of furniture. we have seen some experience -- experiment going in that direction. just like you have a watch, you have a home clock.
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behind novi sad is a very powerful -- behind that facade is a very powerful supercomputer. it can do so many things. is it something that goes against the grain of the cloud? emily: do you have any intelligence that this is -- >> none whatsoever. emily: i like your imagination. thank you so much for stopping by. me on ther joins latest episode of studio 1.0. ♪
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emily: in the latest edition of
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studio 1.0, i sit down which roy carter. he has had a colorful hollywood career, working with will smith. i spoke with him overseeing lady gaga's multiplatinum career as her manager for six years. you met lady gaga. she was an unknown. troy: she had just gotten dropped from def cam records at the time. she and i were kindred spirits. emily: no one knew who she was. dance"not even get "just on the radio. you guys were playing clubs, pounding the pavement. how did you finally break through? troy: she is probably the hardest working artist i have ever met.
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you could not find another artist who put in more hours, studied the game, studying the craft. she was not a dancer when we met. she was behind the p yeah no. she worked so hard at the choreography -- she was behind the piano. she works so hard at the choreography. emily: you guys started little monsters. troy: you do not meet to money artists who understand digital and social in that manner. it was not us educating her. it was just as much as her educating us. i remember getting a phone call, she was watching the social network movie, and she said, i want to start my own social network. of course, i made a couple of phone calls. emily: this is another
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relationship that ended abruptly for you. troy: relationships change. you begin to know what you are really good at. i started looking at us as, i am really great at being an accelerator, we sign you as a kid and we go through 30 years, i do not even know if that is my personal ambition anymore. after working with gaga and going through that heartbreak of -- we worked incredibly hard to build this empire and all of a sudden, you get snatched out of it. it was a little bit hard. emily: troy carter, such a fascinating story. you can catch the full interview right here on bloomberg
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television, bloomberg.com, and it is a podcast on itunes. isebook ceo mark zuckerberg on friending donald trump because of his controversial stance on the muslim community. trump called for a ban on muslims entering the united states. zuckerberg voiced his support for muslims, saying i want you to know you are always welcome here and we will fight to protect your rights. google is no longer number one. why the search giant is number eight on this particular ranking list. ♪
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emily: if you are looking for a job, how about booking a stay at airbnb? the home sharing service is top of the list of the best companies to work for. last door releasing -- glassdoor
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releasing this list. thank you so much. list this year. next really interesting, first time on the list. last year, they did not have enough reviews to make the methodology cut. they consumer brand, -- a big consumer brand, but not as well-known for their workplace. it is a workplace we should be talking about because it is really interesting. it is an incredibly mission driven culture. bring a sense of belonging to people everywhere. they do that for the intersection of adventure and travel. i would not have thought that. i would have thought they wanted to be the world's biggest lodger.
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they give everybody a $2000 credit to use on airbnb. i would not be surprised if they have unlimited vacation. facebook last year was still in its post-ipo shop. what is coming through in the narrative they share, the company has settled in -- the narrative this year, the company has settled in. hand,, on the other people are starting to sites that it has gotten so big, they are beginning to feel farther away from their impact. emily: what are people saying about alpha back? -- alphabet? >> it is breaking down the internal culture and cohesion. emily: how many companies are tech companies?
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50.1 out of the top it was 14 last year. a lot of oil and gas, retail. i think it is because if you go to what makes a great company, the number one thing we see repeated is a strong culture and a set of values that is driven home throughout the organization by a strong leader. that is more common in tech that other industries. emily: where is yahoo!? >> marissa mayer, her honeymoon period continues to be over. emily: talk to me about the methodology a little bit more. you have a special algorithm by which you come up with this list.
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>> it is pretty simple. 30 million people per month visit glass door. meaningful number of those people tell us what it is like to work at their company. that is the only way this data set is built. this is completely based on what the people, the employees in the company say about working there. we feel it is the best representation, the employee's choice awards for companies. be considered for this year, you had to have 75 reviews in the last 12 months alone. the algorithm looks at last rating, andgs, ceo we begin to piece together what is a full and there it is for this company? emily: what about twitter? >> twitter declined in the ratings this year.
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if you read the reviews, they are enjoying a jack dorsey return halo. employees are revitalized and excited to have him back. emily: we will see where twitter ends up next year. that does it for this edition of "bloomberg west." we will see you tomorrow. do not miss this week's episode of "studio 1.0" with troy carter. ♪ sure, tv has evolved over the years.
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it's gotten squarer. brighter. bigger. it's gotten thinner. even curvier. but what's next? for all binge watchers. movie geeks. sports freaks. x1 from xfinity will change the way you experience tv. tand that's what we're doings to chat xfinity.rself, we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20.
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it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. ♪ >> from our studios in new york city, this is "charlie rose." we began with republican presidential candidate donald's controversial statements. his campaign stated that all muslims should be barred from entering the united states. he repeated the statement on monday evening at a rally in south carolina. j trott isdonald calling for a complete and total shutdown of muslims entering the united states until our --ntries representatives country's representatives can figure out what the hell is going on. charlie:

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