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tv   Bloomberg West  Bloomberg  April 18, 2016 6:00pm-7:01pm EDT

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ff vowed toe continue fighting. she said that a president can only be impeached if a crime is committed. if the senate majority votes to put her on trial, she would be suspended while the vice president takes over. jerusalemexploded in on the at least 21 people in what police said was a terror attack i. the prime minister benjamin that yahoo! said whoever planted the device will be found and israel will "settle the score." it is time for the palestinian readership to -- silenceip to end their and start acting as leaders. >> the tense exchange took place during the security council.
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the western-backed opposition wants the rebel groups to put the peace talks on hold. 24 hours a day, powered by 2400 journalists in nearly 150 bureaus around the world. bloomberg west is next. emily: i am emily chang and this is "bloomberg west. coming up, netflix forecasting weaker subscriber growth. can international growth give them the boost it needs? lus, ibm revenue falls for the 16th. straight quarter we will look for -- 16th straight quarter. we look for green shifts.
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first, to our lead. netflix shares plunging in after-hours trading after forecasting weaker subscriber growth this quarter, especially in new or markets outside the u.s.. they expect to add 2 million international customers. that's important because netflix for beings future able to bring the on-demand tv revolution to the whole world. this overshadowing first-quarter results. >> hulu is doing some great work, amazon is, hbo, showtime. there are so many competitors
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and everyone is working hard to build the best content. we are seeing growth in the overall tv market, that is displacing linear tv. it is natural that everyone is coming in as they realize that the future is internet tv. emily: joining us for a full breakdown is lucas shaw who ourrs bloomberg and l.a., editor at large, cory johnson, and our partner from hippo adventures. corey, subscriber numbers from last quarter were pretty good. it is the forecast that does not look good. what are the big themes? y: the forecast is so important because netflix grandfathered in a lot of their old customers and said they will not do that this time. we do not know what the effect will be on their customers. growth of only 500,000 new customers predicted for next
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quarter, combined with that millionntment in only 2 being added internationally suggests a slower growth rate. the question is, how big can this business be? the suggestion perhaps is that netflix is getting closer to how big it is going to be. the reason that is a problem for netflix is that they are contracted to buy so much content, their costs are staying high, they need more customers. if they cannot add more customers, they will face serious problems honoring the commitments they made already. emily: i was speaking to david nevin, who competes with netflix, and i asked him what is netflix's biggest threat? look what he had to say. >> at some point they have to start making earnings. emily: is the original programming going to pay off? >> they have to grow a lot of
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subs to justify that amount of programming spend. they are racing the clock. you know david nevin's well, at what point do we know if it was worth it? >> we should start to know early next year. reed hastings has said that netflix will deliver material profits starting in 2017. there are profitable in the u.s., but if the growth does not keep up overseas, or if currency markets hurt them, we might not to the profits next year that they had forecasted. one thing that i thought was interesting that they pointed and one reason, why the growth outside the u.s. might not be as fast as people want, that they expanded to 130 new countries in january. onlyhe most part, they are appealing to people who can speak english and have international credit cards, which means they cannot add on
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most of the local speakers. emily: just in time for netflix's earnings call, amazon decides to announce a standalone video service. be, an amazond to prime number -- you had to be an amazon prime member, now it only costs a few dollars more to do the whole shebang. how does this change the competitive landscape for netflix? >> netflix is the target for everybody, including people who come from linear tv, like showtime which is an offshoot of cbs. they have been here the longest, they have established the model and will be the target. netflixame token, should have many of cards to play. we just mentioned internationally that they only appeal to people who speak english. they could add local content. in the united states, they could take pages from linear tv.
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they could start doing live television or news. they could tier the programming overtime. they have this ability to target what people watch. there is a lot that they can do to grow. by no means do i think they have reached the end. emily: netflix has said they are in talks to break into china. how realistic is it? >> they have said almost nothing. line in their letter to shareholders today that said they are in discussions and have no material update. it is pretty much the same line they have had for a euro or two -- for a year or two. anytime i have had the chance to ask reed hastings or anyone, they have nothing to say. that is typically a bad sign. you heard on the call today when asked about off-line viewing that reed hastings has said that
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is something they would have to consider when previously they said they would not. there would be some change in the language about china if there were progress. emily: that is a story to continue to watch. thanks a much eric hippeau. want to speak with you about ibm. big blue shares of dipping after-hours after releasing first-quarter results. the 16th quarter of revenue decline in a row. it is a company in transition having away from its software businesses with new growth and data analytics, cloud, and security. what is next for big blue? cory, i will start with you. waysame question here in a that we are asking about netflix. when will we see these investments that ibm is making hit the bottom line? co: $10 billion in investments
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in the last couple years in acquisitions. throw in the 0% 17 quarters ago and you have no growth for 17 quarters in the top line. they said they would be focusing on more profitable as mrs., but we are not -- profitable businesses, but we are not seeing that come to fruition. they have stopped their old form of delineating the different business units. we do not know how this compares to the last because they did not give us the numbers. they have a completely different structure. as a result, they want to start over and they will get that chance. the 5% decline looks a little better, but they had some currency conditions. the dollar is a little bit weaker. the strong dollar they had been complaining about was not as much of a problem. but this shows you what a tough
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business, not just ibm, but throw in hewlett-packard, cics sco, oracle's sun business, d ell, we can see all of those businesses struggling. emily: i mentioned earlier that we would talk about the green shoots in ibm's business. where do you see bright spots? >> you are seeing cloud business up 36% in constant currency. analytics, security. all of that is taking place. we have been talking about this for several quarters. this portion is smaller than the legacy business. it will be a few years before you start seeing revenue growth and catch up to the decline. anarag rana, cory,
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thanks for holding there. we will take you through the twists and turns as the legacy internet up and he waits for elementary bids to roll in. ♪ preliminary bids to roll in. ♪
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emily: verizon is said to be fer when anrd an of unexpected player is jumping into the ring. in the meantime, many companies who are reportedly interested have decided to pass. here to break it all down is my guest host eric hippeau, as well as anthony, who covers yahoo!.
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instantly, today is a deadline, but as far as we know, yahoo! would still accept a bid tomorrow. what do you make of the field of potential players? yp,zon, white the, -- potentially "the daily mail." >> i think verizon is in a poor position to acquire those assets. they could combine it with aol and create a mobile advertising juggernaut that could compete with the googles and the facebooks of the world. i think verizon is in the best position. i never other names, thought that the vast majority would stick around and make a bid, which is why last week i came out with a note and essentially said that i thought mid single digits was about the bidders i expected for yahoo! this week. emily: eric, you are in an
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interesting position. you were an early investor in yahoo!, the former owner of," "the huffington post,"," owned by verizon. depending on how you value yahoo!'s core business and the fact that they would try to do this depending on the -- kind of like a reverse merger. >> i don't know what to think of it. business.ld legacy it seems to be very small am a about $1 billion in revenues. about $1.5 billion in market cap. it seems like an unlikely candidate to buy yahoo! emily: what about the yahoo! japan part of the story? is there a chance that that part of the company could end up in a bidding war? >> it could, but i think it is unlikely. tos a complicated asset
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throw into the mix because of tax implications and ownership implications. what we will see happening today and tomorrow is probably a m oving target. probably some other --d assets like emily: is it about what will appease the starboard investors, what will avoid a proxy war, or is it about melissa myers trying to keep her job? >> i think it could be all of them, but at the end of the day you have to please the shareholders. given their failed attempt to spin off alibaba shares, i think the board has the responsibility to shareholders. that is the best way to reward your holders, the best way to create value in the stock. i expect them to sell the entire
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asset as a whole. yahoo!we are watching earnings on tuesday and there is a big yahoo! shareholder meeting coming in june. eric, how do you expect this to play out? >> i am a little confused. the reports were that there were reluctant to give open information to the bidders. that there was a whole process that was muddled and confusing. i think that probably scared a few people away. i don't know that the private equity guys could make a good decision in terms of what to price to put on it. expectations are that revenue will come down again. without full cooperation on the part of management, the board, and the company, it would be
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very hard, if you are a future bitter looking at cash flows, it would be very difficult to make a good decision. emily: and some people are looking at a reverse morris trust, which is a tax-free merger. that would send -- certainly be an interesting turn of events. thank you so much for joining us. eric hippeau, you are sticking with me. we will be staying with this yahoo! conversation. up next, areata huffington on marissa mayer's -- arianna on marissa mayer's leadership. ♪
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emily: in this week's edition of "studio 1.0," i sit down with arianna huffington, editor of "the huffington post."
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we talk verizon and whether she believes the telecom giant has a long-term strategy that includes yahoo! and "the huffington post." and thatn has decided, is why they want "the huffington post," that the future for them has to include a very fast media technology company. so, yahoo! would fit very well in the strategy. there is competition with softbank and maybe google. we will see what happens. emily: what are the synergies that you see with verizon and "the huffington post." verizonynergies with have huge distribution potential. we're moving more and more into video. have mobile video play, and have produced and paid for great
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content from many providers. "huffpo"antastic for because it gives great distribution. emily: what do you think of the wireless company getting into content? it is an interesting new world. >> i think it is a smart move because the world is changing. it is really the animator's did -- innovator's dilemma. if you do not change fast enough, then it is too late to change. in a sense, if the new york times had changed early enough when it came to digital technology, there would be no room for the huffington post. emily: there has been such intense scrutiny on marissa mayer's's leadership, do you sympathize with her? >> absolutely.
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marissa is a working yahoo!who chose rto run a certain way. at the moment, clearly shareholders are not happy with the way it has been run. emily: do you think that yahoo! could be revitalized with new leadership? >> i think that one of the great advantages of yahoo! is that it is a hybrid. it is a journalistic enterprise, and it is a platform. it owns tumblr. i think tumblr is an incredible asset. as more people want to express themselves in 140 characters, and you have an incredible opportunity to use tumblr to allow people to express their
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views and use it as a native advertising play, we see that this is, for us, one of the most important monetization channels. our relationship with goldman a mattress company, they create intersections that are for me one of the most evolved forms of native advertising. emily: would you like to see yahoo! at verizon? >> absolutely. it provides us a bigger playground. emily: my interview there with every on a huffington on "-- on arianna huffington on "studio 1.0." a developing investigation, seranos is under investigation by the -- theranos
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is under investigation by the fcc. caroline, what is it that you know? it looks like we are having technical difficulties. can you here me? >> i can hear you. emily: what is the latest that we know? >> right now, we have just seen a document from theranos, where they told us they are informing their business partners of a number of investigations, some of which are new to us, including investigations by the fcc and the attorney general's office in northern california. emily: how does this ramp up what we were speaking about with regard to cms? is this a separate story? >> it is a separate story. they are different investigations. we did not know previously about the fcc investigation. this is more scrutiny on theranos. the company says they have been complying so far. it had just asked to see
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documents and the company is cooperating. some serious allegations being leveled at theranos. i know this is something that you will continue to follow, and we will bring you new developments as we have them. coming up, the online education udacityyou density -- launches in china. my interview with the founder later this hour. if you like bloomberg news, check us out on the radio. ♪
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>> i am mark crumpton, you are watching "bloomberg west." in japan, a series of earthquakes that struck on
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thursday are the nation's worst in five years. more than 110,000 had to flee their homes. the uss is delivering bread, water, and ready-to-eat food and other supplies to those cut off by the quakes. rescue crews are continuing their search for those reported missing. in ecuador, hundreds of aid workers are joining search and rescue efforts following the saturday earthquake. it was the heaviest earthquake in ecuador in decades. experts say at least 350 people were killed. -- 110,00010th out houston area homes and businesses are without power after rain fell that flooded roads. public transportation has been suspended, and schools and city offices are closed today. the mayor urge people to say at home and off the roads. donald trump and hillary clinton
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are leading ahead of tomorrow's new york primary. mr. trump has the support of 56% of likely gop voters, ted cruz 18%. hillary clinton leads rival berniesanders 55%-40%. from bloomberg world headquarters, i am mark crumpton. it is just after 6:30 p.m. monday here in new york. i am joined by bloomberg's paul allen. good morning. paul: good morning, we're expecting a very good day on asian markets today after the dow broke through 18,000 points for the first time in nine months. if we look in new zealand, currently the only market open, looking kind of flat. we are expecting gains in australia and japan in about 90 minutes time. in japan, we will be watching
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shares here. we are also watching the bank of korea. they will make a cash rate decision today, currently at a record low 1.5%. in australia, we will be looking at shares of the mining giant rio tinto, due to announce first quarter production numbers any minute now. it has been a bit of a rough year but recent recoveries in commodity prices are typically helping them higher. we're expecting to see some strong production numbers out of rio tinto when the report in a few minutes. i am paul allen for bloomberg tv in sydney, australia. emily: the tech world has lost a giant. bill campbell has died at the
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age of 75 after a long battle with cancer. he was known as "the coach" in silicon valley. both for his previous career as a head coach and as a mentor to some of the greatest minds in technology, from steve jobs to jeff bezos, to google's larry page. 1983, he became a close friend and confidant of jobs, later playing a role in his return to apple in the kinetic seven. -- in 1997. you interviewed him many times over the years, what was he like? >> i think he probably would as ifpent in discussed there were something profane about this discussion. he was a behind-the-scenes operator. he never sought the limelight. he was gregarious, delightfully profane, and insightful.
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he did not seem to know much about technology, the bits and insightfulbut he was about organizations and people. that is why so many executives and investors used him as a resource about how to structure their companies and deal with interpersonal issues. emily: bill campbell, our close friend died this morning. he helped build google and in countless ways made our success possible. tim cook tweeting, built campbell believed -- bill campbell believed in apple when few people did. eulogy at a a memorial service for steve jobs on apple's campus. he talks about scott forestall an apple. listen to what he has to say. >> scott forestall was demoing the new phone. he was demonstrating siri.
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scott did it a couple of times, and steve was across the room and said, let me have that phone. scott said, be careful now, i have this pre-much attuned to my book -- pretty much attuned to my voice. give me the phone! scott goes around and hands him the phone, steve asks a couple benign questions and says, are you a man, or a woman, and siri says, they have not assigned me a gender, sir. [laughter] emily: he was on the board for many years. how did he become involved in the company? he was like an invisible hand at companies that competed with each other. >> google and apple went to war, and somehow he continued to advise both companies. twitter and facebook, venture capital firms. because he was
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not involved in product or strategy. he operated as a kind of industry psychologist or organizational psychologist. he was a people person. he was magnetic. i think about a leader in war. somebody who could lead people and you wanted to listen. emily: until recently, he was very actively on company boards. deor resurveyn told us he was invited to become chairman of -- which he decided to do. is or anyone else in silicon valley who is a next duration bill campbell or andy grove that is filling this roll? he was one-of-a-kind. can look to folks like ben horowitz or peter thiel. somebody who was reeling to advise such a range companies,neurs and
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sometimes on different sides of the aisle, and remain friends, inspiring to everybody -- i don't think. he will be replaced. . emily: i know that you interviewed him for your book, and he had some thoughts on jeff bezos. >> people think that campbell was one who advised jeff bezos, but that's not really true. the board of directors sent bill campbell to basically fire jeff bezos and bezos basically told him to go away and did not see the magic. this guycampbell said, was hoping special and they should not displace him. he went back and told the board that they were crazy and jeff has become one of the most popular ceo's in history. emily: wasn't he also hired to fire someone at twitter? >> that may be true. you should consult the book for that one. emily: thank you for sharing those stories. we will be back with "bloomberg
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west" after this quick break. ♪
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emily: elon musk is speeding ahead of schedule on a huge tesla payday. as $1.5ld net as much billion from certain options promised by the company. 2022, to meet to these goals but he has already achieved 50% of them in three years. this is according to a proxy statement issued friday. tesla shares are up more than 20% over the last year. watching, game shop -- gamestop shares is rising. it announced it is launching a
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new division that will distribute and market its own games. that means the company will be crating content that competes against games on its store shelves. the project includes the creator of the "ratchet and clank" series. udacity is now being offered in china. this expansion follows india. similar to the expansion, they theirocalized many of popular classes to china. the udacity ceo and started by asking why he targeted china for the expansion. >> i think the good we can do in china and india is unmatched. there,lion people live about one third of the world's population. there are few great universities and a thirst for education. emily: bachus to the steps.
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-- walk us through the steps. the cost? the amount of students? >> the goal would be 1.3 billion students which would be a lot, but even 100,000 would be very intense for us. emily: there are 8 million developers working in china. you expect that number to grow to 15-20,000,000 by 2020? -- are you 50,000,000-20,000,000 by 2020, how are you expecting to do this -- -20 million by 2020? how are you expecting to do that? -- >> we had a great reception and china like we had in silicon valley.
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the put $100,000 on the table for the winning students. content andbuild projects, but place students in jobs. emily: alibaba? >> we are talking to everybody. emily: everybody would like to expand in china, but there are challenges. what were the challenges that you had to overcome? has beenggest so far to get the infrastructure working. there is a great chinese firewall and it gets in the way of streaming data from the united states. the next challenge would be scale. emily: what about your experience working with the chinese government. obviously, they have their own views of technology. has it been difficult to work with? have there been regulatory hurdles? >> for udacity it has been really easy. the most important thing is that
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the chinese government and we have the same vision. there is a lot of talent in the world, china in particular. chinese talent were developed as far as it could be, then half the apps in the app store's would be chinese. emily: i was speaking to peter thiel who taught a class in china, and says the one thing that surprised him most was how ferociously competitive chinese students are. it scared him. do you think that china has the power to surpass silicon valley when it comes to innovation and building great companies? >> i have a sweet spot for silicon valley because all the crazy innovators in the world eventually find their way to silicon valley. there is so much brainpower in china that is underutilized. it is such a new country, so to speak, going from the 1960's and
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1970's, when you can get good income and have a growing middle class. they will be amazing people in china as well and we have to find them and train them. emily: you work with companies like google and facebook. facebook is blocked in china, google country. mike the chinese -- might the kind it -- chinese government have a problem? >> we are exclusively focused on giving people tech skills. we don't take any commentary or the political history. for us, i think it's something that's good for people. emily: but they help with your online courses. is that something the government might -- >> so far we have had zero rebuff. only positive reception. they have help from google but it's only about teaching android not making tiananmen square accessible. emily: what about japan or korea? or under the region entirely? >> we are busy for the time being. we are eyeballing places like
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south america and brazil. we have connections to germany and japan, but that is for another day. emily: that was my exclusive interview with the ceo of udacity. we are watching, the alibaba finance affiliate is said to be planning an ipo in shanghai. begin the process as soon as this year. the listing could be china's highest ipo valuation since 2010. it is currently targeting a private round of funding at an estimated $60 billion valuation. coming up, 110 years since the great san francisco earthquake of 1996, we explore the 1906, we ask for technology experts are using to prevent a repeat.
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chair former fdic sheila bairdy. ♪
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emily: a story that we are watching, magically has acquired -- magic leap has acquired an israeli company. north bid is a company that has claimed to acquire a software portability that could affect millions of users on the android operating system. speaking of cyber security, the pentagon is the latest to participate in the so-called bug bounty program. programk the pentagon" runs until may 12 and participants must agree to a background check before participating. 110 years since the
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city of san francisco suffered a deadly earthquake after what experts believe was a magnitude eight point oh earthquake. ecuador and japan were both hit by major quakes bringing earthquake technology back into the spotlight. especially this question of how prepared certain regions are if a major earthquake were to strike. here, we take a look at the risks. >> according to the u.s. geological survey, california has a 99 point 7% chance of experiencing a magnitude 6.7 or larger earthquake in the next 30 years. that is known as the big one. the pacific northwest has a 10% 9.0 mega a 8.0 or earthquake. this is called the really big one. it is the cat's -- catastrophe that seismologists have been predicting for this zone.
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coverea of impact will 140,000 square miles including seattle, to,, portland -- tacoma, portland, salem. major earthquake was 130 years ago and created a new western coastline. you could say that we are overdue. the really big one was a title of the new yorker piece about this big earthquake that could be coming to the northwest which just won a pulitzer prize. here in california, how well prepared california is if another earthquake like the one that hit in 1906 hits here. y.ining me now, glenn palmero thank you for joining us. first of all, that story about the earthquake in the pacific northwest, it scared just about everyone.
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do you believe that is true? >> the story was a powerful piece because it was written in a way that we could all understand. it wasn't scientific jargon, it was just present in matters of ist whichis that fault going to go again someday, and when it does, it will produce tremendous damage along the northern and western coast. tsunamis are the big risk their. in southern california, it is more shake damage we need to be concerned about. emily: so it is a near certainty that in the next 30 years, we will see a next major quake. if the one from 1906 happend now, how bad with the damage be? >> it would be really bad. it was 7.9. we would have strong shaking from the northern part of the state all the way to the south. some 2 million homes would experience strong shaking.
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250,000 of those homes would be displaced. we estimate that the damages caused would be about $175 billion, and that's just to residents. emily: $175 billion. does that mean that california residences and buildings are not prepared? >> we have made a lot of progress in preparedness. when earthquakes occur, we make other leaps forward. think we ares, adequately prepared to rebuild following the earthquake. it takes earthquake insurance. without earthquake insurance, there is no protection for a homeowner. it is specifically excluded in the homeowners policy. after the northridge earthquake, the state of california created this nonprofit insurance company to insure homes in california, and our mission is to make
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coverage available and get as many homes protected before the ground starts to shake. emily: so you work for a company focused on getting people insured. how important is earthquake insurance? you say 50% of residences have it. what about businesses? >> our focus is on homes. basically only 10-15% have it. the rest will be on their own and have to figure out other ways to recover. debt, or on top of hope from a small financial grant from the federal government to take her of life and safety needs. we believe that the amount of protection for businesses is about the same as it is for homes. here, we have a lot of work to do to get in place the ability to survive economically. emily: what about in terms of infrastructure? what more should the state be doing? if things are so great, why would there be this much damage?
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>> there have been a lot of improvements over the next decades -- last decades. building codes are far safer than they were 110 years ago, for example. but what they say about earthquakes, when you have seen one earthquake, you have seen one earthquake. everyone is different and they all happen when you least expect it. the science has advanced, we know a lot more about what probabilities are, but you cannot say for certain. we don't need to live in fear, we just need to do whatever we can to be prepared. emily: is there any research on the big one? >> scientists say to a 99.9% probability that a big one of 6.7 or greater is coming sometime in the next 30 years. it is pretty near certainty that it will happen soon. it could be this afternoon or
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years from now. emily: thank you so much for stopping by. now, time to find out who is having not the best, but today it is the worst day ever. netflix. shares are plunging in after-hours trading after the company reported weaker subscriber growth, especially internationally. ibm is also done after-hours. -- down after-hours. tuesday, we will hear from yahoo! and intel. thursday we have microsoft and alphabet. that does it for this edition of "bloomberg west." we are focused on the workforce with alex roth. ♪
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charlie: every presidential candidate was in new york this week and the democrats faced off for a fiery final debate in the brooklyn navy yard. all of this comes days before the crucial tuesday primaries. for more, we turn to major garrett, he has been covering the republican primaries. i am pleased to have him here and we will talk about where we are. new york is crucial? >> new york is important. it will be a place for donald trump to reset.

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