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tv   Bloomberg West  Bloomberg  April 27, 2016 6:00pm-7:01pm EDT

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better relations with russia and china. trump also said that america's allies need to do their part. our allies must contribute toward their financial and political costs. our tremendous security burden. look at the united states is weak and forgiving. they feel the obligation to honor their agreements. trump's speech came after his sweep of five northeastern primaries. ted cruz has named former candidate carly fiorina as his running mate. fiorina dropped out of the race earlier this year. for the third meeting in a row, the federal reserve has opted not to raise interest rates. the fed said the statement says
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they remain optimistic about the underpinnings of u.s. growth. less worried about risks posed by the global economy. ♪ emily: facebook hitting investors sweet spot with another glowing earnings report. surging revenue and steady user growth. mark zuckerberg has more to come. paypal giving the markets a strong showing. leading revenue and profits. how long can the company fend off the competition. yahoo! scores and narrow victory against activist investors. the company may have averted a boardroom showdown but is it
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speeding down the fast lane to a sale. facebook shares surging after hours, the stock jumping as much as 9% off better-than-expected revenue. the social network reporting quarterly revenue of $5.4 billion, up 52% over the same order last year. a profit of $1.5 billion. positive engagement messaging. steady growth in daily active users. the biggest surprise was a proposal for a new class of stock. mark zuckerberg wants to issue a new class of nonvoting shares so he can continue to make big bets on things like conductivity and virtual reality and fund the zuckerberg initiative. without diluting his ownership stake. able tos, i will be keep founder control of facebook so we can continue to build for the long-term. priscilla and i will be up to give our money to fund important causes sooner. right now there are amazing
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scientists and educators doing incredible work. joining me now to take a deeper look at the numbers, gene munster josh marsh and steve case. facebook be on every measure. what do you make of zuckerberg asking for this new class of shares? gebne: he them more control in terms of the company i think he is wise to do that. this is him making it very clear that he is in charge of this company. he wants to see some longer-term bets throughout. he doesn't want to be pressured quarter to quarter.
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emily: mark zuckerberg did speak about this a little more depth on the call. zuckerberg: this will allow us to improve the funding structure the service so well. than $1 million worth of stock in facebook shares over the next three years. that is still my commitment. will update the shareholders on future plans beyond that. emily: i spoke to the cfo who says that a large part of facebook success is due to mark's leadership. this will allow us to maintain the structure that has served the shareholders well. what you think of this? josh: it is been an extraordinary success. i applaud their work on these moonshot big bet projects. i think the jewel class is a tricky issue.
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if sometimes can be a bad thing. classt sure the dual structure is a good thing. but he has earned the right to continue to steer the ship. back at the history of different companies, sometimes there is a change of strategy and somebody is locked in the doesn't have control of it. that resulted in not really making the right decisions. that has not been a problem in the past decade. it might not be a problem in the future. general, i think there is some question about whether the dual class structure is a good thing in the long run. the underlying issue is how do ceos and founders have an incentive to take that long-term view and invest in those long-term projects. i do think there is a general concern about wall street being too focused on short-term quarterly results. emily: this is a good time to ask when you beat expectations
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on every measure. sharing has been in decline. on facebook. dave weiner told me that people sharing more on facebook but how they share is different. he says they are very well positioned across all forms of sharing. josh, what you make of that response. josh: posting to social media has been dropping. it could be a big challenge of that continues. it doesn't seem to be affecting the revenue yet. it is definitely something to keep an eye on because so much of facebook's revenue at the moment is driven by new advertising. newsfeed isn't necessarily governed by the original sharing. emily: when you look at the
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results they look great across the board. what you may take a ways? ene: they are growing revenue in a similar pace as they did in the december quarter. the reason is that they are continuing to find ways to insert more ads into the feed. the don't feel as much like ads to people. that is one of the genius things that they have been doing. they are having success without tapping into these other areas like instagram. it is hard to find things that aren't working. i'm at a loss to try to point to something that is disappointing in these results. emily: it is hard to imagine a time when facebook be challenged. over the next decade, what do
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you think the biggest challenges would be. steve: facebook ally has been a big success. getting a lot of traction. add to theto platforms. some really smart acquisitions. the risk particularly as we transition from the second wave of the internet to the third book, is focus of my the innovation and things like a health care and education. some of the leaders will continue to lead the way but some other new companies will crop up. that is was a danger when you are the incumbent and you are so strong. emily: we are in the early days of monetizing instagram. but they have these messaging apps that they have even turned on the firehose yet do you see much more attention -- potential not just for the short of the long-term to make a lot more money with this family of apps
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that mark zuckerberg is made these big bets on? they effectively have another two facebook's that they haven't even really started monetizing it. they need to start out monetizing these platforms. you can't just stick and send them as you can on facebook. driving one-on-one engagement between businesses and customers. withng with messenger companies like sprint for customer service. we are still very much in the early days. emily: investors are still wildly optimistic about it. it's shares are surging. thank you for being with us. other tech stocks we are
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watching today. apple and twitter shares plunged off the backs of their latest earnings reports. twitter drew more users last quarter but not enough to attract more and dollars and that sent shares down the most in eight months. apple shares reacted to the most -- first quarterly sales declined more than a decade. the decline was more than the entire market cap of many other companies. up, take a look at paypal. shares rising after hours after they beat some expectations for profits. we break down the numbers after this. ♪
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paypal beating
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expectations on both sales and profits. earnings per share of $.37 higher than the estimate of $.35 per share. volume of processed transactions up 26%. payment transactions also up 12%. ceo steve case. .nd jean muster we're almost a year now from the split with ebay. gene: there's a nice tailwind in terms of the use of payments. they celebrated their total volume which is a key metric. as the business stands today, it is going well. the future chapters are going to be more challenging.
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things are going well today. emily: i know you think of paypal as part of the third wave. steve: the first wave was really building the internet. the second wave has been building apps and services on top of it. twitter and facebook. the third wave is really integrating the internet throughout our everyday lives. it will require little different mindset. partnerships and policy regulations will become more important. moreverance will become important. these are tougher battles. emily: let's take a look at the competition. apple pay, samsung pay. what you think is the biggest threat to paypal?
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gene: as soon as apple launches the new version of its apple pay that could be a turning point. if apple was able to use a secure online piece that encrypts financial data that paypal won't have access to. apple only has about 25% of the global smartphone market. people spend a total of money online. ultimately those combinations of all those players impacting paypal. apple pay will be more potent in terms of the impact. and revolution you guys .ave taken a look at finn tech a lot of that innovation is taking place outside the united states. how well positioned to his paypal to compete with them? steve: i think they are doing well. there's too much focus on what is happening there. the bigger picture is these large financial banks like jpmorgan.
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the debate in washington is are they too big to fail? i think the question is they are big to innovate. the third wave will be about the connection between the innovators in the policymakers. someplace like london is really leading the way. we have to enable the right kind of innovation. enabling those startups to take on some of these a giant companies. amalie: what is paypal need to prove? gene: they need to prove their five parts of the digital wall. they do a good job of desktop. ,here are two important parts in app and point-of-sale, where they haven't proved themselves. having a seamless product, that is the key. small amounts of friction have a dramatic impact on behavior. think about when you put your credit card into the chip reader
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and you have to wait an extra five second, how that feels. paypal needs to streamline what they're doing to make it is frictionless as they can. emily: thank you for joining us. arianna huffington wants to help steer uber in the right direction. she is joined to the board of directors. she is already an investor. who was working to fulfill a promise to shareholders that they will be profitable by the second quarter of this year. they are facing increasing competition from left. bringing emotional intelligence that the company is lacking. coming up, yahoo! ceo marissa mayer makes a deal with one from august vocal critics. we would dig into the details.
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a stock we are watching closely. lending club. shares surge as much as 9.4%. closing just under 8%. after an analyst at loan marketplace says origination fees charged to riskier borrowers. they are now being charged a 6% origination fee. the price increase could contribute 12% to revenue growth. ♪
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activist investors have reached an agreement with marble technologies to add five new members to the company's board. star board took a 6.7% stake in january.it maker in markel ceo and president agreed to step down. the company still looking for a
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new ceo. another star wars target. yahoo! has scored a narrow victory. reaching an agreement with the activist investor. it will name new members of the board immediately. they threatened ceo marissa mayer and let management wrist chain some sway in deciding the company's fate. avoiding a proxy war may increase the likelihood of the sale of yahoo! assets. who wins and who loses? it is pretty clear that star board wins. when two.hareholders and existingives management lose. they now have a chaperone on every day. they couldn't be trusted.
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emily: now i understand. ursa minor said this will allow us to keep our focus on the increasingly important objective. we are looking forward to looking -- working with the entire boards to maximize your shareholder value. what does that mean? brian: there is some truth to a sale may be more likely. we've had a long battle with star board. it goes back to 2014. we've had saber rattling and proxy wars. now marissa mayer saying let's come together and see if we can work it out. this shows up we can all get together and this connection happen. who knows? emily: have you expect the sale process to proceed now?
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how do you expect it to move forward? having put the kind of people that they have. they suggested there were involved. there was a sense that this had to be a monolithic sale in terms of the size of the company. i wouldn't be surprised to see more of a focus on a kind of dismemberment of yahoo!. some of it goes in bits and pieces rather than a single monolithic sale. that is why you saw a number of people brought to the board that you did. emily: talk to us about the status of the bids. who is still in the running. paul: we believe there are more
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than 10 that were involved. this is a winnowing process going on right now. it is a question could there be sort of a breakup of yahoo!. a lot of people who matter what happens say let me get a reasonable valuation. $4 billion $8 billion. that is where we are at. we are not in a resolution. that's another speed bump. emily: paul, we don't know the substance of the office. from what appears to be on the table, what is the best case ?cenario for yahoo! case isthink the best that kind of dismemberment. i think yahoo! is being held for ransom in a sense. people say they have to buy this pile of stuff and go out and retail a bunch of pieces of it. so i'm going to be lower than you think i should. it is kind of like he used car
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problem. that was bored to knows this and star board knows it. they are saying made we can make the margin ourselves rather than selling it at a lower price to a bitter. emily: when we hear more brian? the next fight will be coming up a shareholders meeting in june. we can look at what happens. there's a lot of stuff on the table. is more of a spring in the step of some investors now. emily: could this take through the end of the year. brian: could be sooner than that. because it is not we never know for sure. emily: thank you both. intimate, and conversation with the young
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computing ways who grew up to master the music industry. spotify's ceo tells us what is it like to be a tech celebrity in sweden. more of bloomberg west coming up next. ♪
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mark: former u.s. house speaker dennis hastert has been sentenced to 15 months in prison for violating banking laws. revealedmoney case
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that has to sexually abused at least for athletes when he was a high school wrestling coach. the judge called pastors a serial child molester. president obama will make his first trip to flint michigan since the drinking water crisis. heavy fighting continued today in libya. they are battling for benghazi. islamic state took advantage of the security vacuum after muammar gaddafi was assassinated. the european union is rejecting greece's request for a summit over bailout money. askedeek prime minister for a meeting with eu leaders.
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creditors won't agree to give greece more money unless it imposes more austerity. ♪ paul: we expecting some modest gains here but also some modest declines on the nikkei when they open. the reserve bank of new zealand left to interest rate unchanged. the big rates decision today is japan.
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we'll be watching there to see if there's any change toward traditional keys and techniques. out of korea, we have samsung earnings for the first quarter. those are expected before the opening. the market is expecting a 2% decline there. earnings likely out of sony. ♪ emily: this is bloomberg west. post today is aol cofounder steve case.
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he is just written a book called the third wave. he claims a new paradigm we are entering. the first wave of the internet was the years between 1985 pence 2000 when companies like aol were bringing people online for the first time. the second wave involved companies like facebook and twitter link ecosystems on top of the internet through apps. and now the third wave. what companies survive and steve:in the third wave? it depends on what they do. we talking earlier about facebook and twitter. they did exist. zuckerberg was still in high school. emerge andple will some of the current leaders will remain leaders. it depends on how they play it. when i was a kid could ask that for photography. they ended up going bankrupt because of digital photography.
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they actually invented digital photography. but they didn't invest in it, they didn't partner. some people may need to partner with larger companies. to get that market entry. sectors like health care and education and transportation, things like smart cities that require a lot of companies to be working together just as the first wave a lot of companies work together to build the internet. uber hasn't partnered with anyone. : and it is causing the problems. they are not available in germany or south korea. they had some real challenges. in washington two floors of the building have focused on policy. they get started and second wave hasn't happened. importance on more it will have significant policy and locations. that will be much more common in the third wave.
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emily: we talk about a bubble and inflated valuations? 75% of venture capital went to california and new york and massachusetts. but we are seeing the rise of the rest. great regions all across the country. health care i.t. in madison's wisconsin. educational tech companies in new orleans. we're seeing innovation disperse. arestors california starting to realize that the entrepreneurs are building great companies there. their starting to invest in those places. emily: do others suffer? steve: sure. are delayed public offerings because people don't want to go public and have the risk of a down round. so in the last couple of years things have been overheated in that late stage private market. if youhere that problem
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are in chicago and nashville or new orleans. . some of the cities of the rise of the rest is that the magic leap has raised money from google. they are in fort lauderdale florida. that is the rise of the rest. and: you are based in washington. we've been talking about the tense relationship between silicon valley and washington. sides need tooth do to reach common ground. steve: we need to talk to each other. right now we're talking past each other. silicon valley, most innovators don't want to talk to the government. they want nothing to do with it. when you are dealing with things like health care, we do care about what drugs we taken things like food systems have make sure the food is healthy. the idea things like driverless cars were drones. it will require much more dialogue in the third wave.
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that was common in the first wave. the internet was possible because of the cooperation between the government and private companies. the government actually invented the internet. it was less common in the second wave because of all the apps. it will be more common again in the third wave. even though it is hard to deal and may require more perseverance. the winners will recognize the partnership policy and perseverance. emily: will yahoo! survive? steve: i hope so. they were great innovators in the late stage of the first wave. i hope they continue to be a leader. it depends on what decision they make and leading into the future rather than focusing on the past.
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emily: steve case, revolution ceo. cofounder of aol. always great to have you here. in our new series hello world, bloomberg takes a fresh look at the explosion of technology around the world. sweden has the highest number of per capita unicorns. startups valued at 50 billion or more. one of the most famous exports is spotify. >> you have to set off on the path of doing tech and music. learn to play music. i got a guitar when i was about three or four. the computer was when i was five. for me it was all about games. just fun playing. how hard would it be to try to fix the games.
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coding games. i never had a normal job. when i grew up i did realize how you make money. yourself,omething that was just a totally foreign concept. valley, from silicon sweden has the highest per capita number of unicorns. always new money and fame. suiteuch of scandinavia, operates under a cultural code of conduct known as the gondola. philosophy that demands people do not think too highly of themselves. the people recognize you out on the streets? >> they do but because this is sweden no one really comments on it.
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cut to 2016 and this wave -- way of living finds itself in conflict with tech billionaires boozing it up and clubs. he knows the situation as well as anyone. >> by the time you are 21 you were a billionaire. you told couple of businesses. -- you had sold the couple of businesses. u.s. were. showing off. -- you went through a. of showing off. >> i was almost ashamed of myself. today i realized that there was a huge time of insecurity. it was a lot of fun. don't get me wrong. it was not who i am. the idea the you don't want to stay out -- stand out in sweden.
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you do stand out when you are making billions of dollars. >> it is changing. i see for rvs and the lamborghini's streets of stockholm. the fabric of how we use today. check out the full episode of hello world this week on bloomberg.com. theng up, we sit down with ceo of door down. the food delivery market may be overstuffed. this weekend we will bring you the week. and our longform weekend show the best of bloomberg west. colorful ceos hopes arise and will spend a boatload of money on yahoo!. ♪
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emily: an aggressive status update from elon musk. spacex tweeted planning to spend dragons to mars by 2018. details to come. we are referring to the specific type of spacecraft spacex would send. -- attachedacted concept art of what dragon would look like. in the solarywhere system. the red dragon mars mission is just the first. it would help demonstrate the technology needed to land large payloads on mars. goal is to enable people to live on other planets. plate- has a lot on his right now. despite being in an overcrowded market, it is expanding to its
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24th market in columbus ohio. partnerships with carl's jr. and the cheesecake factory. some question whether door -- discerns -- deserves unicorns status. , you guys have been expanding. making deals. talk to me about your experience with expansion and partnerships? tony: the biggest challenges keeping quality up. door -- was only in three markets for a while. it is certainly no small feat. maintaining the quality that the customers deserve is very difficult. i am a working mom that i see the need here. why does this company survive? it is important to
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understand how the company get started. it was founded on the principle that technology can create a new type of logistics company. because we can do that we can offer a better service. a service with more selections. we make the complexity of logistics so simple. let's talk about the unit economics. investors have been skeptical. when you going to be profitable? beginning the company has always considered as economics and how to build stable company. for the first 60% of our lives this company was only into a three markets. we were able to grow very quickly once we got it right. while doing so we were able to get our first for markets to be
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cash flow positive. that means every penny that is , everything market from marketing expenses to salaries. markets are you closer to profitability than others? in the beginning we are just making sure we get the service out there. getting the word out and making sure the quality is up to snuff. once we make sure that the quality that we have is good then we can actually grow and change the business. for us, as long as our unit economics are positive which they are, we can continue growing. emily: you do facing challenges ahead. restaurants and customers have sued you. why?
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i: the complexity of running a market like this is that we have to balance different needs. we are not just a consumer cap. app. is is always a set of trade-offs that we have to offer in our ecosystem. emily: you talked about being more transparent. what are we going to see that transparency? tony: you will see that the coming weeks. we want to make sure the service was always transparent. we thought the best way to do that was to show you up front with the prices would be periods he wouldn't be surprised later on during the checkout process. we were experimenting and sharing customers feedback. you'll see those changes rolled out in the next few weeks. uber just settled a
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lawsuit. what is your position on the contractors? tony: one of the most important parts here is the balancing of the needs of every audience. in our contractors, the most important product is that flexibility. what you want to do is to make sure that you can honor or maximize that flexibility for them while making sure the to take their input. bettering the entire marketplace. that is what we will continue to do. emily: i mentioned to the unicorns status at the top. you ended up at a $600 million valuation. what happened? company, ourselves included, ever goes for evaluation. for us we actually had a saying that the score will take care of itself. we never mentioned to the valuation in any of our financial documents. when it comes to financing, it comes to financing, is not getting the money that we need
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and building the business and doing it in a way that investors are employed. if we can achieve both of those needs that we will let the store take care of itself. and only: thank you. emily: thank you. google has been fighting off an eu antitrust investigation for five years. getty is now jumping in filing a complaint against google is well. the details are next. ♪
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placedgetty images has an official complaint against google's use of images. they say they made an agreement about image search allowing them to use high-quality photos for free and removing the need to visit the original source site. getty now pointing to widespread copyright infringement. getty images general counsel
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we'll go to mosh the joints me from seattle. why file this complaint now? this is an issue that we have been looking at for a good three years. in terms of the format changes that happened in 2013. this has been an ongoing ascussion within our company well attempt to engage with google in a constructive dialogue on how to address these issues. we first approach to google right after this occurred in 2013. we had very little progress in terms of options here. we were given an option of robots detecting our site and images and removing them from the internet. this doesn't address the issues we face when you have so many licensees. these images in turn get indexed by google. solutiont have an easy is proposed.
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we joined to the existing inquiry and to search. as interested third party in may. we have made no real progress in moving this forward. emily: can you estimate how much business has been lost by getty as a result of google search? yoko. you have to look at the multiple dimensions. let's start with the traffic lost. when those images are no longer clicking through to the source, you have all of that user engagement and the data that comes from that engagement that you are no longer seeing directly to us. you got paying customers whose websites are losing traffic. simply because those images are being indexed from their site trafficthat captive that is engaged on google and not clicking through to the licensee websites. to your point of the
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infringement, you got higher see occurring. piracy occurring. emily: did google ever try to settle? yoko: we have an ongoing business relationship with google. we try to have a constructive dialogue about these issues. but they really led nowhere. we have to stand up for content and creators rights here. that's why we filed. thank you so much. it is time to find out who is having the best day ever. is facebook and mark zuckerberg. shares in the social networker up 9% in extended trading after earnings shattered analysts expectations. also proposing the creation of new class c shares so that shareholders would get to shares for each class a or b share they
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currently own. this would potentially own mark -- allow mark zuckerberg to sell some of the shares will still maintaining control the company. that doesn't for this edition of bloomberg west. tomorrow my interview with twitter cofounder gemstone. earnings from linkedin and groupon among others. that is all for now. ♪
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announcer: from our studios in new york city, this is "charlie rose." charlie: welcome to the program. tonight a conversation with president barack obama. the interview follows are set down at the white house last week area this took place in hanover, germany where the president attended and industrial fair with german chancellor angela merkel. this was the final leg of a trip that included stops in saudi arabia and the u.k. in london he had lunch with the queen, had dinner with a future king, and played golf with the prime minister and celebrated shakespeare. in riyadh he met with

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