tv Best of Bloomberg Technology Bloomberg October 27, 2018 4:00am-5:00am EDT
the headwinds become a worry as well. if you take those things out of the equation, they did fine. there was some slight growth rate declined in terms of what they did the last couple of quarters. waste on what we are seeing so far, these are the two areas [indiscernible] seeing growth. i don't think jeff pesos has anything to worry about. amazon basics is there but he myths, cell phone chargers and batteries. we saw non-commodity amazon label products. we saw a huge growth in advertising revenue.
up to 10% of all the products purchased on amazon are's on search search. there is huge room for growth. emily: amazon is a distant third, but could at some point catch up. can amazon really get there. >> we are seeing larger brands warming up to amazon a lot more, given this number. ad dollarsift, the shift with it. to benefit from that shift that is happening from bigger brands and they can deliver because you are advertising a product and unit
and -- you know exactly the sales. the targeting becomes much better. google goes in the opposite direction. google should be more aggressive in e-commerce and take the cloud stands more aggressively than amazon is crouching upon them from an advertising standpoint. they will be creating 50,000 new jobs. how will those costs impact in coming quarters? >> they have a ton of room to grow and offset those costs. 50% of the product searches online now occur on amazon rather than on google. the things that people want to pay for. to invest in those kinds of
tools and the cost goes up, they will see a spike in returns. huge: we know there is a turf war going on in india and other parts of the world. >> that is one uncertainty we have yet to figure out. hopefully we get some guidance on that. there is a direct impact from across border segment. but there is an indirect impact and what it means for third-party sales growth. more details, but that is a concern. emily: the call is expected to start 25 minutes from now. >> i want to hear the investments they are making, how they are paying off. there is a lot of room for opportunity and a lot of risk if they don't execute properly. i would love to hear more about how interacting with the rest of
the ecosystem. retailers and brands are reticent about what is happening right now. they need to figure out how to create more equilibrium like google has done in that market your emily: we have the holiday season coming up, a increased postal rates, how will the next few weeks -- the next few weeks are critical for amazon every year, but this year in particular. the street will expect more than they are guiding, given the holiday season, especially with more primers than what they had last year. are they able to manage the cost in terms of scaling capacity to deliver these products and meet those numbers? we did see that created an issue in 2014-2015. amazon talked about profits as evan flow. guidance is suggesting that
there is some ebb. cook is touting the importance of legislation. companies -- tech companies by monetizing the user data. mark zuckerberg defended his agree theydel and need to do more to protect user privacy. coming, tesla and shares rocketing up. but wall street is not ready to drop its cautious stance yet. and if you like bloomberg news, check us out on the radio. this is bloomberg. ♪ this is bloomberg. ♪
emily: positive cash flow of 880 $1 million, tesla made an average of 4300 models a week. we caught up with a kelley blue book analysts to break it all down. they aresly, profitable, huge, first time's is the third order of 2016. it is their only third profitable quarter. but demand is still shy. all the stops.
stillmposite number is $900 million in deposits. so demand for these cars are continuing. emily: can they do this again and again. will it become routine? >> this is what we are watching for. there was a lot of speculation that these numbers might be frontloaded. this was a huge beat. elon said as much, we expect to be profitable from q3 onward. huge yuan for tesla and shows the power of the brand more than anything. aily: normally tessler gives significant amount of notice to we found monday night that that tesla would we announcing today. is there anything unusual? fair, tesla always
reports on wednesday. as they as halloween. we were asking them to not do it on halloween because we have kids. to cometed the earnings next tuesday are pushing to november. the company has a good story to tell, might as well do it early. everyone was suspecting this would be good news. >> let's dive into the actual numbers. we are always looking at the model three. you look at the actual delivery numbers, are you liking what you see? about of the big things the delivery numbers is that they were all strong. we have not even seen the race model number three yet. taste level model 3 comes out, a lot of consumers
will like it. there is still plenty of demand for tesla. power.so much it is like a lifestyle thing like google or apple. emily: this is after a tumultuous quarter. elon musk running with the sec after he claims that he would take tesla private and had the funding to secure it. now he is stepping down as chairman. numbers the outstanding with this. we are still waiting to see who the chair will be and the board will appoint two new independent directors. it is not clear if they are doing and internally or using a
search firm, but it will change the dynamics of the board. emily: if you remain at all concerned of his other behavior and if that is something that we are watching. >> it is something we are definitely watching. lot of leeway as a brand when it comes to consumer perception. it is always under scrutiny, but consumers see it as him being different as long as he doesn't do something egregious. hopefully the quality comes along. the brand has some leeway with consumers. emily: kalli -- week froma boost this one of the company's most
outspoken short-sellers. caroline hyde and scarlet fu caught up with him to see what changed. elon musk has made such a sideshow of himself that people start to forget about the underlying business. all the headlines are about he does this and he does that. then you read about the car did as a's -- car. as a short seller, i checked my thesis. all, my god, this car is dominating and the model numeral asked -- and the model s is dominating.
but can they make money? that, all these years, i didn't really understand the tesla story. is still a lot of factors in execution, but i think being short going into this quarter, knowing he made earnings a week earlier, on top of ford's earnings, and knowing that the company is hitting stride with production of the model 3, the short interest, that is just wrong. the october 28 earnings is a positive sign. where do we go in terms of capital needs for tesla? there is always a worry they need to raise more money. are you not worried about that anymore? hours?ours, 27 see if they generate free cash flow. for years, i doubted muck.
-- musk. there are so many things they said they would do and i laughed. sec to work on a saturday. they said they would be cash flow positive this quarter. i'm not going to doubt it. as a wholeto sales have plateaued. they the add an annualized amount. bmwot only is tesla beating and audi, but also toyota and honda. people are paying more many to drive a tesla. it is a revolution i underestimated the way people
are buying these cars. the numbers you are talking are not for tesla. it is what it is. you've run the model -- >> here is where it gets tricky. as a short seller, at the end of the day, it is a car company. but we are basing those estimates on profiting on old-school manufacturing. many parts, not manufacturing as many parts, where does this model take you? you don't know. associates out of detroit, leading automotive experts thinking they can do 30% off of probably 3, they can do it. we don't know. it has become a black box. ahead, earnings and break down the main take abates
emily: let's get back to earnings. ongot off of that results thursday. take a listen. i would start with, look, i don't think it is a coincidence that you see these big cap technology and communications services technologies missing the revenue line. it is due to the currency or dollar strength over the course of a quarter. at the, when you look method -- it was missed by a hair. it was a miss but a very small mass. if you round, it really wasn't.
it was a good quarter. peoplemazing to me how are focusing on the earnings beat, which was substantial, aided by a lower tax rate. overall, this was a solid quarter, above 20% growth. it seems like the trends are intact for the company to be successful for a number of quarters to come. amazone is concern about when it comes to digital advertising. i asked if amazon is a threat. whenever new inventory is created and new consumer interest, advertisers will be interested. we believe this expands the opportunity to expand digital ad budgets. do you buy that? >> that makes sense on where
they are trying to go and the wings they are trying to do around youtube and the things they are bringing available. their costs were also higher. they have a lot of investments tv.ome of their youtube day, it isof the getting expensive to get to the right people, to get these services out, hence these acquisition services are going up. it hit it, but just barely missed. the opportunities moving forward are still very strong. the concern is the regulatory environment. there are a lot of clouds hanging over google/out for bed. we have to think long-term. tesla facing congress and not showing up. these are very concerning.
i asked about china and google's reported land to reignite its search engine in china. she told me they continue to support chinese users through mobile apps. not have said they are launching a surge product. we are making sure we make the right things for the long-term. it would be great in a number of respects, at least from a operational or financial aspect, for google to reenter china, the reality is, especially given the growing tensions between the two countries and their government's, we see that -- their governments, we see that as a longshot. over the last day or two, we .pgraded shares of baidu
we think that has been an overhang for that company and that stock. viable athink that is this point for google to reenter china. i think they have far more priorities elsewhere. just the political pressure and complexity and cost and risk of substantial,o continuing to invest in what has been working in things like waymo, that is the way that google and alphabet should be investing right now. emily: do you think that google should not have dropped project maven? she talked about how it is important to continue working with military. when you talk to amazon, jeff bezos and send in a tele-, they think, look, our country needs to be defended. is i thinkon on that
they should have continued to talk with the government about that contract. you are talking about a $10 billion opportunity, which would have been tremendous for google and its cloud business, which they had been investing in. that possibly would have been a game changer. how whatlear exactly the opposition was in terms of moving forward with that contract. you point out some very good rationale that other companies have articulated. that was a mistake to walk away from that contract, especially at this stage. emily: google and has some business being done in europe. fineare facing that record for the android issues. it remains to be seen how that will lay out. how must you think that will
them -- will hurt them? >> i don't think it will hurt them. in some ways, google could make more money because the filmmakers will have to take google for services they gave away because they have to be offered as an alternative. way, it actually help of them. long-term, the financial impact small. most of these controversies, in the near-term, will not have a big influence in them -- on that. as the gdpr gets in forest and the u.s. creates whatever enforcement they create, how does that do for best that fundamental impact what google does around customized advertising and data tracking. longer-term, those are issues that have to be addressed. soft: coming up, why these bank ceo dropped out of the
emily: welcome back to the best of bloomberg technology. it caused plenty of big didn't go saudi arabian investment conference this week, that includes the ceo of south bank. -- softbank. they admitted to killing him inside their instant bool consulate. his withdrawal from the conference added to the list of high-profile exits that included the softbank coo. saudi arabia is one of their biggest backers. they have committed $45 billion to the first fund. this with theut
founder of constellation research. >> they dropped out in a much more gentlelady compared to some the other business leaders -- gentle way it to some of the other business who left. they met on the sidelines of the conference, but did not go to the conference itself. a lot of softbank executives remained at the conference. >> we've seen many stay away from the conference. do you think that the turn of events could change the relationship between foreign businesses and saudi arabia? will it eventually be business as usual? >> the money is too hard for people to turn away. when it didn't blow over and it got worse, people got scared.
a a lot of startups have a progressive viewpoint. to have this impact their perspective of once going on is a challenge. progress,arabia to they have to make these investments. there are going to be a lot of difficult decisions for startup entrepreneurs and investors. areiven the scrutiny, what the chances softbank will go somewhere else for the $45 billion? >> it's hard to say if this point. it will be interesting to see at an argument gets made, much as happened with china that softbank can influence saudi itbia from within help become more progressive in certain ways. i think a lot of people will be starting to tell a different story about saudi arabia.
>> it's worth mentioning that saudi arabia has a long track record of investing in technology and a long record of human rights violations. is this going to cause startups to look more critically and where their money is coming from, especially saudi arabia? >> we're going to see a transformation long-term and saudi arabia. this is a lesson that learned for the saudi government to recognize their actions have a huge impact around the world. investors will take them to see what reforms take place in terms how their actions affect their investment pieces, but how affect perceptions of doing business and saudi arabia. >> what are you getting from venture capitalists? >> i have heard there is a startup currently weighing a term sheet from softbank because
of these allegations. a they would've probably accepted it without too much thought. they are wondering whether to take the money or not. they are going to start asking more questions about the investors, their own venture capital investors. that had not been the case revis lee. >> employees have more influence over their employers. google did not renew a defense contract. see a revolt within companies that used to take money from certain sources that are deemed unethical? the top conversation was do we accept money from countries that might not have the same values or views on human rights or ethics, there was a big discussion today about what happened. companies, couple of they are looking at the term
sheet. theyare wanting to know if can put some conditions on behavior as to what to do with the money. the other piece we may see with softbank, if they use that that $15 billion. they might say that's just excess expense and not recognize that revenue for that fund. actions like that might soften the blow. coming up, twitter surges. they bring in a strong third quarter. how was doing that when fewer people using the platform? that's next. this is bloomberg. ♪
forecasts. despite the numbers, monthly by 9ge users decreased million. that means they average 326 million. this comes as they continue to purge fake accounts. we sat down to talk about the third quarter results. ned: we are challenging more than we used to so the 9 million number is something jack talked about in front of congress. we've become more sophisticated in our understanding of how create suspicious account so we can detect and prevent their creation or stop them after they've been created. how many get through depends on how many of them should get through. thatst far more accounts are suspicious and we understand the behavior. just because an account is created on a web browser in a certain country doesn't
necessarily mean it shouldn't be on the platform. there's a lot that goes into it. sent monthly active users will decline. how much? would continueat in the fourth quarter because of decisions we might make around contracts we have with carriers. we don't forecast mau. we have done that the last few quarters because we could see a decline coming. we wanted to share that with people. when we talked about it more broadly, we will don't want to be constrained. we want to prioritize health because it's a critical growth factor for the country to make sure that twitter is a safe place for the people that should be on the platform. we are removing suspicious behavior whenever we can. sometimes, they were largely
inactive. it doesn't affect the matrix is as much. emily: yesterday, we saw tweets promoting fake bomb scares, fake bombs, conspiracy theories. how is this still happening? ned it: we still have work to do . there are so many ways for us to these -- address challenges and how they create bad behavior on twitter. of the great things about twitter is we can benefit from this because it's public and open and in real-time we find things that are corrected by the platform itself, other people on twitter who say that's not true. i want to tell you what i believe. that the platform is open makes it different and allows us to take a different approach around policy and enforcement. emily: we are in a time of
divisive politics. the president tweeted the anger we see is caused by the false reporting of the mainstream media. it it's gotten so bad and hateful that it is beyond description. mainstream media must clean up its act. he is past, you've said an influential person, is the president getting a pass when it comes to what is true and false, what is hateful and not, what incites violence because he is the president. ned: twitter is public and opened. that allows people to see what a public figure will say regardless of their party affiliation, where they are in the world. it, they canond to observe how others respond to it. we believe that allows for a
healthy public conversation where people have more information than they otherwise might, whether it's in the united states or brazilian and mexican elections. it's an important part of our purpose, to serve the public conversation. emily: twitter has been clear about the need to do more. how many more people are you dedicating to this problem? one: health is our number priority. i don't expect those to change much as we move into next year. public andtter is open and real-time in nature, we can leverage those characteristics and accomplish a lot through our services team and machine learning. themplify our policies and twitter services team. we have been adding more people. invest.rowing 15% as we
i would expect this to continue. it's not against anyone priority, we want to be able to grow the business and execute the opportunities we see. emily: join us now to discuss is selina wang. what do you make of these numbers? advertisers are coming back and spending more. monthly active users keeps going down. it's difficult to see the progress. challenging every week. >> he just talked a lot about health. if you're going to get healthy, you need to lose some weight. it'sat terms of twitter, losing a few million users. that is a positive step. i think the focus on the daily
active user number is important and needs to be done. the steps that they are taking better, to products reprove itself to advertisers are starting to pay off. once this weight loss is gotten done it, we will see users rejuvenate again. we will see advertisers come right along. reporttwitter does not daily active users. you wonder why. >> that they don't report it means there is something they are not quite call with. belowd repeat that it's half of what the mau is. there is a lot of room for growth. concerning,at was it went single digits for the first time in several consecutive quarters. that means the cleanup efforts
is hitting their daily active users. that really matters to advertisers. at some point, they need to show that these cleanup efforts are not going to let them monetize better and drop more users to the platform. the cleanup efforts are incredibly important. it's driving the national and international conversation. once twitter gets its act together, are they going to add a significant number of new users? is this the size of twitter? is this it? >> it's hard to say if this is it or not. what we see now is twitter finally coming to terms with what it really is. it's not a social network that will be decisive instagram or facebook. it's a platform for real-time news and engagement. it can promote that uniqueness from the other social platforms.
that will draw users back. this constant back-and-forth of how many people does twitter have, they just need to embrace what they are. million, advertisers are going to embrace that as well. snape reported numbers and all eyes were on user growth. they reported the number of daily users fell for a second consecutive quarter. almost exactly in line with estimates are in a -- estimates. this coming as they are struggling to fend off facebook and instagram. the story out has become the preferred for millennials. >> that's a big question.
both snapchat and twitter are in a similar position. they have seen user decline. better-than-expected revenue, that's a positive thing. twitter, we've got a situation with snapchat where haveaily active users declined yet again for another quarter. this is concerning to advertisers. the fact that snapchat has been able to monetize those users to better expense is good. best probably not going to continue for ever. towill see them do more restart that user growth. emily: how will they do that? >> they could figure out android. the android app has been a foreign in their side for a long time now. once they figure that out and relaunch a solid well performing android app, they will get more
users who use android phones, especially outside the united states were android is really popular. hopefully they will figure that out. it remains to be seen how quickly. that was selina wang. still ahead, women in the workplace. women are underrepresented at every level. why the movement seems to be stagnating. this is bloomberg. ♪
and landed rockets for reuse, reducing the cost of space travel. it's the third most viable venture backed startup in the u.s. after cooper and airbnb. companies ther, clear they are committed to gender diversity. according to a new study, progress is it just slow, it has stalled. compiling data from over 400 countries -- companies, the report showed women continue to be underrepresented at every level. they are earning bachelor degrees in asking for promotions and stay longer in the workforce, only one in five senior leaders is a woman and only one in 25 is a woman of color. we discussed this. companies need to lean in now. ,omen getting college degrees
women are asking for more, asking for promotions and raises as often as men. they are not leaving the workplace. they need to treat diversity as a business priority. case, you compelling set goals, utrecht project -- you report progress. emily: you've been working on this since 2012. once different this year? -- what is different this year? >> what we find is we are getting closer to understanding root causes. we understand we have a problem. help us start to break down problems we can solve in units of one or two years. this will take 10 years to shift a generation. tell us about micro-aggression. tell us if targets work.
emily: you are singling out the idea of only this year. experience a woman has for being the only woman in the room. why is it so important to understand that? >> they have a different experience than women who work with other women. they are more likely to face those every day fights. you are spoken over in a meeting, you have to prove your capabilities over and over again. that wears people down. we know they feel isolated. it's hard to imagine women can be doing their best work if they feel that way. emily: when it comes to hiring, one of the things they do is put women on a team with other women. a lot of teams are only men because men still dominate the
workforce. being on a team with other women, they have networking and camaraderie and the experience will be better. it comes at a cost. >> i think it's a good strategy. how do you make and retain an advance the women you have? putting them together creates a different culture. they have role models, they have role models, the have their own. they start to advance. if you are the only one over a long amount of time, you start to feel less motivated to stay at that company, less satisfied. if you leave, that's not helpful. emily: there's a compromise. of all men making decisions without women. >> i don't think it's a simple choice. , as one and done approach single woman on a team and now
we have diversity has to change. we have more women at every level. we are not picking and choosing where to put are underrepresented women across the team. a good strategy is to group women together and accept or realize that leads to better diversity of ideas on that team and hopefully better performance of that team. the blended at teams and see the performance they get. >> it's not a one-shot deal. only thing you do, you probably won't have a lot of success. the hard thing for management teams, you have to do things in concert and stick with it. this is seasonal, you won't be any better than you were last year. emily: once the experience for women of color? >> is worse. they see more barriers to advancement. leaders, there promoted more
slowly. emily: how do we know this isn't just solving a light woman's problem. white woman's problem. >> this year we were looking at lesbian women as well. they are having a worse experience. elevating women means all women. the women who need the most support in the workplace is black women and making sure their voices are heard. emily: you are not only the cleef -- chief inclusion officer, you are the leader of services. this is a notoriously male-dominated industry. it's a couple of different salesnyone in technical is harder. any person of color is harder. for men of color, it's not an
easy road as well, or for anyone who is gay. if i were to put a silver lining on it, there isn't a defense of radical transparency. people grow up in an environment where they understand data. one of the things the report does, we put it out there. there is one company were men felt that gender policies were going to hurt them. they were 30% off the benchmark. the ceo said let's have a town hall meeting and put it all out here. let's explore that. think the emphasis on data and transparency is something we can benefit from. that does it for this edition of the best of bloomberg technology. we will bring you more throughout the week.