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tv   Best of Bloomberg Technology  Bloomberg  January 5, 2019 11:00am-12:00pm EST

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emily: i'm emily chang and this is "best of bloomberg technology," where we bring you the top interviews from this week in tech. coming up, apple shocks the market apple cutting its revenue , outlook for the first time in two decades, plus a bumpy start of the new year at tesla.
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model 3 deliveries fall short and ceo elon musk says the company has gone from production hell to delivery logistics hell. netflix makes the decision to cave to the demands of saudi arabia as it hires a new cfo and plans for a big drop of shows january. to our top story, the bombshell news that apple cutting revenue outlook for the first time in two decades, blaming weak demand in china amid the ongoing trade war with the united states. apple dropped a hint that iphone sales were sagging in november with the decision to stop reporting unit sales. here is some of the early reaction on bloomberg television when the news broke. >> they will still hit an all-time high in earnings per share this quarter. profits per share are still going to be better than ever, even though revenue will decline for the first time in a long time and unexpectedly, they have hit a real speedbump in china and with the iphone. >> people have watched apple closely for a long time and have
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known the wall will hit at some point. it has just hit in a harsher way than people expected. >> corporate earnings and what corporate say about china, and economic data, pmi numbers, industrial production, you name it. markets will be sensitive to the data. >> i think you are seeing the idea that emerging markets in particular china are slowing faster than forecasted. maybe actual gdp is lower than what they tell you. >> it is not alarming to me, but could be alarming to those who are calculating stock prices are forecasting what volume is going to be. >> they come up with a $240 target price. to get there in that 6012 -- 6-12 months, but we think that is the underlying value of the apple stock. emily: mark gurman joined us thursday to weigh in on the news.
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>> this was the darkest day for cook and apple in the modern iphone era and i think it was job dropping that they did not joaw droppingg -- that they did not really see this demand fall off in such a way they could predict and it comes down to 80% of this, in our opinion, is an apple specific story. they had a pricing hubris and ultimately, you saw it in china. this is what i would view as an apocalyptic type quarter and a defining moment for cook going forward. emily: apocalyptic quarter, that's a big word. mark, give us some numbers. if there is a $9 billion shortfall in most of that is in china, what does that tell us in terms of how many iphones were not sold in china this past quarter? mark: i agree with dan. apple likes to point out these external factors, but this is at
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least 80% self-inflicted having to do with the extraordinarily high stratospheric prices of the latest iphones. if you look at the pricing of smartphones in china, we did the math this morning. some of the high-end phones from huawei cost much less than the cost of an iphone. there are phones that cost a quarter of the price. some might even have sharper specifications. this comes down to a sense of hubris, whereas apple needs to evaluate its pricing strategy is. to answer your question, it is clear he missed out on a good chunk of iphone sales, millions of units they were expecting to take place in china. emily: parse for us how much this is due to the pullback of the chinese consumer, due to a
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u.s.-china trade war and due to a smart phone problem in general with a global market that is slowing down and the china market that is slowing down. dan: cook, you saw, use the macro card china, tariffs, i'm surprised he didn't cite the weather, as well. fundamentally, this is an apple specific pricing issue. again, i continue to say, 80% of it is them mispricing, miscalculating demand, the marketing, and the development and feature functionality on this latest version. i do think they are seeing headwinds from the china consumer in terms of what you are seeing on the trade war, but this is really for them a china specific problem and i think right now, they have to look in the mirror and realize what they are going to do going forward is the pricing cuts. is it focus on services? is it content? but this is a fork in the road situation. how they handle this will determine the future of apple and ultimately, cook's legacy rests on what the next six to
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nine months does in terms of this strategy. emily: i have a revenue breakdown for apple. we know the company is trying to become more of a services company if you look at the white line, iphone revenue, still two thirds of revenue that apple generates is from the iphone, so how can apple fix an iphone problem in china, specifically when the iphone is a major product. mark: another point to again was saying, i would like to know where the people who blame tariffs have been getting the information from because the terrorists have not gone into place yet. if they go into play. emily: important point. you are saying the iphone has not changed in price as a result of the trade war. it is still the same price.
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mark: it is still the same price, so i would like to know where that is coming from? prices are the same and on the services point, apple is wanting to position themselves as service company over the last year or so. the reason why is what we saw shakeout this week. they want to show investors they are not a one trick pony. if the iphone was selling through stratospheric levels, you wouldn't see them positioning themselves as a services company like they are today. this is what they need to do to show they are going beyond the phones. the problem is people point to the iphones being two thirds of sales for apple but that is not really true. at the core it is, but what about the other products people are talking about? apple watch, airpods. you can't buy those unless you have an iphone. even the mac and ipad are best used with iphone. it is two thirds of sales at the
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beginning, but at everything else, it is the iphone including services. we saw those astronomic app store numbers come out after the revenue recalculation. -- cap sales happening? the iphone. they have to find a way to pump up the iphone or create a new hub to replace it. the mac was the hub everything was built around and then the ipod. now it is the phone. he tried to say it was the cloud, but it is the phone. they need to get the phone selling or find the successor. emily: apple music, apple pay, those are generated mostly on iphones. i did sit down with tim cook in june 2017. this was in the middle of when apple was seeing decline in china. i asked him about it. take a listen to what he told me then. tim: in china, for us, we make our decision for the long-term. we are not investing for the next corporate here, we are thinking many years out and as i
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stand back and look at china, i see megatrends there that make china an incredible market and i don't mean just a market to sell in, i also mean a market for application developers and so, it's an incredible marketplace for talent and in terms of the size of the marketplace. so the short-term kind of economic moves up and down, i don't get too excited about. emily: after that interview, china did return to growth for apple for a few quarters and my question is, still potentially $84 billion quarter, is calling it an apocalypse and exaggeration? dan: as someone who has covered the story for decades and obviously, mark knows as well as anyone, this was in our opinion, clearly the most job dropping miss we have seen out of apple really since the company's been public.
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fundamentally, it is because of iphone. to have any percent miss on top line that is iphone generated, especially given supply chain, how they see demand in terms of the field, to put it in numbers, 25 million to 30 million iphones they thought they were going to sell, they are not going to sell. emily: mark gurman and dan ives. netflix is hiring activision's spencer newman as its cfo. he replaces david wells, who held the post for the past eight years and said in august he would be stepping down. coming up, tesla slashes the price of cars to make up for an expiring tax break as delivery slightly disappointed. what does elon musk have in store for 2019? if you like bloomberg news, check us out on the radio. listen on the bloomberg app,, and in the u.s. on sirius xm. this is bloomberg. ♪
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emily: elon musk is starting the new year on a familiar note, one of uncertainty. tesla chairs -- shares plunged after the company announced it is cutting prices on all of its electric cars in the u.s. by $2000 after delivering fewer model three sedans than expected in the fourth quarter. the price reduction will partially make up for the u.s. tax credit that has been cut in half. gene munster joined us wednesday to discuss. >> the only reason it is not a huge miss, the big thing that copy block -- by surprise was the price cut. if there is off the hook demand,
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why are they cutting prices and what is the reservation number? emily: gene, what is your read? >> i think the production number was a disappointment. when you are in a growth phase, investors want to see you exceeding those numbers, so let's call it a 1% miss, but that is a little emphasized when you are in a growth phase. secondly, the price cut make the question about what is going on. i would add a detail to that. the $2000, from $7,500 tax credit to $3750 today. that will have some impact on demand. the $2000 represents on average, a 3% subsidy that tesla is giving. in other words, if there was structure -- i think there was's something structurally demonic with the demand -- wrong with the demand. the outlook and opportunity for tesla is still bright. emily: getting your note, you call it a psychological setback, which doesn't sound good. gene: it is not good, especially when you think about some of
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these debt payments coming up and the importance of having the stock move to the $360 level. they can service this $970 million debt payment march without the need to convert stocks, but it would be easier if they did. the psychological piece is completeness. investors have been thinking about the tesla story the next year more aggressively. they have been debating that. the five-year picture is clearer and more optimistic, but that is the issue at hand. the psychological setback of a slight production miss on top of a price cut. what do you make of that? emily: let's talk about the milestones of this year. what are the other milestones you will be waiting for? dana: 2019 is a pivotal year and it seems like every year is for
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ted luck, but we will find out if they had a profitable quarter. they will build a factory in shanghai. elon musk was tweeting he will be going to shanghai sometime soon. there is a big question about model three demanding europe. they will begin deliveries in february, so everyone is waiting to see what demand for model three is there. then they have a whole product pipeline of the semi truck, the pickup truck, where are they going with those cars? emily: what does the competition picture look like this year for tesla? you have audi, porsche, other companies that are ready to go with new models. gene: that first take, you would say it is going to be more competitive in 2019. i think that is the incorrect conclusion here. the answer is some of those questions at companies, there are five major companies that announced first time ev's that will be available in 2019, but the reality is they will not ship many of those. 90,000 deliveries for tesla in
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the quarter, collectively those five new entrance probably won't ship 90,000 for the year. in other words, it is headline risk and what you will see is the fate of tesla the next year will be more dependent on overall growth in ev's. they will write that curve very nicely and assuming the market is good and people are buying cars, that should be positive. i don't think the competition peaceful upset their market share. emily: talking about the five-year plan, i finished a road trip to california and was impressed by how many tesla charging stations i saw. you think over the next 15 years, almost 100% of vehicles will be electric cars? in what does that mean for tesla? gene: massive opportunity. globally, collated $90 million sold a year, we are talking about -- they have 50% market share in the u.s. today. i'm not going to go through the
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technical details between electric and gas engines, but cars should be gas. it is pretty straightforward for a lot of reasons, so tesla's opportunity more specifically within that despite more competition is their ability to produce these cars at a more profitable pace than traditional oems. that will be the piece that separates this tesla story as an ev opportunity with its ability to produce a $40,000 mainstream vehicle. emily: what is the cash position of the company going into this year? dana: they have cash on hand. they need more of it. they need to pay this debt off. you need to raise capital at some point to build these other products that they have been clear they don't want to raise capital.
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there was nothing about capital needs and the release today. emily: so what does that mean? gene: i think if they don't get to the 360 mark, they may by march. if they don't, we will have an update with a cash position in september when they report that but they will service that during their existing cash balance. it is a critical point here. last year, it has been a pivotal year, 2018, especially on the cash position. that is not at risk for the next six months. investor psychology is at risk, but not the health of the company. emily: we talked about the when your milestones. what about the five-year milestone still be reporting on? dana: five years out? i still think a big part of the tesla story is they have ambitions to be an energy company. they are selling their batteries to utilities in california and abroad, and there is a huge market for batteries to help
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wind and solar on the grid. that is just a part of the tesla story no one pays attention to because it is not as sexy as the cars but it is a big opportunity for them. emily: that was gene munster and dana hull. the government shutdown could impact the tech industry. will be agenda be derailed as the agency prepares to shutter operations? plus, using instagram in iran is about to become a lot more difficult. we look at the country's social media crackdown. this is bloomberg. ♪ emily: washington has been in a
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stalemate since december 22 when the federal government partially shut down.
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while congress and the president try to work out a deal, we are seeing the impact in several agencies. some 800,000 federal employees have been furloughed or will work without pay. the federal commissions -- communications commission is shuttering operations. our next guest is at the georgetown university and former counselor of the fcc. she joined us just before the shutdown. >> the shutdown lasts only a couple of days, if there are filings due of some sort, those filing times will be delayed past the shutdown. the shutdown cut -- lasts a couple of weeks, that could have a huge impact on mergers like the t-mobile merger or the proposed merger of tribune and next are --nexstar. him people tend not work, so they cannot work on the transition or have meetings with stakeholders. it can impact major proceedings and major mergers if, indeed, the shutdown lasts more than a few days. emily: so are we talking about a delay here, when it comes to these big potential mergers or could it actually change the result?
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gigi: i don't think it would change the result necessarily. let me explain how the fcc looks at mergers. it is an involuntary clock, a 180-day clock they give themselves to look at mergers and decide whether they ought to be given the green light or there should be conditions or what have you. we are 100 days and the sprint-t-mobile clock and whenever there is a stoppage of any kind, whether it be a government shutdown or the fcc needs more information, they stop that clock. certainly a government shutdown will toll the clock again. this gives more time, even though it is not a mandatory 100-80 days. it is a goal they set for themselves. certainly, if you cannot work, if you cannot have meetings with stakeholders, cannot have internal meetings.
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if you cannot have meetings with the department of justice, that will slow down the fcc's consideration of this and other mergers. emily: as we understand it, spectrum auctions will continue, but 10 and agencies agenda be derailed during a shutdown? gigi: it has to be drilled because they can't work. the fcc put out a statement monday saying if there are issues that affect life and property. for example, a recent 911 outage with centurylink across the country, centurylink being a major internet service provider and the fcc launched an investigation. i would expect that to likely continue during a shutdown but if it doesn't affect life or property, if it doesn't affect auctions, which basically fund
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the work of the fcc on auctions, i don't expect that to continue. if the shutdown lasts a long time, it absolutely can derail an agency's agenda. emily: what about the agenda for big tech more broadly? we are looking at the ftc, which has a massive ongoing investigation into facebook, which could also be slow down -- slowed down. gigi: absolutely. if you are a big silicon valley company now, you are probably cheering the shutdown because when we left the congress in late december, facebook, google, other big tech companies were in the crosshairs, particularly facebook. as we know, the ftc was doing an investigation on the cambridge analytica scandal and other data privacy issues around the company. the ftc shutdown on thursday.
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that work is stopping as well. if you are facebook, you are happy the government is not proceeding with its work. emily: similarly, are we looking at a delay or could this lead to a different outcome? gigi: i really don't think it would affect the outcome, it is just a delay. again, nobody can come in and convince anybody at the ftc to look at this differently because they can't meet with them. they can't work. i don't know what would change the outcome either here or with regard to the sprint-t-mobile merger. maybe something external happens. back to change the outcome, but them your fact that the government is not working is not going to lead to a change in outcome, in my opinion. emily: gigi sohn with the georgetown law institute. coming up, more on apple's surprising cut in its forecast. apple pushed up the broader market in upbeat times.
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willits graduates down? you can check us -- will it dragged it down? you can check us out on tictoc on twitter. this is bloomberg. ♪
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emily: welcome back to "the best of bloomberg technology." apple has become the biggest corporate casualty from the chinese pullback amid a u.s.-china trade war after announcing a cut in its revenue. could other tech companies follow suit? mark: for those companies that have exposure with high price point in china, i do not know why this would not be a reasonable read. i do not know how much of this is apple specific.
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i look at the other faang names, their exposure to china is probably limited. in the long scheme of things they probably wish they had more exposure. emily: twitter, google blocked in china. mark: a few companies have a presence but i do not think we would see it there. we have a high price in a large company like apple. emily: to get a little more detailed, if you look at apple, it is pretty cheap trading at 11 times earnings. are these other companies overvalued and will there be a reckoning for them because of what is happening in the broader market? mark: we have seen a reckoning already, a selloff in facebook. the unfair oversold situation is probably most acute in names like google and amazon where fundamentals have not changed at all.
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growth at google has been consistent, 35 straight quarters around 23% year-over-year and yet the stock is trading at a small premium to the market. these are unusual secular growth assets, scarcity assets. they provide good risk reward opportunities. i am not sure this is the best but it is in the top quartile. emily: was mark zuckerberg right not to sell shares? mark: yes. they will do a $9 billion share authorization, they absolutely should do that. put your money where your mouth is. emily: what about regulation in sentiment? people hate facebook right now. mark: i am not sure they hated. emily: there is distrust. mark: you have to earn it back. i keep thinking about netflix, do you remember when they had the fiasco three years ago and they raised prices and lost subs?
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the stock did a meltdown, a year or two to rebuild trust. emily: and they stopped calling it quickster. mark: for advertisers and consumers with facebook, this can be fixed, but we think it will take time. the risk reward is attractive. it is priced in. emily: i have started monetizing instagram but instagram has some of the same problems. mark: you just quickly went over whatsapp. there are over a billion users. the portfolio that facebook manages, the two largest social media and messaging apps, they are not monetized. i think you have a company with a lot of controversy and they shot themselves -- i do not know how many feet people can have but they shot themselves in all
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of them. if you buy this stock before the crowd does. emily: let's talk about netflix. you are optimistic about subscriber growth. in suntrust is not optimistic, and we just spoke with jon klein, the former president of cnn. jon: winter is coming for netflix in the form of more competition and a more expensive operation moving forward. they will have to be creating more original programs because all of the studios in hollywood are pulling their movies and tv series' off of netflix. what netflix is facing a something i talked about on his network before, they may be the aol of ott.
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mark: i completely disagree. whoever has the most subs can afford to buy the most content. netflix has six times more paying subscribers than anybody else and they can bid more economically for things. they are the biggest ire of content and i did not think studios do not want to sell to them because they have to answer to their shareholders. emily: regulation in general, we know that congress, washington is taking a closer look at these tech companies. mark: these assets are so big, they should be constantly scrutinized given the size.
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emily: you say more regulation is coming piece by piece. mark: -- in the last five years -- emily: in europe, not in the u.s. mark: we have not seen anything undermine the value of google. it is half the size of walmart so you would have to bust up walmart before you go to bust up amazon. i hope we are not in the economy where we bust up people because of size. i look at amazon as extremely innovative and successful, and more politically astute. they instituted the wage increase and i think they are a little more savvy. and the regulatory risk above always these names is least likely with amazon. emily: apple has outperformed the broader market and you wonder if that will continue. do you think the faang stocks
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will outperform in 2019? mark: i think people believe tech is over, faang is over. if the fundamentals stay intact, the stocks will come back to reflect them. you cannot find this kind of growth, consistency of growth, anywhere else. the market will come back. emily: a lawsuit could delay mobile phone upgrades in germany. companies are suing the government over plan to auction wireless frequencies for a five g network. they say the regulations are so onerous they outweigh the value. coming up, why it might be hard to find an episode of an original netflix show if you live in saudi arabia. that is next. this is bloomberg. ♪
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emily: fans of a new netflix program might have trouble finding an episode if they live in saudi arabia. they banned an episode after criticism of the kingdom and its ruler. the relationship between the u.s. and saudi arabia after journalist jamal khashoggi was killed in the consulate. the president of an ai powered media company joined us wednesday to discuss. >> it is distressing and a little odd how many possible netflix subscribers could there be in saudi arabia? it is a small population.
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it makes you wonder what they felt was at stake where they could've gone the other way and made a clear statement. get ready for more of this as american companies face the peril -- especially media companies face the peril of expanding internationally. they need to play by the local rules. google found that in china, and you will say more of it in countries with autocratic leaders. emily: where else? what happens in other countries, south america, asia, all markets where netflix is banking on international subscribers. jon: we always count on america bringing its value with us when we bring our business overseas. if we don't do that, what happens and what kind of world does this become? you a release that netflix but out is they are taking off the program because of a "valid complaint" from the saudi government.
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i guess they meant there is a law against speaking your mind or criticizing the government in saudi arabia, so it was a legal issue. i think the person who -- the publicist who used the word "valid" in that statement, they have a valid reason for kicking that person out the door. emily: the saudi government said it violated their anti-cyber crimes laws, to get a little more specific. netflix bringing on a new cfo, the former cfo of activision blizzard, spencer neumann. this is a company continuing to spend billions of dollars on new content. we are expecting a big drop of new shows this month.
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what challenges well this cfo inherit? jon: a lot of it. winter is coming for netflix in terms of more competition in a much more expensive operation. spencer neumann has experience with finance. he worked at disney before that. they will have to create more original programs moving forward because all the studios in hollywood are pulling their movies and tv series off netflix. netflix is facing something i have talked about before, they may be the aol of ott. they are well popularized a new habit, going online, but they were not monetized. netflix has popularized streaming, but now that we know how to stream we know we can find all kinds of material in all kinds of places. this year, you have disney
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launching a rival. others are bulking up for more over-the-top subscription play. apple is coming up. if you think they have a tough fourth-quarter, wait until you see 2019 and 2020. it will not get easier and that will get more expensive. netflix's big advantage has been their understanding of how their subscribers are using content. they are ai powered. artificial intelligence has allowed them to understand user behaviors and match them to content, and delight their subscribers. they seem to know always what you want to watch next, and that is fantastic. all those other companies i just named are aware that they need to become ai ready, and i help
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to run an ai company that services media companies. netflix's rivals understand and are spending money on matching, if not exceeding the ai capabilities of netflix. emily: another digital crackdown taking place in iran. they are moving to effectively block access to instagram. they would join the likes of facebook, youtube, and telegram, of being off-limits to iranians. sarah: this is one of the last remaining social networks in iran that has in a broad relevance, and you are starting to see instagram considered around the world as not just a place for photos of your food or puppy or vacation, but also political speech. that came to light recently in russia's efforts in the u.s.
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it is never a good thing when a company fully bans a platform that it seems governments are starting to think of it less as a harmless place for beautiful photos. emily: cnn had its own troubles dealing with the iranian government. what is your take on this? obviously, stretching to social media? jon: you see saudi arabia and iran who are deathly enemies, engaging in the same sort of practices. what they have in common is they are unpopular autocratic regimes that have serious internal challenges. it smells of panic in a lot of ways. what we do not know is how effective this can be. in china, the censorship of social media has been pretty effective as far as we know. it may be that these regimes are able to snuff out the scent and free exchange of ideas by
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shutting down the social platforms. i think the china example tells you that unless you are 1000% all in on repression, it is hard to stamp out this kind of exchange. it is disturbing and unfortunate, and i think the jury is still out as to whether it will ultimately work for these regimes or not. emily: i was working at cnn in beijing when facebook shut down in china. i want to talk about the year ahead for facebook, because it has been a rocky year. mark zuckerberg said, we are a very different company. we have fundamentally altered our dna to prevent harm and our services and shifted a large portion of our company to work on preventing harm. he talks about having more than 30,000 people working in safety and security. does that jive with what you are hearing from employees about internal safety?
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sarah: the company has started to think more pessimistically about how users will use its services. for zuckerberg to come out and say they fundamentally altered their dna, it is still very metric space. i think the company will look for growth in new areas and changes to facebook itself to make it may be a healthier platform coincide with the natural decrease in engagement. it will be hard for investors to separate what is using facebook less because they did not like it and what is facebook? facebook will keep trying to tell investors that all of this is its own doing. emily: zuckerberg had a more upbeat post to start the new year. i am so curious, because
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obviously it was a tough year for facebook and it will be another tough year. what is your view on the fate of the social network, not just facebook proper? jon: what happens to a company that used to get people to say, hey, and now they say, ew. the abstract, poets sing in the year about facebook it was so fun and loose and you can be yourself. how can you be yourself in an environment where you suspect everybody is looking in? it is like having a party and everybody is going through your medicine chest. that is difficult to attack and they need a human face representing trustworthiness and benign intent and i'm not sure they have that. emily: sarah frier and jon
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klein. coming up, what is amazons brick and mortar strategy for the coming year? as they break into new industries, one analyst sees the potential for them to disrupt another business. this is bloomberg. ♪
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emily: mark zuckerberg's multibillion stock sale ground to a halt. he did not sell a single share in the fourth quarter when the stock tumbled 20% amid a broader market route. more than two years, he has refrained from doing so. amidst amazons efforts to dominate the consumer experience, they have branched out into groceries, health care, and that is the tip of the iceberg. amazon could greatly benefit if they break into another industry
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-- opening gas stations. >> you can think of it as fueling stations. basically, some are a consumer goes to get gas when they charge their electric vehicle but with the ability to visit a convenience store. the important point for amazon is this could give them 1000, 2000 points of distribution with commercial rather than residential addresses. lowers their cost of shipping. if you look at costco, 10% of their sales come from gas, so this could give them a sales boost and lower expenses on the delivery side. both of those are important opportunities. emily: is there any indication amazon is interested or exploring something like this? tom: at this point, there is no indication.
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if you go back in time before they acquired whole foods, there may have been some chatter but they were looking for bj's wholesale club, and they have gas stations. i have not heard a lot of speculation the company is looking at this specifically. emily: let's say amazon is interested. how do you envision they would roll something like this out? tom: if you look at their m&a strategy, it is kind of build first, buy second. they could test and learn, say to what extent do consumers appreciate the opportunity to save money on gas when they are prime members. is it having an effect on new prime members? or they could make acquisitions after some years of advancing their efforts in grocery. historically, m&a for amazon is build first and buy second. emily: when a look at their
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brick and mortar strategy, they have whole foods and are looking to potentially open more. there is the amazon go store, amazon for star store. it is a little bit disparate. do you see more coherence in this brick and going forward? tom: i think the cohesion will be five years from now when i am calling amazon foods, which is now whole foods. when you walk into amazon foods, they will have a pharmacy. they already have amazon lockers and are giving you lower prices on products. this amazon foods will have lower prices. they replaced insta cart for amazon's delivery.
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they will will give you buy online and pick up in the store kind of thing. amazon proprietary products in the store year round, not just at holidays. they have a lot of disparate things they are trying in retail and physical stores, but i see these amazon stores incorporating everything in the future. emily: what do you think the biggest risks are for amazon this year? tom: there is a huge risk. investors are getting used to the new amazon which we call profit incorporated. if you look at cloud computing, and retail, their fastest-growing businesses are there highest margin businesses. if you look at their performances in june and september, while their earnings per share was double what was expected, in june quarter sales were little weaker. emily: you mentioned the five years from now.
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what do you think the biggest challenges are on a longer time horizon? tom: while technology that microsoft is the most valuable country on the globe, what slowed walmart and microsoft shares, decelerating growth and multiple contraction. that is the big challenge for amazon. have a number of initiatives underway, including advancing their efforts in grocery sales and apparel sales. they need to be outside of e-commerce type stuff that could generate higher sales growth and higher profits, which could sustain the stock for years to come. that is the big challenge for amazon, finding that sustaining topline growth. emily: tom forte there. we will bring you all the latest in tech throughout the week. 5:00 p.m. new york, 2:00 p.m. san francisco, and we are
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streaming on twitter. follow our global breaking news network on twitter. this is bloomberg. ♪
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place, the xfinity xfi gateway. and it's strengthened by xfi pods, which plug in to extend the wifi even farther, past anything that stands in its way. ...well almost anything. leave no room behind with xfi pods. simple. easy. awesome. click or visit a retail store today. emma: coming up on "bloomberg
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best," the stories that shaped the week in business and around the world. it's a brand-new year, but many issues sound familiar. negotiations in washington over a government shutdown, concerns in china over an economic slowdown. >> both the private and official pmi are purely in contractionary territory. >> apple rattles investors with its revenue forecast. >> we've been anticipating this the past few months. this was bound to happen. >> 312,000 jobs added to the


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