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tv   Bloomberg Technology  Bloomberg  January 28, 2019 11:00pm-12:00am EST

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>> i'm emily chang in san francisco and this is bloomberg technology. in the next hour the u.s. department of justice outlined its case against huawei with formal charges 'cusing china's largest smartphone maker of fraud and stealing trade secrets. plus corporate america is pointing the finger at china for disappointing results. individual ya -- nvidia cutting its outlook. is it a bad sign for earnings to come?
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facebook has committed roughly a million dollars to its video service watch. why hasn't it taken off with advertisers? but first, to our lead. u.s. prosecutors filed criminal charges against huawei alleging it stole trade secrets from an american rival and committed bank fraud by doing business with iran. wabaunsee has been the target of a -- huawei has been the target of a broad u.s. crackdown including sales of quip thament could be used by the chinese communist party for spying. the action comes two days before a pivotal round of trade talks between the u.s. and china. joining us to discuss in washington, our reporter who covers financial investigations and also our bloomberg tech who has been following huawei. this certainly marks an escalation. >> we found out from the u.s. officials in the ongoing process that this investigation has been going on for years. this covers quite a few areas. one area is this i.p. theft issue, allegations that they
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stole intellectual property from t-mobile. that photographs and even a piece of a robot that helps mimic smartphone use was stolen from t-mobile. that's part of it. another part of it is the arrest of c.f.o. and she was arrested several months ago and they are charging that she was conspiring to commit bank fraud. that they used a subsidiary called sky com to root deals with iran and breaking u.s. sanctions against iran. now there are 13 counts in the indictment in brooklyn and two affiliates face charges in washington state. a lot of information we're just hearing now. >> and the deadline for the united states to send an extradition request to canada to bring her back to the united states is coming up in a couple days. what do you make of the details here now that we know the specifics of what the u.s. is moving forward with in terms of ormal charges?
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it was done by the same group that brought charges against hsbc a few years ago when they were 'cused of laundering money for mexican drug cartels and violating u.s. sanctions. and the sanction cases i think it's one of the most feared cases, kind of brought by the justice department against a company. especially if they have that evidence in what they're alleging here is that huawei essentially hid the fact they were still kind of doing business with an affiliate in iran in violation of u.s. sanctions. >> they also say that huawei moved witnesses back to china so that they could avoid penalties. talk to us about the broader context. it's ban busy day for huawei. some not good news for them out of europe. and around the world. >> right. in addition to that there are also charges, they were
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actually giving bonuses to employees stealing some of these trade secrets. huawei has really been dealing with a 360-degree assault on its business. there are many developed countries and through the pressure of the united states to stop using huawei's telecom equipment. and for many years there wasn't a lot of solid evidence against what exactly huawei was doing wrong and part of that is because classified intelligence like that shouldn't be revealed. so a big argument is how much of this is national security risk and how much of this is a concern that huawei is becoming a leading developer of this next generation of wireless technology as well as now becoming the world's second largest smartphone maker ahead of apple? it seems to be with this announcement and increasing evidence it is a mix of both of those reasons. and it certainly is a concern of the u.s. government that as their 5 g spreads to other nations it is a threat to democracy and western ideals. >> so let's try to pick that apart. because the u.s. has long feared that huawei makes this equipment that the chinese government could use to spy on
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the united states. however, as i understand it there is no concrete evidence that equipment actually can or ever has been used for spying. the charges that were announced today have nothing to do with that. correct? >> yes, from everything i've seen and i am still waiting to see the official documents in the case but so far we haven't seen anything related to that. i will note that when the justice department in november announced like a big, broad prosecutorial effort on cases related to china one of the things they noted there was specifically looking for cases where the 5 g network could come into play in which there was anything they could sort of develop in that space. so it's on the minds of u.s. prosecutors to be looking for that. it may not be here quite yet. >> meantime, the trade talks getting under way later this week. this is a critical round of talks. this ratchets up the level of
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aggression that the united states is demonstrating. >> it certainly increases the dark clouds hanging over everybody's heads as these trade talks happen. it is unclear what sort of retaliation there will be from the chinese government if talks will break down, how they'll continue to move forward. there is so much conflicting evidence about how the trade talks are doing. but i also think it's important to set this against the broader context and huawei has denied all of these accusations. we've seen the billionaire founder come out and personally say that they do not engage with the chinese government and that they would not provide information, sent information on clients if this were to ever happen. it is important to note that from the u.s. administration's perspective, it is not -- the past isn't so much of an issue as the future, that there could be back doors and there could be a big issue and that's why they're taking these steps now. >> walk us through the timeline now that we know these charges and we have the deadline for the extradition request in a couple days what is next? >> well, now they have to be
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able to have served the company this indictment, which at times sort of when you're dealing with chinese companies some of the more sort of rudimentary actions in a criminal case can be -- take longer than normal. but i really think the extradition is going to be a big piece of this in being able to see if they are able to successfully extradite her. >> meantime, more broadly, huawei is one of the top when it comes to equipment in 5 g which is what all countries are trying to move toward. in europe, they just came out with the report saying if there is a ban on huawei, we will seriously be at risk of falling behind because we can't buy their equipment. >> that is a very interesting dimensions that huawei, they're really good at what they do and they provide it much cheaper than a lot of the other makers. for many countries especially in the developing world huawei is the best option for them.
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of course that is a concern of the u.s. government that it works well. it's cheap. and so it is going to be able to infiltrate all of these other countries. now huawei from their perspective if they are blocked out of certain countries are just going to double down in these developed markets that really rely on huawei technology. so it will be interesting to see how this continues to play out, which countries agree to the u.s.'s demands that they no longer use huawei equipment but we have yet to see how it turns out. >> all right. a lot to keep following here. we'll bring you the very latest as we have it. now a story we are watching shares of tesla fell monday after the financial times reported that saudi arabia's sovereign wealth fund hedge most of its 4.9% stake in the car maker. the report is that the fund still holds tesla shares but faces little exposure if the stock drops. there was a short lived effort to take tesla public last fall but it failed after they failed
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to line up financing. plenty of earnings still ahead this week along with some warnings. we'll talk about where the bright spots may be. our conversation is next. and if you like bloomberg news check us out on the radio. listen on the bloomberg app, bloomberg.com and in the u.s. on sirius xm. this is bloomberg.
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11 days ago netflix came out with results and they were mixed. they added a higher than expected number of subscribers but missed on revenue according to analysts. the company is expected to add
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30% fewer new users vs. the first quarter of last year. my guest coming up has a substantial investment in netflix as well as other companies yet to report like apple, amazon, alphabet. his company has invested over $800 million in tech and media companies. he is the c.e.o. of gerber kawasaki. ross, always great to have you here on the show. underwhelming reports so far not just from netflix but i.b.m. and intel. is it a warning sign for some of the other companies you have stakes in? >> yeah, in a way it absolutely is,. it shows the trade war has two losers, the united states and china. when you go to war with your biggest supplier and also your biggest customer we're seeing the effects now and it is hurting american companies. so, you know, obviously the companies that have less exposure in china will help perform right now like amazon and google which aren't allowed to do business in china and the companies that have extensive
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businesses in china like nvidia and apple will have to deal with the lumps that come with this, looks like a decent slowdown in china. >> we'll dig into nvidia later in the show but i want to talk about apple. of course we know apple cut its forecast very dramatically. so what does that mean for any potential upside that's left? >> i think there is upside now because the stock has moved down we think to a valuation that doesn't account for the long-term cash flow potential and as well as the real growth of their services business. i mean, it's clear that apple as a product company has reached its maximum potential but as a services company it's in inning two or three. if apple does anything bold here in services instead of just sticking its little tailwind i think they could make a big impact and grow the business substantially even more so than today. >> so if anyone comes out ahead, you think amazon, you think google, who else?
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>> well, our basic premise is that, you know, basically four or five companies have just massive monopoly power over their respective areas of business like google for example in online advertising. so these positions can't be changed without government intervention. so as the companies continue, you know, like netflix on the global dominance of the entertainment industry, as this continues without any interference we expect these companies to continue to grow profits, users, and this could go on and on for a long time. so the only risk to many of the companies is really government intervention. >> well, what about the risk of government intervention? we've got congress looking at potential privacy laws, potential regulation that would impact google, facebook. there's also a potential regulatory threat against amazon which is getting quite big and has attracted the ire of the president. >> right. i mean, one option is just to rent out a lot of rooms in the
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trump hotel in d.c. and hopefully that'll work but the other option, you know, is certainly we don't think the government can -- the u.s. government can beat these tech companies but we do think the europeans can. the european approach to consumer protections is completely different than the united states in every industry and we're seeing that effect already on these companies. we actuallike to our european froneds enforce these kind of things a lot more here in the united states. we think this is a risk. it is something microsoft dealt with a decade and a half ago. it really kind of hurt the company for almost a decade before it started growing again. this is a legitimate risk and one that probably should be looked at because they are such dominant forces. but as an investors you've got to own these companies for the long term at this point. >> don't see jeff bezos taking out any rooms at the trump hotel unfortunately for you, ross. i want to ask -- >> you might be surprised.
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he might be taking out rooms. >> we're not going there. but let's talk a little bit about tesla. got a question here from a viewer via the bloomberg i.b. asking for your estimates for and the ear for q4 full year 2019. >> our estimates are imprecise when it comes to tesla. obviously their business is changing so rapidly. what we expect on revenue is somewhere around $25 billion this year. we expect them to make at least 350,000 e.v. cars, a hundred thousand of the model s.n.x. and at least 250,000 model 3's but that might be low. our estimate. so we hwan revenue will probably be around -- we know what revenue will probably be and we hope and expect they'll run either even or a slight operating margin through the year as they continue to invest heavily into their growth especially in china where i think this opportunity is just so enormous. tesla really needs to be investing in growth right now
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to stay ahead of the competition he esspigsly -- especially in china. >> what do you make of this report that even the saudi arabiay investment fund has so they're not ex-podiatrist -- exposed? >> these people only do what they're doing for their own benefit. they are not traditional owners like black rock or me or somebody else. i think they took their stake to try to take the company private and failed at that. they are very nervous as far as investing in things that will destroy their entyrekey. so saudi arabia has the most to lose with tesla's success. so doesn't surprise me that they're hedging their investment. there's a lot of motivation they work with that aren't per se economic. >> what about the lay-offs at tesla, the uncertainty around whether they can hit the same production numbers they did in the last year and the competition from other players
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in electric cars? >> so as far as the competition i'll start with that. we don't really see competition in electric cars for tesla any time soon. the u.s. car makers make horrendous cars and the european car makers are too busy trying to beat emissions testing and getting their c.e.o.'s out of jail. the real competition is coming from china with companies which really are making some good, electric cars for china. they're over a million electric cars sold. they love tesla. it is a premium brand. the competition will help tesla. the more e.v.'s of better quality and made will convince more drivers this is a way better alternative so we expect that to be a positive not a negative. i think on the lay-offs and stuff i think that's a by product of the fact that tesla
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is trying to run their company sustainabley and profitabley not like a typical silicon valley startup that burns capital like they've been doing for years. the fact they're showing financial discipline here is something i'm really excited about and secondly the purpose of the company is really to use automation as much as possible in the production line and they struggled so much to get the production up to the levels that would keep the company alive they had to hire so many people. so i think as they streamline production and such and make the difficult choices that are just a reality for tesla right now, the financial situation for them is tight, so they have to run the business tight and i think that we're seeing some of the effect of larry ellison on the board helping elon make the tough decisions. he did the same thing at space x. we're seeing this at all kinds of tech companies today across the board from apple and everywhere else just trimming, you know, the unnecessary stuff as we worry about the future of the economy under the trump administration.
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>> now, of all the big positions you have in tech companies it looks like facebook is not one of them. why not? quickly. >> well, a year ago or about a half year ago i had i think social media has peaked. i think it is really bad for people. i think that most people are spending less time. you have a screen time app now that tells you on your phone that you're over using this stuff. spending three, four hours a day staring at pictures of your friend's vacations or whatever. and people have real ilsed that. social media has morphed over to gaming now through twitch and streaming. you know, ninja is a huge character now. all the kids are playing fort night and having their social media there and they're done with this facebook thing. so if you ask most kids today they don't even use facebook and they do use instagram. that doesn't bode well for facebook long term. i think they're just ethically corrupt there. that was part of the decision making as well. >> all right. we'll talk more about gaming when we get to nvidia later in the show. quite a pronouncement that kids
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are done with this facebook thing. ross gerber, gerber kawasaki. we'll be back with ross later in the show. cryptocurrencies are off to a rough start in 2019 but how is the decline impacting crypto start-ups? that's next. this is bloomberg.
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>> bit coin slump continues. monday the popular currency sunk to its lowest in more than a month dragging down the crypto index. with it disappointing start to the year for investors who hoped 2018 volatility was behind them. more than $400 billion in crypto market value was wiped out in the last year. julie, is there any end in sight to the drop? >> i haven't heard any good news about bit coin or other cryptocurrencies at this point. something that could happen that would boost them in value would be institutional
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investors suddenly wanting back in the game. this time last year we started hearing maybe goldman sachs, bark liz, and others wanted to open up trading around this which was something a lot of crypto traders were excited about. not only was it good to legitimize the cryptocurrency but also might bring some more stability into the market. i guess it kind of has brought some stability since we have been around three to 6,000 the last few months but i don't know that was necessarily the stability that they were looking for at the time. >> i have a chart here in the bloomberg that shows that actually the cost to mine bit coin is higher than the value of bit coin which kind of makes it a fruitless effort. the white line here, the price of bitcoin the blue line the cost of electricity that it takes to actually mine the stuff. you know, what is the impact of this? >> this is coming from a jpmorgan report that i believe was out last week. this is an average. there are some places where you could still mine bitcoin for
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less than what the report is saying. i believe it was around $4,000. we're trading slightly below that. obviously if you are in a place where electricity and what not costs more where it costs you $4,000 to $5,000 to mine at this point there is much less incentive to continue doing that. just sort of one other negative sentiment that's out there right now. >> there is some hope for stable coins but what is happening to all of the digital start-ups that were founded based on the hope that this was going to be a huge market? not that it won't be some day but it is not looking good right now. >> exactly. i think a lot of them are waiting for broader use cases and sort of exploring that, stable points being one of them. we saw coin base raise at the end of haft year. their previous round had them at evaluation around 1.6 billion and this new one was at an $8 billion valuation which is a massive jump. you can see a little bit of that impact but based on people
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i was talking to during the fundraising talks there was one point where the valuation was as high as 12 billion so you have seen some of that come back down and then along with the story that we had about their funding round we talked about what their sales were in 2018 and while that wasn't broken out by quarter they did still increase from the year before. i would obviously just love to know what the actual quarter looked like because i'm sure the bulk of that was back when, you know, the first couple months of the year when bitcoin was still trading around 19, $18,000. >> all right. keep your finger on the bitcoin pulse for us. thank you so much. as always. coming up, nvidia fell the most in two months after cutting its outlook for fourth quarter revenue. we'll break it down, next. plus, lodge tech reported strong third quarter results. what to expect from the company as it takes on gaming. this is bloomberg. ♪
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emily: this is "bloomberg technology" global link where we join "bloomberg daybreak: australia." i'm emily chang. i want to take a look at the top global tech stories of the day first. shery: let's take a look at huawei because u.s. prosecutors filed criminal charges. part of a broad crackdown into the chinese smartphone maker. allegations of committing bank fraud of violating sanctions by oing business with iran. apple is planning a subscription service for games. the company began talks with
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game developers in the second half of last year. it is not certain how much apple will charge for a subscription or what kind of games it will offer. shares of nvidia took a tumble in monday's session. the maker of graphic processors has cut its fourth-quarter revenue forecast. nvidia says gaming sales were below expectations due a weakening global economy, especially in china. those are the top global tech stories. emily? emily: thank you. i want to stick with nvidia and bring in ross gerber. c.e.o. of gerber kawasaki in l.a. you have a big position in nvidia as we discussed. are you prepared for long-term pain here? ross: it feels like the pain already happened. we are down into the 135 range. i think the price clearly reflects the issues they are facing which are legitimate. emily: so, why do you think this won't be longer-term then?
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ross: two things. one, do we get a resolution of trade issues with china which would sort of give investors as well as capital more confident in making investments and growing the chinese economy will be a lot easier if we can get through this. we do think the trump administration has manufactured this slowdown possibly, even the first chinese recession ever, who knows? we've created these problems for ourselves and issue is whether we will keep digging the hole deeper or solve them. is i'm hoping we solve them but i have little faith in the art of the deal so we are playing a pretty conservative right now. haidi: best case scenario, you can solve the trade war with the short-term wins or whatever, but i think there will be no economist that will say china does not have structural growth problems of its own. without the trade war
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it is an economy coming down based on the pace of growth. that is undeniable. that market is something that is changing for suppliers and for companies like nvidia that have been used to the breakneck speed of demand. ross: there are a couple of things working behind the scenes. the banking shadow system they started a year ago by pulling back a lot of these sort of ridiculous lending things that were under the surface. this is one of the reasons the chinese economy has slowed because they have taken steps to actually make the economy more structurally sound through attacking these shadow banking systems. that is one of the reasons we are seeing the slowdown because there is less lending in things that will never make money. i think when you are china and look at the size of their economy and how fast the average individual has grown
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income, this is the most exciting market in the world. growing at 5% or 6% or even 4% is a reality for china over time as they mature, but these are still huge numbers and they will be the largest economy in the world in the next five, maybe less years. we have to accept that. but with this, i think there is tremendous opportunity in china and i don't think they are headed for some major collapse or anything. emily: that said -- to haidi's oint, the imf has warned the global economy is slowing down much faster than expected. how do you think ceos are going to react to this, even if they et some short-term relief? ross: i think ultimately, china has begun stimulating the market with different methods. china, they can do whatever they want. it is not like they have separation of powers and fed.
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the truth is that china can just add more liquidity to the market if they want. they can do whatever they need to do to keep growth. ultimately, when you look at china as when upwardly mobile society and how advanced in technology they have become, how advanced their cities are today -- i have little fear that china will be successful in the future. once again, we are making investments right now into china, into some of the chinese companies that have come down in value because we think they are very dominant companies. i think this is a growing pain for china that was bound to come, but i think their leadership is very good and the people are very happy with it. i think it will be ok. shery: you are fairly optimistic a deal will be struck on trade. i'm curious whether that faith has been shaken given the development earlier today, the ndictments against huawei.
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the criminal charges. seen as an escalation before the next round of trade talks. are you concerned? ross: once again, i don't agree with the trump administration's methods of negotiations which are basically heavy-handed. not a coincidental timing of these charges with huawei. i think i have little faith in the trump administration's ability to do a deal. what i have faith in is the need for both xi and trump to get a win here and stabilize both of our economies before we really see a global recession in the next year or two if this stuff does not get worked out. that is when people question the leadership not only in china, but also in the united states and we have an election year coming. i cannot imagine with an election year coming and how poorly the republicans have done that they are not pushing to resolve these issues, refocus back on growth and all the positive that can happen from two of the major economies in the world working together.
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are they smart enough to do this? the chinese are smart enough to get it, but we are relying on what i consider very unintelligent people to represent us. i'm not confident. i think greed might overwhelm intelligence here. haidi: it is also a longer-term issue. whether you look at this huawei situation as legitimate concerns over security or whether it is part of a broader attempt to curtail chinese tech. is there a real concern it will be difficult for companies like nvidia and huawei to be doing business with the largest market in the world? ross: i think it is a new day for china. i think huawei is guilty for what they have been charged for. i think they have been abusing a lot of things for a long time -- technologies, theft. iran is certainly getting things from people and it is certainly china. i think it is great we are enforcing this.
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i question the timing and the approach. it certainly has taken a dangerous approach to dealing with this issue, but i do think the way china has treated u.s. tech companies and the way they have hurt companies like amazon from being able to do business in china while they built up their own amazon, it is the same kind of game. if we are going to play the same game, they should expect that. this is part of the trade war and none of this ultimately works out good economically. maybe we can get a deal. once again, i am hopeful greed will outpace stupidity here. it is hope. i hate investing in hope. we are looking for opportunities when things get too cheap, like maybe nvidia. we are playing it very conservative right now. haidi: really appreciate your time, ross gerber joining us. thank you for your time. much more ahead so do stay with us. this is bloomberg.
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emily: dropbox has acquired hellosign for $230 million in cash. hellosign is an e-signature oftware company. lyft is among its customers. the deal is expected to close of the quarter and dropbox says the company will continue to operate independently. logitech beat third-quarter earnings estimates, attributing much of its success to the rise of e-sports. $864 million in sales last quarter, with a 23% jump in the gaming business. the company has attempted to diversified its sales, while mobile and cloud services gained popularity.
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producing $500 million in net sales in the last three quarters. ceo bracken darrell joins us now to discuss. you actually took over this company at a critical point, and reprioritized gaming. why? bracken: i have three kids. all three of them were gamers. they were right in the strike zone. before i joined the company, my kids said logitech is a great company but their products are not as good as they used to be. when i joined, i immediately said where is the gaming group? it was four people. we changed that right away and have a great team. emily: how many in the gaming group now? bracken: it would be well in the hundreds. emily: you still make the keyboards and mice and now making more of this equipment for gaming. controllers, headsets, speakers. bracken: right. gaming, in a way, the core business grew 13%.
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mice, keyboards and headsets is the same thing you see in gaming business but it is higher spec. increasingly wireless, high quality sensors and designed for gamers. it is that business but we also make things more console gaming which are headsets mostly today. we are getting into the controller business. we are also in simulation where you can feel like you are driving a real racecar. or if you are really adventurous, you can drive a farm sim. a simulator for farming. emily: how much does the company depend on the gaming industry and is that a concern given china's recent crackdown on gaming and the health of the global economy right now? bracken: when we first joined, we had four business groups. now we have 13. we are increasing our portfolio all the time. we are a lot more than just gaming. we are in gaming and it is in a sector of growth curve that will go on forever. it will be the biggest spectator sport within the next 20 years.
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we are also big and video collaboration, videoconferencing. we make videoconferencing equipment for rooms of all sizes now. that is our third biggest business. the pc peripherals business is very strong. emily: what is the outlook for e-sports? bracken: e-sports is fantastic. what is happening in e-sports, for most people under the age of 25, they realize that almost everybody is either playing or watching at home. if you are over the age of 35, 40, what is this e-sports thing? is it a craze? it is not a craze. they are playing more and more games, and they are playing them longer and they will grow up and their kids will play. emily: how was your strategy being impacted by the trade war and the concerns about the chinese economy? bracken: it does not even touch our strategy. it touches the tactics and operations in the way we bring things to market. we do a lot of manufacturing. we have a factory in china but we also manufacture in other people's factories in china.
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what we will do -- we are moving things into other factories, some of them outside of china. where we can, lowering costs overall. where we have to raise prices, we will. emily: what is the volume of manufacturing outside of china? bracken: relatively minimal because the u.s. business, the total m.a.r. business is only about 35%. in the u.s. it's about 28%. emily: if you need to raise prices, isn't that a concern for the business? bracken: we are generally the biggest player in the category so it gives us some power. everybody we compete with is in the same boat. emily: do the trade tensions have you thinking anything different about acquisitions? bracken: i was at a dinner the other night with other ceos and that question came up. no. i think it has dimmed the overall market in general and
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made people more conservative which makes things more attractive from a pricing standpoint. we are still thinking about it. emily: some big consumer tech companies have been getting into consumer facing accessories like apple, facebook, google, amazon. is that a threat to your usiness? bracken: our general strategy and choice set is, we try to go into things that are really not important to them strategically. if they are in them, they are in to finish up and experience. it is not a threat, but it does shape the directions we go in. emily: ok, thank you so much for stopping by. good thing you have smart kids too. bracken: i do. emily: he used to lobby people for votes, but now lobbying the eu on facebook's behalf. what changes are in store for facebook. still ahead, what are the expectations as apple gears up to released its quarterly results and has the tech giant
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managed expectations? this is bloomberg. ctations? this is bloomberg.
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emily: as we prepare for facebook's fourth-quarter results wednesday, analysts are expecting a revenue surge, according to data compiled by bloomberg. there was one corner of the facebook universe under the radar and that is the video platform, facebook watch. while facebook will taken close to double youtube's $4 billion in ad sales, watch is a ingle-digit percent. we have sarah frier who covers facebook for us. what is happening with facebook watch which made a big splash a lot of questions about where it
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as been? sarah: one thing about facebook watch that in the beginning in 016, it was more about creating a different way for people to use facebook. one of the things we will be hearing more about during earnings is how facebook has really reached a saturation point around the world in terms of global usage and its biggest ad market. watch was supposed to get people to use facebook in a lounge-like experience, like when you are on the couch watching netflix, maybe you want to watch facebook instead. so far, that has not happened. facebook watch is a minority of facebook users. it has not had a lot of big hits. the company is not getting to the point where they are competing head to head with youtube with the way they envisioned. emily: what is facebook saying about it? sarah: facebook is saying they consider it a success. they know there is consumer
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behavior to have this kind of intentional viewing experience, but they have not really gotten there yet. one thing that is very interesting that my sources told me about this whole thing is back in 2016 when this was conceived, facebook was taking an average of 45 minutes of user's time per day, but that was split up into little moments. less than 90-second sessions on average people were looking at facebook. while they were waiting in line or waiting for the check. it was these moments of the day that in aggregate turn into an amazing, global advertising business, but they don't have a lot of sit-down, intentional viewing. it is more passive. emily: with results coming up, despite all the bad news about facebook, analysts are expecting the biggest profit ever in a single quarter, right? sarah: facebook has so many options beyond facebook and watch. it is a tremendous business with the likes of instagram,
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facebook messenger. starting to slowly monetize whatsapp too. most of the growth we will probably still see from the main facebook app which is continuing to grow in emerging markets despite the controversies in the u.s. what we will be wanting to see is whether those main market have really reached a saturation point in terms of users in the u.s., europe and other places. emily: nick clegg, the new head of policy in comm is on board, former u.k. political figure. what will he bring to the table? sarah: the independent voice that facebook, telling them this is what will work, this is what will not work when you talk to regulators, the public. facebook has had a big problem with not understanding how the public views how they work and
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how they need to get better. so, maybe he will bridge the gap, but so far it looks like he is out there touting the same solutions that zuckerberg has touted in the past, which is more independent oversight of facebook content policies and an expansion of the same tactics used around the 2018 midterm elections. emily: there is nick clegg in his former life as a u.k. politicker. snap in search of new executives. the cfo recently left. lara sweet, do you know her? sarah: she is one of the rising stars at snap. i know there has been a lot of turnaround at the top, so people can rise quite quickly. he is an interim option. hey have said they are going to initiate a search. so, we still don't know who is going to be the long-term cfo at snap. tim stone was in the role for much less than a year. it is going to be incumbent on
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them to find somebody who can really have more stable approach with wall street. there has been a lot of volatility. emily: all right, i know you will keep us honest. thank you for stopping by. and apple reports tuesday. investors are well aware the company won't fit its initial revenue forecast. mark gurman looks at how they went from darlings to downgrading. mark: in august 2018, apple became the first publicly traded u.s. company to top $1 trillion but a lot has happened since. in november, the company reported revenues beat estimates. apple forecast the strong growth for the holiday quarter, when presumably iphones, ipads and apple watches will be flying off the shelves. the iphone maker cfo quickly
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announced the company would stop reporting how many iphones, ipads and macs it sold each quarter. some analysts thought something was amiss. they forecasted revenues for the holiday quarter between $89 billion and $93 billion. analysts' fears were proven right. tim cook announced the company was cutting its revenue forecast down to $84 billion. on tuesday, we will find out how accurate that production was when apple announces its final numbers for the quarter. apple blamed lower-than-expected iphone sales, particularly in china. it seems consumers who bought the iphone x for $1000 last year did not think an upgrade to the 10s was worth another $1000. the iphone 10r did not support enough people looking for an upgrade. apple plans to turn that around. it is planning larger changes for the iphone this year, and even bigger changes by 2020.
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there is also an augmented reality in the works. new software changes for the ipad coming. i'm mark gurman for bloomberg news, los angeles. emily: mark gurman all over apple for us as always. that does it for this edition of "bloomberg technology." tomorrow, we will have full analysis of apple's first quarter results. we will be talking to dan ives, and much more. we are live streaming on twitter. check us out. follow our global news network on twitter. this is bloomberg.
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:> this is bloomberg daybreak middle east. u.s. accuses huawei of fraud and theft are ahead of new trade talks with washington. the company denies the charges and calls for the release of its cfo. caterpillar and nvidia site slowing demand from china. expects toa says it reduce oil output once again in february. the kingdom also announced that it is looking at more than $50 billion worth of deals as part of a sweeping plan to develop infrastructure. and the trump administration slaps newio

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