tv Bloomberg Technology Bloomberg May 30, 2019 11:00pm-12:00am EDT
emily: i am emily chang in san francisco, and this is "bloomberg technology." uber reports its first results but does not share guidance. losses widened to $1 billion. we have it all. facebook shareholders pressed for more checks on ceo mark zuckerberg's power. highlights from the annual investor meeting. disney's $1 billion star wars expansion is now open to the public, with record crowds
expected at a galaxy now not so far away. we give you a sneak peek. first, our top story. uber reported its first quarter as a public company. investors are trying to digest the details. shares were up, and then down, and now back up 2.9%. the company meantime is putting some meat on the bones in the call, giving us a little color, reporting a $1 billion quarterly loss is expected but among the largest of any public company. more than lyft lost in all of last year. lyft also reported a loss in its quarterly report this year. uber did not provide guidance for the current quarter. in the call, the ceo talked about their advantage over rivals. >> our model allows us to acquire and retain customers with a cost and efficiency and effectiveness advantage over our rivals. these efforts are just cutting
started as we penetrate into a $12 trillion total addressable market. emily: what is the standout here? we knew a lot of the numbers going into this. we weren't expecting surprises, except for the fact that it looks like they are not reporting a forecast? >> they reported preliminary results on may 13, so none of this is really a surprise. largely within range. they ended up sort of on the higher end of the range so investors reacted marginally positive to that. stepping back, you still have to think, wow, they lost $1 billion in three months. that's a lot of money. emily: as did lyft. mark: as did lyft last year. but they lost a lot of money in the quarter. gap accounting, all sorts of ipo equity costs. so we expect to see those in uber's next quarter, so expect
giant losses in the next quarter due to that, those charges. but on the call, they didn't offer a forecast, didn't explain why. but they gave vague guidance on the call, which is still ongoing, to expect incentives paid out to customers to go down in the future as the percentage of revenue from marketing will come down in q2, which investors like. that drove the stock backup in aftermarket trading. emily: looking at some of the details coming out from the call, they are talking about international, targeting countries with a regulatory opening. germany, argentina, south korea, spain, italy.
that on top of what the ceo mentioned about uber being a bigger platform. so any company that competes, uber will be a bigger platform. mark: those were countries that were closed to pre-much any of uber or international competitors for a long time and only recently opened up. japan and germany both have very strong taxi industries that have a lot of influence in the government, so uber was kind of locked out of those countries for a little while. emily: and of course lyft doesn't have an international business. mark: they are just in canada right now. but they have a bunch of international allies, so there is the prospect that somewhere down the line, we don't think any time soon, they will try to expand globally. but uber is a much bigger business. emily: we have a chart comparing uber's losses to lyft's, and it looks like this has the most recent numbers. tell us what we are seeing here. mark: in the first one, we are looking at operating losses for both companies.
it's a term and is amount of money for both, really. by any business measure, they're very loss-making businesses, uber vastly more so because it is so much bigger and operates globally. and then the operating margins are also not good by most business standards. but uber's looks slightly healthier. lyft kind of has been growing faster in many u.s. markets, partly because it has been spending so much on paying incentives to drivers and discounts to customers who use the service. emily: one of the interesting things that is different between the two companies, lyft on its earnings call said this was the peak spending year. when i asked if it was uber's peak spending year, i didn't get an answer. how will that sit with investors the next few quarters, on top of the market volatility?
mark: yeah, it is a good question. lyft thinks it can gain a foothold in the u.s., then just bring costs down, not have to spend so much to gain market share. uber's competing in a lot more places, and they don't know what will happen in india, argentina, some of the countries you mentioned. uber did say on the call a few minutes ago that this will be the investment year, so maybe the implication there is next year won't be quite as expensive as an investment year, but i don't think they want to commit to anything yet. they want to test the market and see how much investors are willing to stomach. emily: they did raise billions of dollars with the ipo they can now invest. we will continue to follow the call. u.s. president trump and outgoing u.k. prime minister theresa may will discuss huawei
during a june 4 meeting on london. may will listen to trump's concerns as the u.k. makes an upcoming decision on 5g dear. the u.k. government currently doesn't use 5g equipment made by huawei, but it is used in commercial networks. coming up, facebook investors go after ceo mark zuckerberg at this year's annual shareholder meeting, but it doesn't look like he's going anywhere anytime soon. we'll discuss the results of the meeting. and if you like bloomberg news, check us out on the radio, the bloomberg app, bloomberg.com and in the u.s. on sirius xm. this is bloomberg. ♪
emily: mark zuckerberg's control over facebook was the focus of this year's annual shareholder meeting, but unsurprisingly efforts to check the ceo's power failed. investors rejected all eight proposals, half of which were aimed at limiting zuckerberg's power, including a proposal to change the company's dual class voting structure and elect an independent chair. zuckerberg himself holds the majority of the company's most powerful shares. joining us to discuss, bloomberg's kurt wegner and shira ovide. you listened to the whole meeting. set the scene for us, including the words "fire zuckerberg" projected on the side of a hotel? kurt: also a group with a big hot air balloon with an angry face emoji on it. some people in the room said it was tense, it was sober, and so
i think that you could tell just by the questions that were asked and statements that people made that there are a lot of angry people at facebook right now, and a lot of people who want to have more or better answers from mark zuckerberg and sheryl sandberg. emily: shira, investors asked a zuckerberg several times about the amount of power he holds over the company. there was one who had a follow-up, saying something along the lines of, i am asking if you should still be ceo or if you should step down, and he said we are limiting it to one question, moving on. so what do you make of, obviously these proposals were rejected, and we expected them to be, but also sort of the evasive nature of the answers? shira: i mean, in a way facebook is kind of in a no-win situation right now, where everybody is furious at them for a host of sins. one of the people who stood up to ask a question was asking why facebook had banned her small business selling hoodie sweatshirts that read "men are
trash." so it was that level of shareholder questioning, should mark zuckerberg be a dictator over facebook and why are you blocking my hoodie business. that just shows you the scope of anger at facebook right now, from the sublime to the ridiculous. emily: there was one investor, kurt, who tried to ask the independent board member on facebook's board what she thought of the whole thing and she also sort of deflected? kurt: they had to actually bring her up to answer the question. she wasn't on the stage at that point and had to kind of make a special thing, we want to ask sue, let's bring sue up. the question was, you are the lead independent chair, are you actually going to call a meeting of independent board members without mark zuckerberg? is that something you would do? would you consider holding him to account by making decisions while he's not around? she basically said no, this is not something we are considering, we feel this is the appropriate set up.
emily: meantime, if she wanted to could she take power? kurt: as independent chair she's really the only person he would have to report to. there are rules that she cannot call special meetings of the independent board but she says she does not want to and doesn't plan to, so for all intents and purposes he basically has the run of the show. emily: meantime, mark zuckerberg answered many questions, including new questions about what counts as a speech that should stay up and watch it come down. take a listen to one of his answers there. mr. zuckerberg: if the rules for the internet were getting rewritten from scratch today, i don't think most people would want private companies to be making so many decisions by themselves about what constitutes acceptable speech or what people are allowed to say around elections, especially in different countries around the world where we may operate but
may not even have a large physical presence. emily: this as controversy continues to swirl around this doctored video of house speaker nancy pelosi that facebook has chosen to leave on the platform. youtube has decided to take it down. nancy pelosi herself has commented on this, saying this to kqed earlier. speaker pelosi: facebook knows that this is false. they know this is false, and yet they have decided to keep it. we have said all along, facebook ,poor facebook, they were unwittingly exploited by the russians. but i think wittingly, because right now they are keeping up something they know to be false. emily: what do you make of that? shira: it is harsh, may be unfair, but i understand the anger. there is this doctored video of her that has been seen millions and millions of times on facebook. and look, the company did do
things to make sure that it got slightly less distribution in people's newsfeeds, made sure to put a little tag on it that says that there is more information about this video, linking to a third-party article saying this is a doctored video, it's false, but millions of people have seen it and some people have chosen to believe it. so pelosi is sort of reacting to that, that episode that embarrassed her. emily: kurt, what do you make of the fact that this is the issue facebook is digging its heels in on, the piece of content that facebook is saying, we know it is doctored, but it doesn't truly violate our policy? kurt: i said this earlier this week or last week. this is a really good reminder that facebook's policy doesn't actually mean they take stuff down just because it is fake, right? this happens all the time. this is just a very high-profile example that is getting more attention. when facebook takes stuff down,
it is because the people who posted it might be misleading who they are. pretending to be in the united states but they are really in russia, stuff like that. they don't axley take it down just because it is inaccurate, so this was just a high-profile example and reminder of the policy, and people are realizing this policy might not be as great as we think. emily: and also it brings back the question, is it simply too much to expect, impossible for facebook to be the arbiter of truth? kurt: i think it is. think about it, 2.4 billion people i believe on facebook as monthly users. are you going to stop everything go person who goes on and says, the sky is red, everything a person whom bespeaks or shares a stat that is wrong? i don't think it is a feasible task right now, and they don't want the responsibly of doing it, and that is why they are asking the government to step in. emily: a new billboard has gone up in san francisco from elizabeth warren saying break up
big tech. of course, facebook isn't the only company she's talking about, shira, but to throw this up in the heart of silicon valley. shira: lots of people getting their pourover coffee looking at elizabeth warren talking up breaking up big tech. [laughter] her campaign knows what it is doing to get attention. facebook isn't the only company part of her policy paper about breaking up tech. amazon is certainly a prominent example. apple and others. this is not a facebook-specific kind of target. emily: but given that facebook is such a large platform and in a way because of all the content on there, should they be in a position of being arbiters of truth, even if we believe that is impossible the way facebook is architected right now. if facebook were smaller, broken
in smaller parts, would that be more realistic of a proposition? shira: i am not sure. i think "break up facebook" has become the sort of catch-all solution to this problem of facebook, to any problem of facebook, and i'm not sure it solves the problems people are articulate in. so, if facebook it's broken up into instagram, whatsapp, facebook, you still have multiple internet hangouts with over one billion users apiece that still have to make these difficult content decisions. and i'm not sure it gets much easier dealing with individual companies with one billion-plus users as opposed to one company with multiple products that have a billion-plus users. emily: bloomberg's shira ovide, kurt wegner, thank you so much. obviously this conversation will continue.
homes. the solar project will open in 2020. meantime, silicon valley's rocky history with clean tech investing has been well-documented. clean energy startups were once lauded as a winning bet, but the sector's hype fizzled. but there has been a resurgence of interest in cleantech investing as the trumpet administration hardens its attack on climate science. the white house has created a new panel to downplay climate change and legitimate science on the topic. i want to bring in our guest, from a venture capitalist firm that has raised $92 million to invest in companies focused on sustainability. how do you make of the new line of attack, trying to undermine? >> i think that's exactly what he's trying to do. an ongoing data point of unwinding many positive regulatory moves from the previous administration's, not just obama but bush as well, to
be candid. the reality, this is likely to have almost no impact on my investment focus or my results. emily: there appears to be increasing interest from you and other investors in sustainable startups because of trump, sort of in reaction to trump. what do you make of that? abe: i think that's exactly right. i would say there are three separate groups that are really galvanized by the fact that the trump administration is not focused on understanding or believing climate science. there's broad scientific consensus that global climate change is real, and what we are seeing, number one from an entrepreneurial standpoint, most people in the valley and elsewhere are very cognizant of the fact that there is in fact climate change. we see it out here every day. locally here, pg&e is a bigger story, but they have gone bankrupt as a direct result of climate change. we're seeing tremendous deal flow.
the second group, facebook and others. 176 separate corporate groups have pledged to go 100% renewable over the next 15 to 20 years. in the third group is utilities, which is kind of a head scratcher, but there are six states that have passed 100% renewable standards by 2045 to 2050, and a dozen utilities that have said they will go completely carbon-free over the coming years. so the trump administration's stance has in fact galvanized tremendous interest in this area. lastly and perhaps most important he from a capital formation standpoint in our world, our investors, the pension funds, the endowments, they are very aware of what's happening in climate and they are actually very exposed to it. real estate holdings, energy holdings, massive assets are exposed over the next 20 to 30 years to global climate change, and they are looking to folks like us to motivate both some real counterbalancing returns
for them, but also to mitigate some risks they already have embedded in their portfolio. emily: so stopping climate change is one thing. making money is another thing. of course, cleantech, all these investors flooded in and then it didn't have returns. can you make money? abe: the short answer is yes. there's a much longer answer that we don't have time for today. [laughter] but the short answer, the fundamental economics particularly in the energy sector have changed dramatically. a quick example, to generate one kilowatt hour with solar costs about four cents for a utility project. the fully burdened cost to run a coal plant today is between $.14 and $.16, according to a group that does more power in traditional power than renewables. today, solar power is actually as cheap or cheaper to produce than to run a coal plant.
that was not true 10 years ago. the fundamental economics have changed, and no matter how hard the administration tries, they will never be able to put that back in the bottle. emily: you made 20 investments. what is the general thesis? abe: that global climate change is real. there are almost no other venture funds positioned, and there is a real ability to have been it returns over the next 10-20 years as an early-stage venture fund. early-stage venture is not unique, but our focus very unique. emily: abe yokell, thank you very much for sharing. coming up, uber's ceo saying they have suffered some brand damage in the united states that will take time to repair. more on that coming up. bloomberg tech livestreaming on twitter, @technology and our
emily: this is "bloomberg technology." back to our top story. uber sales up after reporting its first quarterly earnings as a public company. the company's cfo said that while the ridesharing market is becoming more rational, he won't hesitate to spend to protect uber's position. uber is losing more than $1 billion this quarter alone. joining us now dan and mandy. dan was reading the headline on the call and what struck out to me was they said there is no one thing that we can do to
get to profitability. the implication is that it is going to be a lot of things that make up this whole pie. what is your take? dan: i agree. compare that to what we saw with lift. this is the peak year of losses. this is important, because right now for investors, focus is on growth. the last thing you want to do is back yourself into a quarter -- a corner talking about profitability. it will take a few years, and right now, they are doing the right thing. i view this quarter as a step in the right direction, especially after a shaky start. emily: what is your take on this continued level of losses? the cfo is saying this is going to be an investment year. >> they are investing in the
food delivery business. they are very heavily subsidizing the drivers. that is why the take rates are coming down. you can see the reason why. the average prices for a food delivery business are much higher. you can scale it up over time and that is the most fragmented. even amazon invested in a company like that, so you know the market is big and that is what they are striving for. emily: dan, what is your assessment of uber's ability to get to profitability. i asked if this was the peak earnings here and he wouldn't commit to that. how likely do you think it is that uber gets to profitability in the near term? dan: i think that is the smart move, because when you look at lyft, that may be something they regret seeing, because railway, it puts that mark there in terms
of what they can do for profitability. right now, uber is doubling down. they need to invest in becoming autonomous. in the next 2-3 years, there is a better chance of me playing for the golden state warriors than them hitting profitability. in the next 23 years, i see that as often -- off the table -- in the next 2-3, i see that as off the table. they have to make sure that their users continue to ramp and it monetizes. emily: i want be seeing you at -- i won't be seeing you at the nba finals tonight. you have just broken my heart. but, mandeep, he did say on the call that marketing expenses were going to start to go down. that is presumably welcome news, given that both lift and uber have been spending heavily to
new writers. -- new riders. mandeep: lyft and uber are not subsidizing the riders anymore. it is a duopoly. you see this structure in online travel markets and booking.com and expedia. overtime, it is going to pay off in the sense that these guys can maintain stable take rates and the core ridesharing business. emily: what are you looking for over the current quarter? by the way, they didn't give a forecast. what is next? dan: it's important, they did talk about take rates. right now, it comes down to that take rate number, what bookings look like the second half of the year, do they monetize eats?
there's a lot of competition in terms of pressure and take rate. if they can get through this period, it is an execution story. no doubt, the stock comes out of the ipo, investors can grapple with the valuation, especially no profitability, but we believe the valuation starts to get a stock that may get re-rated when you start to look at the next 3-4 years, but it comes down to execution. this is an important quarter, but the next few will be a focus for the industry. emily: i am looking at a chart that looks at short interest for the biggest and most recent ipo's. the short interest in lift is a way higher than the short interest in uber. what do you make of that? dan: lyft right away, because it is domestic ridesharing, makes it an easier target.
as well as the timing with uber coming up. they shot themselves in the foot on the first call, not giving take rates, not giving bookings. they smell blood in the water. that is why you're seeing that. i think they have improved some of the communication with investors. no doubt, lyft is in the investor penalty box and that will be the next few quarters. they need to prove themselves, which is why there is so much more focus on lyft versus uber, where we are today. emily: on the call, he played up the idea of uber as a platform that does many things, which according to him, gives them a competitive advantage over a smaller company that does one thing. you can imagine he is talking about lyft. is it a good argument that one platform that does one thing very well could also be a really
staunch competitor? mandeep: yes, but again, in this business, our two-sided marketplace, like uber, it is all about scale and network effect. the fact that they have 90 million plus riders and our international, was so many people in different countries, i think it plays to their granted they their advantage if can show steady execution. it all comes down to how you monetize that writer base over -- that rider base over time. how is your driver retention? if they can show improvement on those metrics, it clearly is an execution story. that is where parallels to amazon make sense. emily: of course, we will continue to follow headlines. thank you both. bank of america sees china
tariff risks to apple already priced into the stock, reaffirming its by. the analyst cites iphones, capital returns, services and new products as upsides and says chinese retaliation is low, since iphones are manufactured there. earlier today, a bank of america senior analyst joined bloomberg. >> the important thing is to look at what china can do and there are two ways china can retaliate. the first is indirect, in which they could ban iphones. we think that is quite low. the second is more measurable. that is to look at the data. we looked at multiple different sources of data to get some confidence around what is actually happening on the ground in china. we do a very extensive survey in the survey results showed that the purchase intentions of apple iphones for chinese consumers and globally are not very different.
did not change much through this whole trade dilemma that we are going through. secondly, when we look at what is actually happening to iphone sales in china, we are looking at the inventory as it continues to draw down, which is a big deal, because as inventory trends continue to improve, which they should this time of the year, we should see it kick off in the back cap of the year. half of theck year. lastly, when we think about the app store, which is quite important for chinese gains, the trajectory of that has significantly improved from low single digits in january and february top in the months of -- to up 20% in the months of march, april and so far in the first half of may. we think the trajectory the data is telling us is much better than what people are worried about about the worries being reflected. the data is telling a different story. emily: bank of america senior analyst. coming up, more jobs at been
jacob, thank you for being here. instead of complaining about the pipeline, your company is trying to expand the pipelines and create its own. talk about how what you are doing works. >> thank you. we are solving the problem of the skills gap in the labor economy by filling the gap for software developers. we are doing this by using ai to find individuals who had the unique cognitive ability to have success in software development. we put them to the quick want of a full computer science degree in 20 weeks, then put them to work for our clients. what is unique as we are hiring people from all walks of life. musicians and teachers, construction workers, even doctors and phd's. we are proving that we not only
can make them good developers, we can make from the highest performing and most successful developers. our clients win, because now they have access to an affordable, diverse, predictable tech workforce that scales on demand. emily: where do you find these workers? how do you apply ai to people that you don't know exist? jacob: we are looking for a broad cross-section of society. we are looking for exceptional people and we found that there all over, hidden in plain sight. we ask people, we put ads in places like craigslist and different jobs boards all over the country and it says, become a professional software developer, no experience necessary. you go to our website and sign up and you are directed to an online assessment, where within two hours, we give you a decision. emily: what is interesting is that you pay them to learn.
you will pay these folks while they are in the middle of their training. explain that model to me. jacob: at the end of the day, we are putting our money where our mouth is. we have proven that this model works. we decided that instead of trying to sell this as a service, we would put our money where our mouth is and invest in our people. we pay people to take our training. once you are accepted, you essentially join a training program. there is no money out-of-pocket for the training. we pay them a stipend, typically while they are in the training program and when they graduate on a friday, they are hired on monday. they begin as apprentices for two years, then convert to permanent staff engineers after the two-year partnership. emily: companies here in silicon valley are used to looking for a very specific and stereotypical thing. the typical graduate from stanford university with a computer science degree who is
generally male and wearing a hoodie. how receptive are the big tech companies to taking on unconventional talent from unconventional backgrounds? jacob: that is what is kind of silly. i'm a product of silicon valley. i am a native who grew up there. i built a career there. silicon valley has a lot of conceptions wrong. i would say most of the country, the job requirements that people have for software developers are just wrong. if you think about the tightness of the industry, the people who built the industry, most of them didn't go to college or dropped out. they are the one to build the industry. if you go back, this industry was built by musicians and artists and hippies. it is silly that we are looking for people who have this four-year degree, programmer background. the reality is the highest performers can come from anywhere. it is just a matter of, can we
actually get them into a program that gets them into these careers and gives them the opportunity to grow and learn on the job? emily: you can't do this on your own, so what do you think that companies like facebook, amazon, google, why should they be doing to do their part as well? jacob: our vision is that people from all walks of life can be the most highest performing and most successful. it begins first the companies recognizing that and getting rid of integrated hiring methods, like looking at resumes and doing a traditional job interview. we have found that our approach to hiring, using ai to find people who have demonstrated ability and potential, then training them to do the work is a much better approach. the economics are better, but the intangibles like culture and retention and all the things that go to building the soul of a company are all things that are intangible benefits of this model of hiring. emily: good to hear the work you are doing.
pushing for delivery to catch up to demand. joining us is craig. how are investors and analysts reacting? >> these emails have been an effort on the part of musk to on one hand put to rest the notion that tesla has a demand issue, but also to rally the troops. it is also just an attempt that has not gone over that well with the market. you did see a bit of a tick up the last time he sent in a mill -- an email to employees, where he did try to put to rest this idea that they have a demand problem. he also phrased these emails in ways to where he left out the fact that there is a lot of work to be done for them to have a
great quarter. the second email was on the side of, we have work to do, we have to work through our delivery issues and bring costs down in order to have a great quarter. they haven't necessarily had the effect that other n.l.'s have have had where it read in the past is that he sent these wanting them to leak in the sense that he was cheering people on and giving his employees a sense that they were on the up and up and the company was doing well. emily: given that the analysts keep piling on, is this just a rough patch or is this going to continue for an extended time? perhaps be fueled by the next report. craig: the barclays report was interesting, because brian johnson has had this -- the way he has put the debate with tesla is red pill and blue pill, which is a reference to the matrix.
these are factions that are very strong and bifurcated, where people have for a long time treated tesla as a tech company that has the ability to make money that automakers are not familiar with. the red pillers know that it is slim margins. you don't make big money making and selling cars and they have been cautious about the idea that tesla will ever be sustainably profitable and able to generate cash and cover the obligations that they keep adding to the balance sheets. on one hand, went to estimate -- when tesla went back to the markets to raise money by selling stock and selling convertible bonds, that maybe would have looked in the
past -- been looked upon fondly by tesla, where people have been willing to cut checks to musk, thinking that down the road, he will deliver these great things, he will see a return to the focus on fundamentals. the idea that cash generation has not improved in a meaningful way and this is a company that has a lot more dead nowadays and -- more debt nowadays and there are questions about whether they will be able to address that. emily: we will be watching to see if any new emails hit inboxes. thank you. disney wants the forced to be with you. it has finally unveiled its anticipated star wars galaxies edge theme park at disneyland in california. the project is set at the time of the most recent films and is open to the public. our own ed ludlow got an early look inside.
>> the newest addition to disneyland california may not be in a galaxy far far away, but standing here in the first full-sized millennium falcon ever built, it certainly feels like it. called galaxy's edge, it has two main attractions. the first centers around the iconic millennium falcon. it allows users to pilot a craft or man guns to smuggle goods across the galaxy. later this year, disney will open rise of the resistance. they have not shared any details beyond the fact that it will mimic a fight with the first order and open by the end of 2019. fans can also build their own lightsaber or droid. it does not come cheap. the lightsaber will cost $200 and the droid $100. this is disney's ever -- biggest ever expansion in the park. they say it accounts for 40% of disney's overall revenue and is becoming more important when disney's most profitable business tv is losing viewers. i spoke to disney's chairman for
park experiences and projects and he said that investors should expect that investment to continue. >> walt disney said disneyland would never be complete as long as there is imagination left in the world. i suspect that this is a new high water mark, but it is not the end. ed: disney bought lucasfilm and the rights to star wars for a $4 billion. it has grossed almost $5 billion. disney hopes that the park will drive further sales of merchandise. the star wars markets had less traffic in markets like asia and china in particular. bloomberg intelligence expects the force to be strong with disney, especially with parks revenue, when it reports
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