Sun. Astronomers have called the socalled xo planets exo planets [inaudible] this is bloomberg. Cory this is bloomberg technology. The roadshow rolls into new york and is facing a slow of a slew of investor concerns. What investors are saying ahead. Over goes into damage control. We will look at allegations of Sexual Harassment and gender dissemination. 350 million compromise. We will look at the new terms of a verizon yahoo deal. First, to the lead. Snap kicking off its first u. S. Investor roadshow in new york to with a plan to ipo next work. Slower usingd engagement and the euclid and uniquely week shareholder rights. Up with sean steeple who attended the roadshow. I think you have to justify the valuation. The questions are around user growth as well as monetization. I think they dance around the issue of user growth alluding to issues with the android and monetization, they touched on lightly but certainly as the story progresses and as this valuation, you will need to see more metrics. Corey joining us from new york jenniferarinka and [inaudible] what happened at the roadshow . Investorsried to grab like sean to hear their take into his point, the when asked what was your big takeaway that is on your mind, user growth was the first thing that a lot of potential investors said. They limit on android but i heard a lot of instagram being called out by investors who point to the stories feature that instagram introduced that mimics snapchat. Others brought up the new whatsapp feature rollout where you can send images that mimic snapchat. Into nap is turning turning to internal issues like its noncore markets but investors still question the competition factor and it will surely be on the minds when they are running their comps between the facebooks and twitters of the world. Corey the monetization issue is a euphemism if there was one. Tons of people are using snap, not tens of people are jeff it generating revenue. The underlying opportunity for snap is around the data and the audience. As you know, they skew to a much is aer audience, that content creating machine and tapping into that and targeting that audience and be able to use that data much more effectively than a lot of their peers is where they opt. Corey is advertising the only real opportunity for these guys in terms of revenue and theres nothing wrong with an advertising on the model, the history of media is mostly about that. Jennifer there a lot of different ways you can monetize around what youre calling advertising. Very targeted marketing and marketing dollars are getting more segmented. A larger opportunity will be around how they use that data and selling that data to a whole host of different applications. Advertising being the largest bucket and you skew down from there. Corey the valuations for the business are aske astounding. There is lack of Gross Margins. The most basic concept of businesses sell for things more than the cost but that is not what snapchat does. Did you get that feedback from the Money Managers that this might be a bad is this the highpriced . Alex it is a high price. We have seen the price come down. As we reported since october of last year they were looking at valuations around 30 30 billion to 35 billion. The terms are set at a market value of 16. 2 to 18. 5 billion. Expectations came down as more information about the company has come out. When you look at where they are spending money the profitability factor is the next set for them. They talk about that as phase three. Phase one was development, phase two was user growth and engagement and phase three will be profitability. The biggest cost for them is their technology infrastructure. There was some new conversation around that today. The company said it expects the cost of infrastructure, paying for cloud and storage to ntually decline as it is as the two providers being google cloud and amazon compete on pricing. It is open to building its own infrastructure. A little bit as the two providers being google cloud and of new commenty around that and that is important because that is the bulk of their expenses right now which outpaced the revenue. Fonstad, of that you would have no complaints of publicvestments could go at 17 times sales. Jennifer that is an awesome number. What they are banking on his monetization and taking him out advantage of the massive amount of users and content. It is a to them, it is their game to prove that out. It is common for stock a standup to prove that in the Public Market where they can build predictability into their business and that will be the name of the game. Lot carere of a a lot about predictability and demonstrating growth while being thatto build them predict into the business. Corey the gross margin is a serious one. Negative Gross Margins over the last year, the last two quarters and better. Those are the quarters when they are dressing up the ipo so i would discount it. Investorestment would have discounted that into a former roadshow. Gross margins are generally horrendous. Were not talking operating margins or what al frankel was referring to was expenditures on the cloud. The basic pieces of what they sell. Jennifer a cosmic two different issues, what alex was referring to in terms of their into cost structure. They have been on a tear in terms of users and content growth. That has enabled them to, forced them to not focus on cost just until they got to a size with a size with the could take advantage of scale and think about creating a competitive dynamic and creating infrastructure. Google made a similar exercise when they first started out and built phenomenal low cost infrastructure. And Gross Margins overtime. Be in boston,l they are heading that way tomorrow and we will be listening as they head out to the west coast. This process will continue, they will keep pitching their wares and fielding questions from investors. Q a for an hour. There was not a lot of presentation. When you think about it they might feel like they express their message before shares are scheduled to price next week on the first of march. That would put a listing day on march 2. That is where i am putting my focus for the rest of the next two weeks. Corey you do that. Ipo reporter with something to do with an appeal ipo in the pipeline. Trading. Wist in prosecutors will allege that walter made 43 million trading insider information. Jurors ato show history of engaging in illegal trading with apple. They did not reveal the details but walter was indicted last buy trading on tips to [inaudible] big time butiting is it enough to take on online giant amazon . Bloomberg technology streaming on twitter. Check us out 5 00 in new york and 2 00 p. M. On the west coast. This is bloomberg. Corey u. S. Tech giants continue to face ago tori hurdles in the eu. Microsoft facing european windows 10. Es over regulators from seven countries are concerned that even after making privacy related changes microsoft is still not in compliance with fundamental privacy rules. Microsoft said it will continue to cooperate with the working party and National Production agencies. Walmart posted fourthquarter earnings which beat estimates. That tells you more about the analysts it than that does the company. The stock up 4 . The biggest intraday gain since may 20 26 2016. Benefiting from last years acquisition of jet. Com. Andking out sales growth posting. 9 growth in the u. S. In the fourth quarter. Walmartanjo covers joining me from new york city. I am struck by the comparison to s. Cys, target, kohl walmart showing something very different. Has been ais struggle for walmart. Walmart has been the Worlds Largest retailer. The thought was why cant it catch up to amazon . This is a finally a right step in the right direction. Corey we do not know the actual numbers. They gave the percentage of your over year growth, not the actual numbers. Some companies you get used to that. Google never tells us how many clicks they have. Is seems a good kind of number they should be breaking out. Shelley we know a little bit about it. Did a little bit around 14 billion in sales. So the bulk of that does come in online sales. That comes from the u. S. It is still a tiny number when you think about the fact that walmart is almost half a , and sales per t year. Corey we heard from the walmart ceo. Check this out what he had to say. We continue to invest in ecommerce to accelerate growth. We are gaining traction in moving faster. With the second we are the second largest u. S. Retailer by value. Our warm out our will walmart app is one of the top three. The characterization that they are the second largest retailer is kind of up for discussion because that does not take into account apple, for example, or hewlettpackard. If you think about traditional retailers, walmart is the secondlargest. Corey and to that, what do we know about their traditional is this and is that going the way of other retailers that had a tough quarter . Shelly one thing that is going for them is the online grocery. That is included in the u. S. Sales. Online, they and a picking up instore and walmart does include that in their online sales. Your strength is you are starting to see walmart benefit from and mortar which they always said was an asset to them compared to amazon. They are still much smaller than amazon. It looks like they are starting to take ecommerce much more seriously. Corey i am sure they did the responsible thing and broke out separately organic sales of walmart. Com and told us what jet. Com is is a post to buying those jet revenues. Shelly we do not know what jet was doing. Corey shocker. Thet really know exact numbers but we know they were not that big. What is more important for them than jet sales is mark lori, the new ceo who has an eye toward ecommerce and someone that could change things up for walmart. The chart we were just showing shows you that those online sales were not about last quarters acquisition, maybe there was a pickup in terms of the increase in the percentage growth of online sales for three quarters in a row. Ly we will start to see that in the third quarter. Jet is not included on their online sales. What this shows you does reflect a few changes they have made to ecommerce. That is the global chart but what theyre are starting to break up now is theres u. S. Is this u. S. Ecommerce growth. We do not know where the numbers are coming from. It shows you what walmart is reorienting to. It is saying Global Growth might have been a focus for us before but now we are focusing on u. S. , so walmart breaks out a number, it is like amazon and does so intentionally, that it is what it wants to draw the markets attention to and that is what they are saying is the focus going forward. Corey maybe more focused than amazon when they come out and list 40 different objectors objectives from the last quarter. Their profitsay could range from 100 to 100 million, who knows . Corey ec you see walmart steering toward [indiscernible] great stuff as always. Check her out on bloomberg gadfly. Terrific stuff as always. Scrambling in light of its second pr crisis. How the company is responding to Sexual Harassment claims. Function,teractive tv on bloomberg go. You can watch us go live and andprevious interviews bloomberg functions we talk about. You can be part of the conversation by sending me messages. Do it. Subscribers get that privilege. Check it out. This is bloomberg. Corey for the second time in a month, uber is facing some backlash. The ceo sparked controversy for his participation on president trumps business council. His company depends on a lot of immigrants who work hard as drivers. Down before the delete Uber Campaign was born. Uber acted quickly promising an urgent investigation led by eric holder. Bloomberg Technology ReporterEric Newcomer joins us now. This is not a new issue for uber, the issue has come up quite a bit for this company. Isc the issue of whether it forgynistic has dogged uber a while. Booberd the company at one point. The specific allegations and how the companys Human Resources team handled it, that is new in moving the conversation forward and throwing the company into a bit of shock. Best telles about the us about the blog post. It was an interesting read. Susan fowler. She said one of her managers, as soon as she joined the team message her and propositioned her saying he was in an open relationship and most more troubling she says she took that Human Resources and they basically said he was a High Performer so they were not going to do anything about it. She could change teams or do deal with it. Pretty troubling allegations and theres a lot more in her blog post. Been issues have about what has happened with the companys response to complaints against drivers, rape allegations against drivers and with the company has done to do with that. Eric with the drivers side, there are millions of them. Drivers they have to deal with. We do not know the incident rate which confuses the whole situation. Abouthave been questions how they handle support, whether they do enough background checks on drivers, here we have the 11,000 or more actual employees they are worried about then they also have these millions of drivers with a have had to do with all sorts of allegations there. Cory we refer to them as a starter but that belies what they are. They have 11,000 employees. Maybe one million u. S. Drivers. Has is a egg company that seems to have some aspects of baby company behavior. I do not mean that in an insulting way but going through this cultural definition within the business even know it has operated on a large scale. Eric it is nearly eight years old, our best guest for revenue guess for revenue was a billion. It has had to grow quickly. The majority of those 11,000 employees i said joined in the joined in the last two years. A lot of the process is are still getting created and there is a historical silicon valley, we do not need a chart. To build theed processes but they do not have everything. when i was an investor, if i sought employees had their stuff on a box it meant that they were changing desk so often that the business was growing and id did not want to own the stock. Place wheresame change is happening fast. If the allegations prove true andthe companys cul. They are companies that there are companies that grow fast and break things. Ese are very big moves and addressing the team is hard to do but it is hard for a company to figure out something they do need to do. Eric this is a company that has had a lot of pr nightmares. Ete uber,y after del and they needed to respond quickly. Engineeringftware company. They need to recruit away from google and facebook. Uber star story that Software Engineers are going to leave and think it is a hostile culture that will put them at a major disadvantage to the competition. Corey is this a sign that uber will respond more quickly than they have in the past . Eric eric holder is as top a gun as they can hire. They take this very seriously and they are putting a lot behind it. We will see. Om Bloomberg News the way in the other room. Ou very much. Coming up next. Anlas roles drive shares to alltime high. Solarcitys impact on the bottom line, cash flow burn could be a nightmare. We will discuss. This is bloomberg. You are watching bloomberg technology. Lets start with a check of your first word news. French president the french president ial candidate regained some of the ground he lost last month. The latest poll finds he gained three Percentage Points to a total of 21 . He lost five points. The poll shows far right candidate Marine Le Pen with the most votes in the first ballot set for april 23. Matt theresa may at londons downing street today as he tries to rally support from french expats in the british capital. Macron addressed supporters at a rally in london. He said in order to have access to the single market, it is necessary to be a member of the eu. The Italian Coast Guard released video showing refugees in a packed boat about to be rescued in the mediterranean sea. 630 people were transferred to the italian ghost card that is coast guard ship. Including 70 women and children. More than 12,000 people have arrived by see in europe according to the united nations. An admirer says the policy resonated with his thinking. He is the worlds oldest head of state. He says he hopes the u. S. Will remove sanctions imposed more than a decade ago over alleged human rights abuses and electoral irregularities. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. I am alisa parenti. This is bloomberg. It is just after 5 30 p. M. Tuesday here in new york. 6 30 a. M. Wednesday morning and singapore. I am joined by bloombergs haslinda amin. Is dragged down by Fletcher Building and frontera. Down as much as 4. 5 . Limit on expectations of a drop in sales. Futures industrial your pointing to a higher open. We are keeping an eye on fortescue metals. The loss they are out with earnings right now. Firsthalf profit coming in at announced a dividend of 20 australia iensense. The company has a policy of payout as much as 40 of profit to shareholders. If you take a look at the shares have reached seven aussie dollars for the second time in six years. Bloomberg shares that is a target revision. Bloomberg technology is next. Top our top story. Ipo slated for next month. On the heels of what weakening metrics. Guest attended the roadshow and was troubled. That was a big concern among ksmoove people in the audience going into this and i do not think that the roadshow addressed it. Pointing to problems with lower and androids is not adjusting the interesting addressing the elephant in the room which is instagram. He needs to clarify that. Certainly there is more questions than answers in that regard. Sarah frier is in new york, our bloomberg Technology Reporter. We talked earlier on Bloomberg Radio and you said you thought sentiment from investors was pretty strong coming out of the meeting. Sarah it was a packed room. Refers to Isom Evan Spiegel who that good ratings from the people who watch the roadshow. They said he was polished and confident. But youre right. There were these concerns about user growth. He is not the only person who thought that instagram needed to be mentioned a little bit more by snapchat as a threat. They were mentioning that it was all android and a lot of the people leaving the meeting thought they needed to be a little bit more clear about exactly how much of the facebook competition impact is snapchat growth. Perspective for the ipo, they explained user growth was a problem with the Android Version of their product. Something they have since worked on. It is athat implies onetime issue. If the issue is something to do with the competition from other players, then it is going to become clear in the next couple of quarters and when we see user growth if it is still slowing. Cory it was not just slowing and one quarter. It has been slowing quarter after quarter after quarter. Sarah that is just normal. Cory theyre coming up for a new excuse for it. That sounds weird. Sarah what people want to see from snap is they are not going to just be a niche product. They can actually change the way people consume media in a broadway. Not just among the anger set of users. Other questions from the roadshow, people were asking snap whether they have been able. O rake into a Broader Market snape was explaining that their users are broadbased. Other questions were about infrastructure. Snape has had very high losses compared to its revenue. Reliant on google and amazon paying them for cloud sustain theirp, apps growth. That was another big point at the roadshow. They said the price will come down. They will benefit. 890,000 is how much the company spent on personal security for the ceo of the company. On top of that, you have the special class shares that leave investors with no shareholder rights whatsoever in terms of voting rights. Was that a concern you heard from investors . Sarah that was definitely a concern we heard more at the london roadshow with took which took place on monday. People were worried about why are we buying into this company if were going to have no voting power, no control, that is extremely rare, almost unheard of among stocks listing here. Evan spiegel is really starting out doing what a lot of his peers have ended up doing after listing for a few years. Remember mark second bird some voting power away from his shareholders last year. Same has happened with google and their founders. Cory it is hard to get my head around those numbers. It tells you a lot about the company i think. Thank you very much. Tesla earnings, the stock has earningsng out of a q4 report. It will be the first report that they announced their deal to acquire solarcity. Dana hull joins us with a preview. You had a great piece about how the analysts of wall street have thrown up their hands on how to include solarcity results. Dana a lot of people are waiting for more guidance because the deal closed in late november. You have a month of financials to incorporate. Some analysts have said, forget it, i will set this quarter out. Cory and get more guidance. Cory i think that is insane. Solarcity was a public company. They have got financials and detailed financials going back for years and years. They know exactly how the business works. They know what the cash Flow Networks were and they should not need if they are real analysts we will tell you what will happen in the future. Only three of them have experience covering solarcity. Ice cream at the heavens, that is what i do. Dana it is not clear how does solarcity fit in, is it its own business unit, are they part of tesla energy or are they going to break both of those divisions out or are they one division, no one knows. Cory the numbers can be greatly affected by that. Tesla has been a business that has actually negative and poor cash flow results. Worse. Ty is much in terms of burning through. Cost were going to see savings and synergy and they promised they would be 115 billion added to the Balance Sheet and 100 million over the next three years. Investors want to know if we going to see solarcity this summer, what is happening with the factory in new york, what is the happening with the storage plays . Cory they are making panels there . Dana also the solar roof. In termsis interesting of how these companies are going to come together. It gives the Company Something else to focus on than the actual shipment dates area where do we stand at, the data has been falling back over the course of years. Where do we stand with that right now . Dana falling production is supposed to begin in july. With shipments slated this year. Where are they on that timeline and that ramp and what are they terming talking about in terms of volume . Elon said they might sell 100,000 to 200,000 model 3s. We are trying to find out if the factory is ready. Cory what you said is interesting. Not that everything you say is interesting, let me be quick to add. If you are suggesting because elon musk is in production for so long and not being able to predictions, no one believes it anymore. Dana he makes comments on calls are publicly that are sort of wildly ambitious. And then he scales and back. The question is, people want to know where are we on model three but no one expect some to sell 200,000 model threes this year. Cory there are some corollaries with the white house. Your time and thanks for coming and. Coming up, forget intuition. We will talk about data to guide investment at a level not seen before in mr. An investor capital. We like to bring to your attention interactive tv. You can become part of the conversation by interacting meet during a live broadcasting a , check ithump, ib me out at tv. Facebook and transfer wise are teaming up. It is a an International Money started. Chat platform known as messenger. Eventually hoping to expand to 50 come days thats countries and 600 exchange peerings that transfer supports off of messenger. Data at Realtime Technology to screen top engineering talent. Chris farmer was on the radio with me and i was blown away but what by what you guys are doing. Do this chronologically. How do you do enter capital investing before you invented your methodology . Guest we go around to conferences and meet with influencer and experts in various domains. And directed to various interesting companies. Finding a new by in a haystack. We start from first printables on what we think are the most important things in any given market and then we actively and proactively track those things in real time. Cory give us some examples. Guest everything from consumer paper, engagement on apps, we track the movements of talent within the tech and venture industry. Cory tell me about that. Guest it challenges the lifeblood of the tech world. And engineering talent is the most fluid commodity. People vote with their feet every day on what companies they join, whether they think their options will be valuable or if they want to stay at a company and it is reflected on the culture, the prospects of the company and many hurdles that are critical to building great companies. Cory how do you track to see where these great engineers are going . 10 millionrack over. Different sources there are things all over the internet on where people are going from company webpages to fundraising profiles to Regulatory Filings and social networks and everything between. Let meyou show me show you my bloomberg terminal. I have a launchpad and it shows you a ton of information. 500, what ishe s p read is what is down and what is green is what is up area and details in a couple of stocks, earnings stuff and so on. I have Earnings Growth of Different Companies and i get that all in a second. Does your screen look like that . Guest yes. We have over 6 million companies. Will you change your investments based on that type of data popping up on your screen . Trade it is more able to live on exchange because you have to be invited into companies. You have to see things early and the system helps us. We have a network of 50 advisors that serve as effectively scouts for the organization. And then we look at and analyze the companies to make the best decisions. That is the judgment element, still human element. Cory that is not a data thing. Guest you use it to do comparable analysis. How far downfield the competitors are. Cory Warren Buffett who says there is no methodology, you have to figure out if something works. Guest it differs depending on the sector. Looksmiconductor Company Different from one of the key values versus the social neck putting networking company. Mean that you have a more diversified portfolio to wait listeed companies . Guest you have to take different approaches to each different sector. Everyone asks what the most important data sources, it is a combination of the data sources of differentting sources depending on what you are pursuing. Cory it has to help you raise capital because you can go to Pension Funds and and down mens and endowments and say we have a different approach. Guest i cant get into the details and fundraising. Ising a totally novel story very helpful. People were very skeptical. , can youata be used still win, you have to have the magnetism to win and add value to the companies. This does not start with sourcing and monitoring. It goes all the way to helping Portfolio Companies. Directlysystems that plug into the applicant tracking systems for recruiting for Portfolio Companies and have realtime alerts on when people are likely to change jobs in those kinds of things. We extend all the way out to chrome plugins for Portfolio Companies so the founders and recruiters can gain access to the visibility and to where the there are potential opportunities for recruiting. Spend moneye might to get a bloomberg terminal at their desk, you are getting this data feed to the companies so they get the strength of that. This is as much about helping the companys win as it is about finding the companies that are making the investment opportunities. We have a network of 50 advisors that are wired into the system similar to how you might look at uber, there is an advisor and portfolio version. Cory thank you very much. Interesting company. Coming up, there is a price tag attached. 50 million is the cost of the hacks. To yahoo at least. We will discuss with them merger stands next. This is bloomberg. There is a fire sale because yahoo is nearly burning with hacks. Verizon acquiring yahoo for 50 million less after Security Breaches were revealed. The company is valued at 4. 5 billion in cash the total deal. So this deal is a better deal for verizon. A little bit. Some were thinking it could be a bigger discount. I heard 500 million, even 1 billion. Is less but it is relatively small. It is a haircut, not a big that is a lot of money. Especially because this is the 4. 5 billion gets them that is what folks were thinking. We could be seeing that much of a discount. We thought it would still happen. After the hacks and there was a serious question about whether they could make this work. There is a big deal, not only one hack was exposed but too. Two. Cory one issue is what do they know and when did they know it, did they know verizon was part of the negotiations so they keep this secret after they knew about it, what do we know about that . We know that a lot of this has got to have some kind of resolution. That is what analysts are saying. Verizond they tell before the deal went down . From what we understand in september that was when the first hack was revealed. This was first relayed well after that. In july. The deal was announced after many months of negotiation and then we all wake up in the afternoon one day and find out a massive hat, over 500 million people. That is one thing, what did they know and when did they know it. That is important but the other issue is, what does this do to the yahoo brand, do consumers say i am not going to give you who might you mail information when i go to yahoo sport, i will not let them track me when i use yahoo finance, i am not going to start a new page on tumbler because on tumblr because it could be hacked. That is something everyone was watching closely. They did not look as bad as some people thought they would. Engagement came back up on key metrics even after december when isy announced this opening up a little more than we get to see most of the time. Anonymon on a mise ized. We got a feel for this after this was exposed. We were not seeing snapchatlike growth or anything like that. Yahoo is still very much an asset that has its issues. They are trying to hold water essentially at this level. She is onesa mayer, of the highestpaid ceos in the s p 500. Does she stay or does she go . We reported that verizon would be eggs replacing her with some executives they had. Today she was happy. She said we made it area made it. She is. It she gets out of there. See you later. That does it for this edition of bloomberg technology. Ceo ofesday we have the arm holding. Will sit down with him for a lengthy talk. We are livestreaming on twitter. Weekday at five on the east coast and 2 p. M. On the west coast. That is all for now. This is bloomberg. From our studios in new york city, this is charlie rose. Charlie welcome to our broadcast. Tonight, we spend the hour with a man who has already left his own unique mark on the face and history of new york city. If donald trump is not in the news, he may be in the gossip columns with his latest. Elationship less than two years ago, the news was that the trump empire was in trouble, and some were quick to announce the king has lost his ground. Prove them wrong and is currently writing his third book, the art of the comeback. I am ple