Transcripts For BLOOMBERG Bloomberg Technology 20170608

Ts russia probe. Tesla is warning that Syrian Government allies will strike and american positions inside syria if it crosses any red lines. The Lebanese Military group made the threat one day after u. S. Forces bombed forces there. They condemned the terror attack in tehran and are asking for perpetrators and financiers to be brought to justice. The statement was drafted by japan on behalf of countries in asia pacific region, and was approved today by all 15 council members. 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. Emily i am emily chang. This is bloomberg technology. Oneonone with meg whitman in a bloomberg exclusive. She joins us live from las vegas on maintaining profitability in the age of the cloud. One day before former fbi director James Comey Testifies before the senate, President Trump tweets of the name of his potential successor. We will tell you more about former doj official Christopher Wray. With hours to go before the u. K. General election, online voting is front and center. We break down the pros and cons. The annual hp discover conference is happening this week and the company has outlined how it will continue to grow and stay competitive in the age of cloud computing. Hewlettpackard Ceo Meg Whitman joins us live a for a exclusive interview in las vegas. Thank you so much for joining us. Meg happy to be here, emily. Emily it is almost two years post split. What is your number one message to customers today as Technology Shifts beneath us . Meg there are two very important messages. First, we believe the world will be hybrid. We want to make hybrid i. T. Simple. Applications will be on and off and in the cloud. Each customer has to find the right miss for them. They are rethinking, do they want to put as much effort and applications into the cloud as they thought . For reasons of control, another big opportunity for customers is that the edge. When you think about factory floors, the edge, everything other than your data floor is exploding in that in terms of the need to collect data and store it. Emily there have been questions about margins in particular. Why is the environment so difficult right now . Meg our margin in enterprise group, a major part of hewlettpackard enterprise, was down in q2. We had costs from the best teachers divestitures. We had significant increases. We anticipate it will go back to historic levels by q4. If we continue to grow highmargin growth products, gen10, the most secure server in the world, you will see nice Financial Performance from us. Emily what is the strategy to get cost down to help with the margin issue . Meg we have to really we have a much smaller, much more focused company. I am the only ceo enjoying a Smaller Company rather than a bigger company. We have an overhead cost structure we have to get down to be more in line with the new company we run. We have to reengineer policies to make things simple. That will lead us to stake out more costs and be more cost competitive in a very competitive market. Volume servers, a very competitive business. We need a more costeffective cost structure there. Emily when we spoke of this time last year, you said dell was making a big mistake i merging with emc. Cost structure there. That said, hpe stock has been under pressure. Has that led you to reconsider whether smaller is still smarter . Meg no. Were really proud of our Financial Performance and stock Price Performance since the flipped from hewlettpackard, to hewlettpackard enterprise. When you think of the stock price of the company as a whole, which reached a low of 11. 62 in the fall of 2012. If you add up hp ink, our share of dfc, and the Software Company, it is almost 50 a share. We have done very 58 a share. We have done very well. Emily can they play hard ball better because they are private . Meg there are advantages to being private. But dell, because their debt is publicly created, we have a window they do not get the scrutiny we do. We really like our hands. We have no debt on the company. We have about 6 billion of net cash on the company. We have gotten more strategic, focused. We are smaller, nimbler. We can turn on a dime now. It is a different strategy for dell. We are getting they are getting bigger, we are getting smaller. We are leaning into more technology and they are doubling down on old technology. I like our hands. Emily how reasonable are valuations right now . Meg they have become a lot more reasonable in the last six months. We made an acquisition of almost one a month for the last six months. Valuations are coming down because Venture Capital is getting tighter in Silicon Valley. The willingness to fund losses for indeterminate time is shrinking. We bought rights, we have cloud cruiser rights. They are dead on to our strategy of making hybrid i. T. Simple, empowering the edge, and the services we need to make it all happen. We are feeling good about the opportunity to make reasonably priced acquisitions that fit our strategy. Emily what are the attractive targets . What areas are of interest on your radar . Meg we are interested in a number of areas, but the first is the software decline data center. It is more a Software Company than a structure company. It is around deploying applications easily in a hyper converged environment. We are interested in software defined, allflash storage. We are also interested in the edge. Aruba was an incredible acquisition for us, growing 33 in the last quarter. We are super excited about that. We bought Machine Learning for security on the edge network. We continue to look for opportunities at the edge. Emily you spun off your Enterprise Services business, how does the Services Business evolve . Meg services will be an important part of our next. Every company is trying to take their data center on a transformation journey from an older, brittle, high cost environments, to the new environment that is so essential for their competitive their ability to win in the market. Services, people need help on that journey. Why we will not do i. T. Outsourcing or app maintenance, we will revive and transform. We think it is an important part of the business area the other part of our business is the echo system of partners. Here i discover in las vegas we have the biggest presence of partners that we have had in many many years. A lot of folks are anxious to do business with us because they do not view us as having an asset that is competitive to what they do. We are still focused on technology but have a whole bunch of players interested in doing business with us now, and that is great. Emily there is onlys great fascination around what your future holds. How long do you plan to continue running things that hpe . Meg i love what i am doing, i have to say. Now being head of a smaller, nimbler, faster moving Company Makes this a lot of fun. I love what i am doing and we still have a lot to do. Another phase in our journey to make hpe everything it can be. I am here until my work is done. Emily what more work to feel you have to do . Meg we now have to take this make hpe everything it can be. Very focused Company Called hewlettpackard enterprise and make sure we have a cost structure that allows us to compete in the marketplace. We still have a little too much overhead because we had an overhead that oversaw 110 billion company. We have to take more cost out of that. We have to redesign some of our systems, our processes, to be more appropriate for a smaller, more noble company. We have more cost takeout to do and a lot of innovation coming to market. I want that to land well, like our server, which is getting rave reviews at this show. It is the most secure server in the world, and everyone knows security is one of the big issues facing every i. T. Department. Emily you urged President Trump not to pull out of the paris climate accord, along with other business leaders. Hours later, he pulled out. How does that impact your relationship with the president . Meg as you know, i was on the other side. Emily you urged President Trump as a lifelong republican, i endorsed hillary clinton. I said to our employees, i wrote a note which said, President Trump has won, we need to give them the benefit of the doubt, so we are. But when we think there is something not in our best interest or the countrys best interest, i will speak out. I said, i thought we ought to stay in the paris climate accord. The next generation of industries around clean energy is important for the United States of america. It does not impact our relationship. People can disagree and we disagree on this issue. Emily tim cook also told me he thought the president decided wrong on paris but planes to keep an open dialogue because he thinks it is important for america, the company. What is your strategy and what are the number one things on your priority list when it comes to discussions with the white house . Meg we are in favor of tax reform. We think the ability to repatriate money overseas is important. A lower Corporate Tax rate would spur growth in the United States. On the other hand, we are not for the border adjustment tax. That is very difficult for companies that deport a lot of their products and it is not in our best interest. By extension, in the best interests of the United States. To make it clear where we stand on issues, very respectful, civil discussion. That is what this country was built on, civil discourse and the ability to disagree without being angry. Emily meg whitman, ceo of hewlettpackard enterprise live from the discover conference in las vegas. Think you for joining us. Much more of our conversation with meg whitman later this hour. Coming up, President Trump says he will nominate a new fbi director on the eve of former fbi director comeys critical hearing. This is bloomberg. Emily we have breaking news, and emailed statement from the president s personal attorney, responding to james comeys opening statement, preceding the remarks he will make tomorrow before the senate. He said trump feels vindicated given that in comeys opening statement, he confirmed that the president was not personally under investigation by the fbi. Again, the president s personal attorney saying trump feels vindicated. We will follow former fbi director james comeys critical testimony all day tomorrow on Bloomberg Television. On the eve of the highly anticipated congressional hearing of former fbi director james comey, his Opening Statements have been released. He says President Trump asked him in february to put an end to an investigation into former National Security adviser michael flynn. Comey also states the president told him i need loyalty, when they find alone in the white dined alone in the white house, with regards to the investigation into russia. President trump will nominate Christopher Wray to run the agency. As investigations into russia continue and is wray the right man for the job . What do we know about Christopher Wray . He is a solid prosecutor. Many people in washington said he is the best guy on the list, we are happy about this. He has a history of bringing cases. He was at the Justice Department after 9 11, was involved in terrorism and other coverage at the time. He went on to oversee a task force. Many other matters. He is an experienced prosecutor. Emily what do you expect his approach to be on issues like cybersecurity . The Russian Investigation . Winnie first up, he is not going to be overseeing the Russian Investigation. That is now run by a special counsel by robert mueller, former fbi director. Who he worked with had justice. They know each other, they are not strangers. His double be to oversee the be to overseel the fbi. We do not know a lot about what his intent will be we look back at his 2003 testimony to congress on the patriot act and fighting terrorism. He was very supportive of the patriot act. New, enhanced surveillance techniques and tools to put the fbi on a more even playing field. He cited the patriot act to get information from Internet Service providers to go we do not know how they will feel about hacking cases or hacking iphones. Derbecame a big deal une comey. It will get into the limelight at some point. Emily winnie okelley, thank you so much for joining us. Do not miss our special coverage tomorrow of former fbi director james comey, testifying before the Senate Intelligence committee, on Bloomberg Television and radio. Check out the sevenpage opening statement, it is quite a read. Ahead of the u. K. General election, online electronic voting. Just how big is the risk of a highprofile attack . This is bloomberg. Emily as british citizens had to the polls to vote in the general election, the debate on how people vote, back in focus. A new poll in the u. K. Reported 42 of adults who are not planning to vote in the june 8 general election will be more likely to cast their ballot if they could do it online. Lets get the Caroline Hyde in london, with more. Caroline i am joined by a great guest, out there helping count as many as election votes. Lets speak to mike summit. This is already a company that helps with electronic voting. Where are you already helping with this . Mike we are working on five continents around the world. We have counted 3. 7 billion electronic votes. The government of belgium, customers in estonia. We have done three nationwide elections in the philippines. We have just done a big project in armenia. Literally, anywhere across the globe, any democracy. Caroline and the u. K. Isnt operating online . Why . Mike we have to ask the u. K. Government. I think it is a shame. If you look at the recent technology successes within government, it has been the success of the online Voter Registration pool. Just last week, when the registration deadline closed, 622,000 people were registered to vote online. In one respect, we are doing something to enhance and make the registration process. It is a criminal shame we are not closing the loop and making voting easier. The reality is, in the u k, election participation is dropping through the floor. We can make voting more accessible by allowing online voting. Caroline talk about the challenges, concerns. There are concerns when it comes to fraud, privacy, cyberattacks. How are your technologies ensuring that will not be a concern . Mike it is important to stress that a lot of the things you read in the paper about potential state manipulations of elections and foreign intervention actually have not touched upon voting citizens. The reason for that is that Voting Technology is particularly hard to hack. We deal in very specific additional security features, featuring and to end encryption end to end encryption. They are quite concerned about the privacy and security of these platforms and tools. We strongly protect those votes so they cannot be hacked. Caroline nevertheless, we saw in france a pulling back from online voting, particularly because they were worried about cyber attacks. Why did they do that if you have such a strong encryption . Mike it is important to stress, that is not a system we deployed. I think it was a kneejerk reaction to this general climate of concern around cybersecurity. It gave them a chance to look at the system solution and make sure it was watertight. If you follow that story through to its conclusion, one of the challenges is the suppression of that online voting, there were thousands of voters who were disenfranchised from being involved in the election process. Without doubt, i think we will see that reinstated. Caroline if the u. K. Government came knocking, a could be at the end of this week, what would you say, there would not be an issue, such as the dnc hacking . Mike one of the advantages of technology in elections, you can introduce verifiability. It allows you to show that everything you say about the Security Solutions is operating correctly. It supports one of the key, fundamental principles of democracy, which is transparency. We have tools in the system that allow us to check right away through the casting process through the storage process, to prove it has not been manipulated. That is one of the advantages of online Electronic Systems over paper systems. Caroline mike summit, it has been wonderful having you. We will see how this election goes. He is already helping other countries get online when it comes to Voter Registration. Emily caroline in london, thanks so much. Coming up, more from our conversation with meg whitman on the health of her company, hpe. If you want to check us out on the radio, you can listen to us on sirius xm. This is bloomberg. Paul james comey will Tell Congress President Trump asked to see his way clear to letting this go. In a testimony for his appearance before the Senate Intelligence committee, comey will say he never agreed to it to end the inquiry. Trump says he will be taking action very soon to stop foreign steel being dumped on the u. S. Market. The effective steel imports on National Security under the seldom used section 232 of the trade expansion act. Wilbur ross has accused china of failing to deliver on its promise to reduce excess still capacity. U. S. Markets are seen a risk level since the financial crisis with investors paying dearly for the chances they take. Central Bank Policies and low rates were artificially hiking asset prices. Gross says investors are buying high and hoping. Global news 24 hours a day, powered by more than 2600 journalists and analysts in over 120 countries. Emily a check on the markets in asia. A more cautious turn. We see equity markets mostly turn to gains. We do have chinese stocks leading the charge along with shares in hong kong, up over the 27th 26,000 level. But its being tested with the kospi. We have shares in sydney turning. 1 , despite the disappointing trade balance. The aussie dollar remains the worst performing currency. Are arriving bearish bets are arriving. We have the commodities space picture. Oreres reversing as iron prices picked up marginally. We do have chinese exports to look out for. Keep an eye on what the reaction will be when it comes to that csi 300. We have Energy Stocks beginning to fall in asia. In sydney and cnooc in hong kong leading the drop in asia. Emily this is bloomberg technology. Interviewr exclusive with meg whitman. She hit the stage and said hpe is seeing a slowdown in the public cloud. We asked if businesses are rethinking their move to the cloud and what that means for hpe going forward. Take a listen. Meg the way we see the worlds hybrid i. T. What do you want locks down in your data center, untouched but by only your employee hands . What would you want in a managed service . There is a role for public cloud. The for reasons of cost, security, control, people are beginning to say i wonder if i have gone too far in putting workloads into the public cloud and then want to bring them back on prem. Emily what does that mean for hpe . Is ine have to do what our customers best interest, which is a multicloud environment where they can have a right landing spot for their workloads. And we make sure they dont end up with the vendor lock in. People say, once you move something to the public cloud, it is difficult to move it back. We want to give customers choice and make sure that we do for them what is best for them. Have been questions about your Cloud Partnership with microsoft. How is that going . Meg its going well. Weve done a lot of business with microsoft for many years. They are our public cloud partner. When the customer says that these are the workloads i would like to have in the public cloud, we say its a great opportunity. Cloud want your personality on prem and you want your staff on prem. I think microsoft is a great strategy and we are great partners with them. And its about customer choice. Cloud they want a public partner, we recommend asur. Emily what does it mean for hp . Meg this is a dynamic industry. For a long time, infrastructure was not in fashion. We see all kinds of people getting into the business. We will figure out how to have a opetition. Ip around co we will figure it out. Emily tech stocks have been on a tear since the election, despite political uncertainty. What are the Market Dynamics you see helping or hurting hp . Its a challenging Global Environment right now. There are some countries doing very well. And there is uncertainty in a number of countries. Uncertainty is not good for business. Our strongest market in europe is germany. Germany is doing incredibly well. But the u. K. Is challenged. Public spec publicsector spending is down. Firms investing in the u. K. Are holding back because of brexit. It doesnt mean that they wont spend, but it is on a pause. I dont know what is going to happen here, maybe a should take a little time to think it through. Japan a strong for us. Australia is coming back. Latin america is doing well. And the u. S. Is uneven. So its a mixed environment. We have to make it work in every environment. We sell as hard as we can and try to give customers as much choice no matter what is going on in the backdrop. Emily im curious what you think of the unicorn startups, what you see them doing well, what you see them doing poorly. G the startup scene in Silicon Valley and elsewhere is alive and well. Its a renaissance of innovation. Think about what youre seeing. There are some very Innovative Companies that are unicorn valuations. We are seeing the ability of Venture Capital money to keep funding moneylosing startups. We are starting to see a pullback there. One of the reasons we were able is it was notity clear that they would be able to raise the next round. Neville had a great fundraising round, but they needed to be tucked into a big company. So there will always be unicorns. There will always be new companies. But its an opportunity for us as we think about our m a strategy and our innovation strategy. Pe is heavily investing in your vision for the future of computing. How will this help customers in the computer in the future and how will this evolve . Meg one of the big challenges is the demand to build a data centers, the demand for space, and the demand for energy is unsustainable. We work in parts of the world where there is no more energy on the grid. That caused us to think through the fundamental model of compute. It has always been a cpucentric model. Can we turn that on its head and make it a memorycentric model, where data is moved through [indiscernible] which means smaller space, Farmer Energy efficiency. We are super pleased with the progress of the machine. We are already and betting parts of the technology to our next generation servers in storage. We are excited about the amount of data that can be processed with a very low power utilization and in a small form factor. It is on track. It has had its ups and downs, but we are super excited about it. Emily articles of interview with meg whitman. Round,latest funding adding 300 million to the were just. The highly competitive field of consumer electronics. Valued at 900 million to a billion dollars. Essentials submitted new paperwork late may, a few days before cofounder andy rubin unveiled the first two products, a highend smartphone and an echolike gadget. A new report out by nielsen shows ratings do not equal social engagement. The Company Conducted a study fromincludes information twitter and facebook to see who is getting the most attention. Walking dead was by far the most viral tv show on social media, but only the eighth most watched show on my on live television. Trailing behind it is empire, and bachelor franchise. We will look at the car market with stacy smith. Why it will be twice the size of the sharing economy next. This is bloomberg. Waymo uber. Though google self driving car project has been seeking a copy of the report as part of its uberaration for trial but bu has refused to hand it over claiming client privilege. Much has been said about the race to a taunus vehicles, with both startups and tech giants scrabbling to the start line. Less has been what has been said about what these copies are racing for . We will go to cory johnson for more. they are racing for a seven chile dollar market. They expect the world will be economists by 2050. Stuff. Ally interesting the grouph is management and sales. This is a fascinating study with. Ome really big ideas what is the biggest idea in all of this . transportation, like information, starts to become free. It changes how you consume information, how you think about owning a vehicle. It gives you time. Back. It makes the world a safer place. We have seen disruptions like this in the past. It is huge opportunities for companies and huge threats for companies. It can disrupt entire industries. Cor adoption rates are interestingy. Talk about how you imagine that happening . The report does not describe the evolution, but i expect it starts at a highend vehicle and then gets cheaper and cheaper. At it at aou look nearterm timeline, over the next five years, you will see tens of millions of Autonomous Cars on the road, but in the sense that they are doing the driving for you, but youre still sitting there with the steering will and there will becomes when you will want to take control of the vehicle. Another five years from their. And you will see an increase in penetration of cars that are fully autonomous. Think of them more like a pod. You will get in. There will not be a steering will and they will take you from place to place. You will get out and then. That car will pick up the next person. You will see an adoption curve that plays through. You will start to see a lot of it in the next five to 10 years. Cory there was an interesting with aof a vignette Family Living outside of berlin where the car is running out and doing errands. I was picturing Something Like the amazon echo. We get to your launch under drycleaning. It also spoke to this idea of car ownership in the future, not just of mobility as a service. Stacy exactly. That is why this is important to think about now. It disrupts so many different industries. I think youll see three big impacts from this. First of all, transportation becomes a most free. The of goals become electric. The way you think about the vehicles become electric. The way you think about getting from place to place and how you have things delivered to you changes dramatically. Using the vehicle to go to work or connect with friends and family and consuming content. It eliminates deaths on the road due to human error. It has an impact on the world economy. Of a there is a suggestion lot more time that people will have to do stuff. It had me thinking about 5g, conductivity, tablets and smartphones or what ever the devices are 20 or 30 years from now that intel wants to be a of. Is that part of the notion that there is so much my computing happening because people will have their feet up instead of their hands on the Steering Wheel . Exactly. Think about the car as being this really powerful computer that is connected to the server structure. Data from today in the u. S. , and average person spending five hours a week in their vehicle to in britain, it is more like 10 hours a week in their vehicle. Structure. Beingrom today in thethat timeo completely productive time. You can use it to work, to connect, to consume content, to shop. You could probably use it consume services when you think of it out 10 to 15 years. And you will get some of that time back. Wade new are in this fully autonomous world, the grid becomes much more efficient. It gives you time back and it gives you time that you can use to enjoy yourself or to be productive. Stuff. T is mind blowing apple using that are, faster intel chips like they might have introduced a while back, what does it mean that apple does is for intel in a world where people see pc contractions in the business . Stacy we have talked about this over the years. Innovation is so good for us. When we see Innovative Companies like apple that are introducing things, that people are really hundred to go by, it is wonderful for them. It is wonderful for us. We are pleased to be a partner for apple and help them deliver this kind of technological innovation to the marketplace. In their new pro line, i saw some of those yesterday as i was reading through the news reports. Its one of those things i was wanting to go out and buy. That is exciting for us. Cory 18 core xenon processors . Thats amazing. This report is fascinating. I will put it on my twitter as well. Mind blowing stuff. Much. Thanks so toshiba has reasserted the right to sell its chip business. It has rebuffed its American Manufacturing partner. Western digital hasnt been able to match the price offered by other bidders. Coming up, more news out of uber. In itsest developments internal investigation into Sexual Harassment. And a future i would like to bring to your attention our new interactive tv function. Loomberg tv you can watch us live, if you missed in the navy you can go back and maidens and a message, play along with the charts onair. This is for bloomberg subscribers only. Check it out on bloomberg tv. This is bloomberg. To buildsla plans another factory because the current one is bursting at the seams. Elon musk says the electronic carmakers looking for a location to build the model y crossover. Tesla haselon musk says the surl motors, honda and ford motor in micah cap this year. More developments on uber and the probe looking into the alledge it workplace violations. Rapeunderstands the and kidnap of a woman by a driver. This rape case from india back in 2014 coming up now . That toprned had been skeptical that this rape had occurred and had propagated the Conspiracy Theory that their competitor might have planted it, and that travis, even after the conviction happened of the driver, continue to float this theory that it did not occur. So it was deeply troubling to employees at uber. Emily you call a specifically Eric Alexander. Eric he is a Business Development guide that was dealing with some of the case and investigating a little bit and got the case file from attorneys,rom ubers which included the medical report of the victim. And he was very cavalier in how he treated the case file. Emily does Eric Alexander still working the company . Eric no. He left basically after we started asking questions about it. Emily do we know if this was a result of the Sexual Harassment investigation or your reporting . Eric there is some muddying of the waters. A doesnt seem that he is one of the 20 people that were let go yesterday. But there are a lot of factors. This holder report is also coming in. We could see further departures coming from this separate holder report rather than the perkins investigation we saw on tuesday. Emily what do we expect to learn from thisemily holder report . Now we are hearing that it will be recommendations and that the findings will be held tightly by the board. They are still seemingly working on what the recommendations are, but there will be recommendations about a fix for this company after scandal after scandal after scandal. Emily how is this affecting the internal culture of the company . I know youre on the phone a lot. What are people telling you . Eric i dont think this is helping the mood. I think people were optimistic employeespurge of 20 who had social harassment and retaliation complaint against them. But i think there are bigger questions about the companys culture and that is not good to them. Y for employees who did not know about it, which is a lot of the new people, it will be troubling to them. Emily thanks so much for giving us that update. That does it for this edition of bloomberg technology. This thursday, special coverage of the u. K. Election will be airing instead of bloomberg tech. Tune in for our onehour special live as exit polls are published. Bloomberg techs life streaming on twitter. That is all for now. This is bloomberg. The following is a paid advertisement for time life of video collection. Good evening sir. They are demanding my return to the screen. What is so funny . We are