Transcripts For BLOOMBERG Bloomberg West 20160423

European union. At a joint press Conference Today in london with Prime Minister david cameron, the president made clear hes more than comfortable entering the debate and advancing the case for britain staying in the eu. The president also discussed syria, saying he has long been skeptical of Vladimir Putins actions in the country. He also joined Queen Elizabeth for a birthday lunch. The obamas gave her a photo album that chronicles her visits with president s and first ladies. They visited Kensington Palace for a small dinner with the duke and duchess of cambridge and prince harry. I am mark crumpton. Bloomberg west is next. Emily i am emily chang, and this is bloomberg west. Ubers breathing easier after striking a deal with california drivers. What does this mean for the larger gig economy . We break it down. Apple is not immune to china. Chinese regulators shut down itunes movies. We will dig into the larger implications. After a busy week in technology earnings, the main takeaways as we go into yet another busy week. What you need to know ahead of apple, twitter, and amazon all reporting next week. First, a developing story. First round bidders for yahoo could find out as early as next week whether they made it into the next round. Yahoo s advisors will spend the weekend narrowing down the field of bidders after receiving more than 10 initial offers for the internet company, ranging from 4 billion to 8 billion. Sources say advisors will narrow the list to seven finalists. The bidders include verizon, yp, ppg, and a group led by bain and vista equity. Paul kedrosky joins me from san diego. Paul, how does the Search Committee and the board begin to narrow this down . Where do they start . Paul so, in the parlance of the banking industry, this is kind of a takeoff. The idea is you try to figure out obviously the highest value is who carries the most weight. But there really is a clear highest value. People always are often offering a company cash, stock, other securities, different structures with respect to what they do. It is not always possible to do a straight of comparison. They are trying to put everything on an even footing and say, who is putting of the most cash, who has the other things tied to the offer . Emily how important is the overall price . Paul oh, thats the crucial piece here, because obviously the realization on that is what people are looking for, the idea of, what is the maximum value you can get for yahoo , separating the company from the Alibaba Holdings . People who are interested on the alibaba side, it is important the separation be made, so any complex bid will fall by the wayside. Emily have any emerged to you youou as more attractive . Paul there seems to be a sentiment that verizon is the most attractive, just because it is a combination of a financial buyer, but they also have strategic interest in the property itself and have enough cash to put together an attractive offer. Put those pieces together, and that will make a lot of sense to people at yahoo . You may be able to get a higher total number at some places, maybe even higher cash component, but in terms of overall fit and least likelihood of a dismemberment of the company, that is the closest. Emily a developing story. We will continue to follow it. Yahoo has more than 10 firstround bids, and they will work to narrow the field to seven next week. I want to move on to uber, dissolving the biggest threat potentially to its business. It settled with drivers suing to be treated more like traditional workers, in a move that could have broad ranging implications for all companies in the sharing economy. Uber will pay as much as 100 million to drivers in california and massachusetts, allowing them to solicit tips from riders by keeping them classified as contractors instead of formal employees. The story is far from over. Representatives of the Teamsters Union notified uber of their intent to form an association of workers for californias ridesharing industry. What does the settlement mean for uber, drivers, riders . Joining us is the founder of a Talent Agency for tech freelancers, and also a business professor at nyu who wrote a new book called the sharing economy, as well as Paul Kedrosky still with us. What do you make of this news with regard to teamsters, and potentially uber drivers forming a union . This is sort of an emerging market space. There is a natural giveandtake. I think the announcement today, the settlement is a winwin, a good step in the right direction. Uber saying, well do more to selfregulate. I do think the market has fits and starts, but this is an overall win for uber. Emily uber and Travis Kalanik said that drivers but you flex ability despite this lawsuit. But a lawyer for the drivers said that no court had decided whether uber drivers are employers or independent contractors, and the debate will not end here. The case stands as a stern warning to companies that play fast and loose with classifying their workers as independent contractors who do not receive protections. They had just settled this, but no court has made the decision here. Professor, what do you make of the broader implications for the sharing economy and uber Going Forward . Well, as far as uber is concerned this is a big win for them. As you pointed out, ubers biggest source of valuation risk is uncertainty around worker classification. This is a big step in the direction of uber being able to put that issue aside, and as consequence i think the 100 million, they will make up multi fold through increase in valuation. Overall this is good for the sharing economy. I am sure there are situations in which it makes sense to classify sharing economy providers as employees, but with uber drivers and lyft drivers i dont think this is one of those cases. I do think its really important that we start to think about a way in which we can fund benefits for these drivers and other providers in the sharing economy. It is not going to come all from uber. It is not all going to come from the government. It is not all going to come from the drivers themselves. There has to be a partnership model. When we look back on this case, we are not going to remember the details of the settlement. But we are going to see it as the event that triggered this conversation about the need to protect the workforce of the future, which will be largely freelance. Emily one of the interesting parts of the settlement is that drivers can now say, hey, tips are not required or expected, but are much appreciated. One of the great things about the uber experience has been to press a button, get in and get out, and not have to worry about a tip or anything else. Paul, could that significant we do significantly change the uber experience . Paul i think people have a newly ingrained habit of just ubering. They like the idea that it just shows up like a teleporter whenever they hit the app on their phone. But at the same time, that is not an insignificant issue. We all liked the idea, that it took away this end of right decisionmaking that what i have to do with respect to a tip. Now the problem is, having reinstituted that, what happens if i dont tip . Does that mean i as a messenger get a bad rating, that the next time i call for uber it doesnt come and get me because i did not tip last time . It introduces uncertainty, because you are backdoor reintroducing this thing we thought we got rid of, this nasty sort of subjective business of tipping cab drivers. Emily rishon, what have you heard from drivers . Do they even want to put themselves out like that . Rishon i talked to a couple drivers. I think everyone is happy to get tips, obviously. It is a great extra source of income, and it sort of shows the recognition and appreciation for the work they are doing. I do think that uber and lyft will probably have to integrate or iterate their product in order to accommodate that. How they choose to do it, whether at the point when you leave the car or the point when the receipt comes back and you can see the total, that remains to be seen. But im sure drivers will be happy to have tips included or added. Emily it is clear that laws still need to change in order to accommodate the sharing economy. So arun, what are some hurdles Going Forward for uber and other sharing Economy Companies . Arun was really going to create an opportunity for uber and lyft and other sharing economy platforms is if we successfully create a safe harbor in which they can demonstrate that they are willing to participate in sort of providing a safety net for the drivers, if there is not the threat of this kind of classaction lawsuit. So, i dont see the case as having eliminated the threat of, like, additional costs that may come from different worker classifications. But i do see it as laying the foundation, being able to say that, now lets go ahead, lets create a safe harbor, lets show you we are willing to sort of pay for part of the benefits that these drivers, the face of our brand, the providers fighting with each other to retain platform, give them space to offer them the things they want as a retention strategy. Companies have done this all the time with employees, so it is important that we sort of create the space for the sharing economy platforms to be able to sort of do the same kind of thing. Emily arun of nyu business, rishon blumberg, cofounder of 10x. Paul kedrosky, you are sticking with me. Microsoft and google are making up after fighting for more than a decade, dropping pending regulatory complaints against one another. In a statement today, google said that our Companies Compete vigorously, but we want to do so on the merits of our products, not legal proceedings. Microsoft was once the most powerful force in lobbying the eu to investigate Google Search practices. Coming up, chinese regulators deal a surprise blow to apples business in the region. We discuss whether this is a sign of more trouble to come for tim cook. Emily china has shut down apples itunes and ibooks services. For years, apple was one of the few western companies allowed to expand without major restrictions in china, selling phones and computers in years and recently introducing apple pay. Beijing allowed them to roll out itunes movies and books, but in a surprise aboutface regulators shut it down. Apple released a statement saying, we hope to make books and movies available again to customers in china as soon as possible. Reasons for the decision are not clear, but it is possible the government took issue with content offered on the entertainment platform. Is this a sign of trouble ahead for apples china ambitions . Alex webb and Paul Kedrosky alex, i will start with you. How big a blow is this . A huge part of apples business . Alex it is a very small part. The Services Business as a whole is 19 billion of 230 billion. Break it down further into books and movies, just in china. Its not very big. Emily does it signal something about their future in china . Alex sort of. It is sort of a statement from china, saying remember who is boss here. We are the people controlling the internet in our country, and you have got to be careful. Bear in mind that you have to pander to us if we want you to. Emily would you echo that . Paul this is more of a flexing of muscles than something that will go straight to apples bottom line, given the relative size of that operation. This extends beyond movies in the long run, to Security Issues and the encryption debate were having in the u. S. China is prepared to tell apple what to do. The question is, what is apple prepared to do in response . Emily Apple Earnings are coming up. What are we expecting . China is a huge part of their business Going Forward, but so far mostly for hardware sales. Alex the possible implication of this kind of thing, these are part of the Services Business, and that Services Business makes iphones stickier, making sure that customers keep buying iphone products. I have my music on itunes, so i dont want to check of us that by trying to port to an android. Apple is trying to build out services revenue, using the iphones Subscriber Base to generate a further Stable Revenue stream. Emily so apple has made huge investments in china. Tim cook made many trips to china. Of course, Mark Zuckerberg has been learning mandarin. Hes on the board of beijings university. Do you see a point in the future when the Chinese Government will ever change its attitude towards u. S. Technology companies . Paul not in the near future. Not even probably in the mediumterm future. Its really not in their interest to, because while they are happy to have these Companies Selling product, at the same time they would love to see a domestic industry grow up, with companies at least as powerful and profitable as facebook and apple, so they will always ride the fine line. There is a tension between allowing companies to export products into the chinese market, and allowing Domestic Companies to innovate and imitate on top of what those companies are doing so they can build a larger and stronger Domestic Technology industry. Thats not going to go away until china is truly a first world economy. Emily alex, what are you watching for in Apple Earnings . We talked about production cuts, about sales declining for the first time in a decade. How do you expect to see these play out . Alex iphone sales will drop. The question is, how much . If it is in line with expectations, that could be positive for shares. No news is good news in this instance. Emily we see other big tech giants missing. We will of course be watching closely. I know you will be bringing us the update, alex webb. Thanks so much. Paul kedrosky, you are sticking with me. Coming up, a lackluster earnings week in text comes to a close. Which company was a Silver Lining for the industry . We will break down the winners and the laggards. As we head to break, how about the tesla effect . Shares of Lithium Companies boosting by about a third since tesla increased its outlook for february. These cars rely on batteries using lithium. Production of lithium may triple over the next 15 years. More bloomberg west continues next. Emily tech earnings fell short of investor hopes this week. Reports from microsoft and netflix missed estimates. One company had a positive note, amd. Shares soared the most in 35 years after it said it is Licensing Technology to a Chinese State backed joint venture. Back with me is Paul Kedrosky. Start with alphabet, which has been on this incredible ride. Do you think this is a speed bump . Paul i think it largely is. The concerning thing for me in the numbers was that there was a bit of a capex acceleration and issues with margins. The fundamental story, google has not changed much with respect to the transition from desktop to mobile, so that story seems to be proceeding at pace. Theres no sign of a letup in spending with respect to supporting the cloud side of the business, in the face of really heavy spending at microsoft and amazon. So that pressure will not go away. But the transition, the fundamental issue, seems to be going ok. Not like they are ahead of plan, but seems to be going ok. Emily before we go to microsoft, the cfo talked about hiring, saying that they are growing more quickly when it comes to new hires, in places like googlex, and the other parts of alphabet. Headcount at the end of the quarter was 64,115, up approximately 2300 from last quarter. The vast majority of new hires continue to be engineers and product managers in areas where we have prioritized investment, such as cloud and apps. On a numbers basis, we are adding more headcount, and on a percentage basis we are growing faster in other bets. Emily some analysts are optimistic that these other bets like self driving cars will become moneymakers. How optimistic are you . Paul not very. Not that they wont ever be. Obviously, who knows five years out. But in terms of meaning they contribute into the point where you feel this needs to be discounted into the current share price because there are reasonable earnings prospects in the near future not at all. There are a lot of signs of a real growing problem inside of some of those groups, in particularly in nest, where there has been a report of real engineer of people in the company. Theres a feeling that the Senior Management in nest is not being receptive to what needs to be done, Holding People to unfair scheduled. These are anecdotal reports, so take them as you will, but this is troubling given that there has been a real slowdown in the pace of products from that specific group. They are underperforming. Emily what about microsoft . We sell revenue from the cloud is going strong. This is the main area of growth, and is supposed to be the future of microsoft. But is it enough to be the entire future of microsoft . Paul well, heres the thing. Its enough to be the entire future, but it is nowhere like the margins microsoft investors historically enjoyed. It is a platform business. In some sense, it is equivalent to the old Windows Business, but it will never have the margins the old Windows Business did, given Competitive Pressure against ibm, amazon, apple, google. Theres an awful lot of people seeing cloud as a platform business, which is microsofts central focus in terms of growth. It will be a great topline, but margins will be under continuous pressure as far as you look. Emily netflix also. All three companies took a big hit this week, with subscribers in the United States not growing as fast as people would like. At what point does netflix have to worry about the bottom line, making sure that these billions of dollars they are investing in original programming are actually going to pay off . Paul i think its coming pretty quickly. You see what netflix is doing. There is a story this week that was really interesting about a crackdown on vpn, virtual private networks, the mechanism by which people who because of their geography cannot access the entire Netflix Library can access it as if they were in the u. S. Netflix doesnt like that very much, because they dont have the rights to distribute this content in other countries. They are in a difficult position, where they simultaneously dont want to pay the rights holders to distribute content across all geographies, but that forces them to do very expensive content development for themselves. They see two freight trains coming, and both cost a lot of money. Emily we will talk about earnings coming up next week later in the show. And, check out trading of the First Tech Company to go public in 2016. Secure works making its debut on the nasdaq. We will speak to the ceo. Show me movies with explosions. Show me more like this. Show me previously watched. Whats recommended for me. X1 makes it easy to find what blows you away. Call or go online and switch to x1. Only with xfinity. Mark lets begin with a check of your first word news. More than 170 countries are official signatories of the paris climate agreement to reduce pollution and fossil fuel emissions and to slow rising temperatures. The landmark deal, reached in december and ratified today at the united nations, coincides with earth day. Among those who attended, u. S. Secretary of state john kerry, who held his young granddaughter and gave her a kiss as he signed the pact. President obama says british voters will have final say on whether the country remains in the european union. At a joint News Conference in london with david cameron, the president said the results of the june referendum will be felt across the atlantic. President obama the outcome of the decision is of deep interest to the United States, because it affects our prospects as well. Mark the president discussed syria, saying more progress is needed towards a permanent ceasefire. Meantime, mr. Obama is not revealing whether he will become the first u. S. President to visit hiroshima during his visit to japan next month. He sidestepped the question during the press conference with Prime Minister cameron, and playfully asked reporters to wait until he visits asia before asking him questions about asia. An autopsy on prince has been completed a day after his body was found in an elevator on his minnesota mansion. The sheriff who responded to the 911 call said that prince was more than a music legend. This was a tragedy for all of us. To you, prince Rogers Nelson was a celebrity. To us, he is a Community Member and a good neighbor. To his family, he is a loved one. Mark princes body is being returned to his family. It could be weeks before the autopsy results are known. Investigators say they found no signs of trauma on the body. China is closer to building Maritime Nuclear power plant platforms that could one day be used to support projects in the disputed south china sea. Thats according to the new york post, citing a statement newspaper. The New York Times says the Floating Nuclear plant could provide electricity to ongoing construction in the area, hundreds of miles from chinas power grid. China has rattled global nerves with military and construction activities on the disputed islands. Thailands military government is being urged to reduce limits on free speech. Thailand has been ruled by a military junta since a may 2014 coup. Global news 24 hours a day, powered by 2400 journalists around the world. I am mark crumpton. Emily 2016 has been the slowest year for u. S. Ipos since the financial crisis. Across all industries, only 13 companies have gone public so far. Secureworks, the Cyber Security Company Formerly owned by dell, is the latest, and the first u. S. Tech ipo of the year. The stock stumbled in its debut, closing literally unchanged at 0 . Our deals reporter caught up with secureworks ceo mike cote and asked how he is feeling about the listing. Mike we could not be more satisfied. The nasdaq experience was spectacular. It is a rallying call for the company. We have been doing this for 14 years and have a long road ahead of us. Delisting was downsized. You brought it down by one million shares, and the price came down below the marketed range at 14 a share. What were investors missing from the valuation . What do you think, what message didnt get across . Mike we are in a market that seems to be coming towards us, with regard to Internet Security for and the growth around the internet of things. We focus heavily on partnering with our clients to keep the bad guys out of their networks in a vendor agnostic manner. We work with other Security Companies to find a holistic solution, and our clients go from the smallest to the largest in the world. Where is the biggest growth barrier for you . You do managed services, focus on threats, help your clients respond to threats. Where in those sectors are you pushing . Mike from a highlevel perspective, we partner with our clients, locking arm and arm with them to prevent attacks that can be prevented, detect those that cannot be prevented, respond rapidly, and predict those that cannot be prevented, respond rapidly, and predict where the hackers are going next. We are going from 36 of the fortune 500 clients are ours, around the world. It is important that we grow in each segment. The more visibility we have, the stronger we become. On the roadshow, you did kind of talk to investors about this idea of pricing pressure. Some of your bigger competitors are coming in, dropping prices for what they are offering. You are still posting losses. How are you doing with that . How are you working through this time in the industry . Mike two years ago michael dell and i sat down and looked at the industry and where we are going, at the growth that will come in the industry over the last couple of years and in the future. Growth last year was 25 . We made investments on an infrastructural perspective, in data centers and opening offices where dell had a strong presence, and in the large global sever secure a market. Japan, australia, singapore, france, germany we have invested in those areas to improve our capabilities and bring data into our counterthreat platforms to provide a better solution overall with our clients and protect them. You mentioned dell. That was your from a parent company. Now that you are out on your own, they still have a majority stake and a lot of voting rights. Does that relationship change now that you are a publicly traded company . Mike we are in a best of both worlds position. Michael is the chairman of our board. We have a tremendous independent group of Board Members, from Bill Mcdermott to Jim Whitehurst and dave dorman, mark hawkins, who are helping to guide us. We get to use dell branding when it makes sense, and we have the ability to act and operate as an Entrepreneurial Company to accelerate growth. So you are spending and investing. It is showing up on the bottom line. Do we see a Tipping Point were you start reining in net losses and moving to profitability . Mike as the market continues to grow, we feel really good about the Operations Investments we have made. Security has become a huge thing for your clients. The ceos head is on the line at the companies you work for. What is the message you are telling the executives you are providing services for . What are you pushing these days . Is it still building a moat around i. T. , detecting things early . Mike more Board Members are getting educated on the cyber threat, and it is resulting in more accountability across the cios. We beieve theres a lot of depth in the industry over the years, and the industry seems to be pivoting now. We can come in from a vendor agnostic way to work with all those products and provide a more holistic solution, helping cios understand where the threats are coming from and how to best create a full Security Posture of prevent, detect, respond, and predict. Do we get to a place in the future with threats are effectively managed . Are we there yet . Another great question. The interesting point, in the Internet Security industry it is not a Technology Problem we will ever solve. It is human beings, bad guys using technology. I dont see that ever stopping. In the future, frankly it will continue to escalate over time as we move to having more things automated in the internet of things world. It is the reason why i feel excited about the opportunities in the future, because we love to partner with our clients across the whole spectrum. You were the first tech ipo u. S. Listed this year, in what has been the slowest year for u. S. Listings since the recession. What is your advice to those potentially looking to follow you and go public in the Tech Industry in 2016 . Mike we started the process about two years ago and took a very methodical process. From an infrastructure perspective, to put us in a longterm position to continue to respond to Market Growth that is happening. If i said anything, i was a to start early, plan through the process, and be prepared. How concerned are you that your comparables like fireeye were trading down in the last six months . How much were you paying attention to your peers . Mike i did not look at our peers at all. I focused on offering the business and doing the right things from a longterm perspective. This is a tremendous occasion, just the start of the next chapter of our life. Emily secureworks ceo michael cote. Coming up, we speak with a startup that just got funding from Andreessen Horowitz to bring banking to the developing world. And, ambitious plans for deep space, next. Emily now to branch, a San Francisco start of getting a bump from Silicon Valley after raising money from anderson our votes. They built a Branchless Bank that provides small loans and credit to millions in developing countries. I spoke to the cofounder, matt flannery, and got his take on the rise of the mobile money market. Thank you so much for joining us. It is called branch, but you are trying to create a Branchless Bank that would give microloans to people in developing countries. Mark about a year ago i started a new company after kiva, where i was ceo for 10 years. Branch is a Branchless Bank for the emerging market. Our first country is kenya. Emily you are getting into tanzania as well. How quickly do you plan to scale this up . Mark pretty fast. Within five years, kiva was in 50 countries. We hope to do the same thing with branch. Emily how do you determine creditworthiness . How do you manage and assess the risk . Mark it is tricky. We are working every day in places were people dont have credit scores. Were having to invent that all on the fly, using mainly data, data from mobile phones. We look at who they call, how much money they spend. We are looking at places where people spend money on the phone every single day, so you can learn about peoples financial history that way. Emily you are backed by Andreessen Horowitz. What attracted andreessen to the company . Mark there are a lot of amazing innovations pioneered right here in San Francisco that could apply to places like kenya and Subsaharan Africa in general. The need there is really great. People spend money on their phones, but they do not have bank accounts. They need things like basic credit cards to build their businesses. Emily kenya and many african nations have a cashbased economy. How do you intend to disrupt that . Mark people are moving away from cash into mobile payments, but they do not have access to a credit card. It is a big opportunity to give them credit right on their phone, right where they spend their money. Emily how do you make money . Mark we are a lender. We charge 2 to 12 interest. Emily if it is a cashbased economy, why would i want to pay your fees . Mark people dont have access to credit. When you go to a bank, people often have to wait up to six months to get a loan. They are not good options, so people value access to a line of credit so they can buy things for their business. Emily you have a lot of experience going around the globe through kiva. What do you see as the biggest challenge in building this out . Mark the biggest challenge is that there are no established Credit Bureaus like we have here. Among lenders Like Lending Club or prosper access the fico system, so they can tell a lot about your history. Over there, we have to sort of invent that from scratch. Emily what about political hurdles, political pushback . Mark so far, so good on that. I have been working in east africa for 10 years, so it has been a really good place to work. Emily tanzania. What is next . Mark uganda. We hope to introduce mobile payments for people to transfer money from one country to the next. It is sort of like a paypal system for africa. Emily all right. Interesting. The cofounder of branch thank you so much for joining us. In this edition of out of this world, china is planning to land on mars by 2020. In a rare News Conference on friday, the top space official said that plans are being drawn up with full government support. The mars mission will attempt to recreate the success of the u. S. Viking 1 mission that landed on the red planet four decades ago. It will open a new chapter in chinas space expiration program. Coming up, tech earnings from apple, twitter, facebook and amazon next week. What you need to know ahead of the reports, next. Next week we will be joined by aol cofounder turned venture capitalist steve case, who joins us to discuss the socalled third wave of the internet revolution. More bloomberg west continues next. Emily next week will be a big week of tech earnings. On tuesday we hear from and twitter. On wednesday, paypal. And on thursday, amazon, baidu, linkedin, and pandora. We caught up with an analyst to paris for the week ahead. The number one pick here is amazon. 715 price target. In all fairness, the stock has really moved up a lot off of a 475 low. A lot of the fear has been taken out of the stock. It is still our number one pick. I would also single out netflix. We like the even width, maybe even more because of the correction they just put out. The stocks we are most cautious about, the two would be twitter and ebay, for fundamental reasons. Ebay has a lot of valuation support, but Financial Outlook for both companies we think could turn negative. For twitter, we are looking for 610 million in revenue and . 11 on earnings. We think there is a little bit of upside to those numbers. The key thing on the stock is the Monthly Average users have been flatlining for the last four quarters. Our guess is they will be flattish again, and theres equal risk they start declining. If they start declining, that is another small leg down on the stock. For facebook, we are looking for over 5 billion in revenue and . 68 in earnings, both above the street. We can fund mental trends are stronger than the market consensus estimates encapsulate, especially with growth in instagram and the stillsuccessful rollout of video ads on facebook itself. We expect to have a lot of commentary about the monetization of messaging. We still think that is a year or two away for the company. Overall, this probably has the strongest single fundamental trends across the internet landscape. Linkedin, for the quarter we were looking at 800 million in revenue, . 56 in earnings. We think theres a little upside to those numbers. This was the big correction stock of the december quarter. We doubted we would see that sort of correction again. That is highly unusual in a large cap name like this. We have already had an Inflection Point like that. We think we will continue to see Revenue Growth deceleration. For the stock to start moving again, you need to see the reactivation in the key revenue segment, and we dont think we will see that in the march quarter. Amazon reports next thursday. We are looking for a little over 28 billion in revenue, over . 50 in earnings, a little above the street in that earnings number. We think this has one of the strongest fundamental profiles in the internet group. We will see revenue and Margin Expansion this year. The checks have been very positive, including from the google Cloud Platform conference. For the core retail business, we think they are still, they will sustain north of 20 Revenue Growth. We think we will likely see what we call a beat in bracket quarter out of amazon, slight beat in the numbers. Amazon is our number one pick, and on the risk spectrum it is one of the least risky stocks. Emily i want to bring in Paul Kedrosky, our bloomberg contributing editor. Lets go with your reaction to what mark had to say. Start with amazon. Paul how does he do that . Did he have some sort of teleprompter . That is just astonishing. [laughter] emily it was quite impressive. No teleprompter. Its all in his head. Paul yowza. Sorry, i interrupted. Emily what is your take on his take on amazon . Paul i agree with him on the fundamentals. The risk, all of the fear is out of the stock, which makes it hugely risky. That is the perversity of financial markets, as opposed to running a business. It doesnt take much for people to say, i dont need to own much of it anymore. That is a fantastic company, given how much it has advanced. That is pure equity market blahblah, nothing to do with how good jeff bezos is doing. Emily facebook seems to be running away with the advertising market. What is your take . Paul i dont see how that changes in the near term. Just about everyone else in the online ad space is kind of a blend owner to facebook. They are all giving up share, essentially providing an infusion of revenue to facebook, from twitter on down. If the momentum is still with facebook, while it is aggressively value, the business has so much momentum given the infusion is taking from everyone else. Emily what about twitter, which you and i both use constantly yet continues to be plagued with questions about longterm growth. Are the same people still using it over and over again, and no new people . Paul this is the problem. That problem has not gone away. But by the same token, weirdly enough i am somewhat optimistic about this quarter. I think we could see further deceleration in monthly active users. On the flipside, i actually think they are slowly getting expenses under control, slowly being the key word, and they could surprise something. Mark said . 11. It would not surprise me to see the company come out slightly above. Emily jack dorsey has been back now for about six months, so we will be all over all of those companies next week. Paul kedrosky, Bloomberg Contributor editor. As always, thank you so much for joining us on the show. And happy friday. Time to find out who is having the best day ever. Todays winner is amd, advanced micro devices. Shares saw the biggest jump in more than 35 years, jumping 52 to just under four dollars. The search is due to a Licensing Agreement with a Chinese State backed joint venture that will produce server processors. They predict it strong growth in the second quarter. That does it for this edition of bloomberg west. Do not forget to tune in this weekend. We will bring you the best of all her interviews from the week, including former twitter Ceo Dick Costolo and googlex founder sebastian thrun. The best of oh bloomberg west this weekend on bloomberg television. Announcer the following is a paid advertisement for time lifes music collection. Chances are because i wear a silly grin announcer there are artists will always remember. Mona Lisa Mona Lisa men have named you announcer there are beautiful songs, words, and memories that will always touch our hearts. Its po