Transcripts For BLOOMBERG Best Of Bloomberg Technology 20171

BLOOMBERG Best Of Bloomberg Technology November 18, 2017

The last quarter, we will discuss the secret to the companies continued success in asia, and u. S. Ambitions fortencent. Wilbur has set the stage for one of the biggest writing services softbank and other firms will be allowed to invest up to 1 billion in uber, and can buy out the 9 billion in shares 9 million in shares. I caught up with cory johnson and eric newcomer. Basically everything except the price, which is key. Who the sellers are, we dont know that for sure and therefore we dont know the total amount that is up to be bought. We have sort of a slate of governance reforms and we have softbank and a number of other potential buyers. The thing we have been negotiating over for the last many weeks now is those governance reforms and the process by which softbank would buy the shares. Emily talk to us about some of the governance reforms. There was some contentions. Steve made some compromises, benchmarks made some compromises. Tell us about those. Eric travis wanted benchmark to put their Fraud Lawsuit against him on hold and agreed to end it at the end of all of this once governance reforms goes through. Benchmark has been unwilling to put it on hold and really commit publicly that there would be any lawsuit. They came around and travis agreed to give the board the board has majority were approval if he replaces his own board seat that he filled Going Forward. That was the major compromise. Emily whats your take on the hurdle that remains . Cory i think the weight to way to think about this is in terms of an ipo. This is, in some ways, could be the ipo for the longterm shareholders. This will allow a lot of the longterm shareholders to get out of 8 billion worth of stock. It really clears up the Corporate Governance questions of who owns what can the company and what classes of the share of the stock may be offered in the public stock . Not only would softbank be buying a billion dollars worth of shares, but by clearing up the governance structure, by doing that it sets the stage for these guys to go to the public markets. Interestingly, in this sort of between the lines, and eric newcomers wonderful story, is what we really see happening is with valuation. Softbank has agreed to pay a higher valuation for its first bunch of shares and then its subsequent shares and they would buy from the shareholders. The shareholders could say they are paying everyone else is paying, but they can dribble down to a lower cost. Softbank will invest in both worlds and the valuation of uber does not officially declined but the overall valuation will decline in the deal. If existing shareholders sell to softbank for less than that top 70 billion market cap valuation. Eric we will know it is less. The valuation will probably be lower and we are already seeing the positioning. We had an investor reach out to say this cannot be too low so softbank put out a statement saying this is not done yet. The price position is really beginning and that is what cory said. This is not the last round pricing. How low it goes will be a major point of contention. Cory here is why that matters because the reason that matters is because what matters is what the valuation really sets up. If there are ratchet deals, if some of the investors have deals where a lower valuation issues more shares automatically, a cascade of shares to anyone that invests before the last round, they would have to do that. They could say the official valuation has not gone down so we dont have to issue more shares. There is no ratchet trigger, no devaluation of earlier shares. They dont have the flood the market with new shares because they have not officially lowered the valuation, but they actually of the blended valuation will be the official valuation. We will see that in the paperwork. Emily obviously, eric, a lot of Unfinished Business here but when softbank is officially on board, what could they contribute to uber as a Strategic Partner . How could they help the moderate issues abroad . Eric hopefully they can stop investing in ubers competitors. I think the dream is that softbank and help broker peace can help broker peace in india or Southeast Asia where it has investments and grab. That is the hope. That is not an explicit part of this deal, but softbank has invested everywhere, and i think it is in everyones interest , except probably lyft, to see a Global Alliance and the cash burn goes down in india and Southeast Asia. Companies can find a way for profitability. Bloomberg technologys eric newcomer, and our editor at large, cory johnson. Another ridesharing start up breaking news lyft is rolling north. They will launch in toronto and across hamilton ontario starting next month. Theyre pushing into a territory long occupied a rival uber. About 50,000 toronto residents lyft thoughded the its not available yet. 105 billion offers. Next for the potential microchip deal. And, how apple plans to wrap up its a our efforts. This is bloomberg. This week, qualcomm emily rejected a 25 billion offer, pushing off what could be the largest take over battle in history for tech. I posed a question to bloomberg tech reporters, and bloomberg deals reporter. I think, whats really thatesting here as we knew they would get some pushback. I think they knew that as well. They rejected the price, rather than going here no way this deal could ever get done. That was seen as relatively positive by the market and you saw that reflected in qualcomms shares which initially went down and went up when the bell opened. I think what happens next will be really important. They have shown a willingness to go directly to the shareholders and go hostile. They are probably now going to slate for the qualcomm board. Then it remains a question of how much money can they really put on the table. Almost certainly they will go above the initial salvo of 70 a share. Some talks are going in the mid80s but a lot of that depends on the feedback they get now and when they get next move. Emily what happens now . Ian that is a very good point. The assumption by the market is this is just about a prize. If you look lower down at that statement, there is a fundamental difference in how you run a chip company. They say the good times are over and no more growth to be had. We need to back down the hatches. Qualcomm Still Believes it can grow and move into new areas and that is absolutely not. Emily he has gotten a lot of what he wants. Could this be the one thing he cannot make happen . Ed it is the biggest thing he has tried. This guy is a deal machine and built this company up through acquisitions, most notably the deal with broadcom. This is a hostile, a different order of magnitude from anything he has tried. Even if he does get the shareholders of qualcomm on board, which is entirely possible, the real issue will be whether or not is passes the regulators. You are seeing qualcomms existing deals they are trying to put through in europe is being held up by the eu who is taking a very careful look at this. Even if this deal gets over the line in terms of the companies deciding to dance, whether it gets through the regulation hurdle is another story. Emily ian, how much is qualcomm really worth at this point given the potential of losing apples business . Ian it depends on who you believe. If you believe qualcomm management, it might get a bit of time. We could see a licensing model. Get that extra 2 billion of revenue a year. It is worth much more than this, especially if you believe emily if it does not happen, emily apple is planning to take another step into turning its smartphone into an augmented reality device. Apple is working on a 3d Center System for the iphone by 2019. I spoke to the man behind this group, alex webb, and our editor at large cory johnson. At the moment, what you have at the back of the phone, is two cameras on the iphone x. Doingpple is looking at is the 2019 iphone, adding the depth perception on the back which allows them to do much more complicated augmented reality things with the rear facing camera. Emily was this impact any of the current technology, the face id, or is this something separate . Alex it is something separate. If you are a laser maker, it is probably good news because there are two lasers on the side of the screen, which allows face id to work. There would be another one on the back. If you take a monopoly board, a virtual monopoly board, you can play virtual monopoly on this table with the ar kit. If you put your hand in the field of view, it does not know your hand is there and ruins the illusion. Adding a 3d sensor can allow you to pick up a hat and move it to the next space. Cory i want to hear him talking about english monopoly. Emily it is not surprising apple would already be pushing forward on technology one, two, three generations out, but what do you make of this knowing about apples broader ar strategy . Cory i think apple looks at what has happened to the pc industry. We have gotten to a point in pcs where there is no compelling reason to get a new model every year or every other year. The replacements have slow down have slown down for pcs and tablets. We see people replacing the tablet but at a much slower pace. People want to get a new phone after the 18 month or 12 month period, but they dont want to slow down and they want something compelling enough to get people to want to upgrade their phones. This is that kind of thing that is a big leap in one direction. Alex i think the thing is interesting in that for to a that there are two production from out at the moment that have this kind of technology already. Kind of shows apple is taking the advantage because it wants to milk this cycle and the next cycle rather than putting all of the technology as soon as they can, it leaves room to advance it leaves them little to room advance the next generation. Emily apple working on ar headsets. How does this tie into that . Alex it can be seen as a Foundation Stone in some ways. There are increased numbers of augmented reality apps. The problem with augmented reality glasses at the moment is there is not a huge amount of content out there, which makes it worth people buying. If apple is building a whole ground of foundation for of ar content, they can parlay that into smart glasses in three or four years time. Cory they have the ability to do a lot of things with ar using air pods as well. Augmented reality with the air pods with some kind of glasses as well could be somewhere they go. I think the fundamental of this is one of the development tools. If you think about pokemon go, it was Ground Breaking stuff, but they had to build that from the first 1 and 0 to the top. Now, developers can get a head start and we might see real advances quickly. Emily new technology can be hard to imagine how you would use this. As with pokemon go, if somebody explained that to me, i do not think i understand it until i played it myself. Alex, give us some ideas about how i as a regular user might benefit from this kind of technology. Alex ikea, which has an augmented reality app, it allows you to place a virtual sofa in the image of your living room and walk around and see how it might look. What it cannot do is hang a mirror on the wall or a picture on the wall. It is not as good dealing with vertical planes. It adds that some of perception to it. You have seen the walking dead app where you seize on Walking Around your living room. The moment a person approaches a zombie, a does not know the person is there anything place an interactive thing with your friends saying hit them in the face or god knows what. That was alex webb and cory johnson. The decision to launch a brandnew print magazine in the era of digital complications. To a newazon takes ai level. They plan to launch the first cashier list can cashierless the main store. This is bloomberg. Emily vanity fair has named its next editorinchief. She comes from the New York Times, where she served as the editor of their book department. She is well known in the literary community, but lesserknown in hollywood. The firstnes will be female editor of medicare since the 80s. William hearst the 3rd has unveiled a new magazine. That focuses on culture , politics, and the big issues impacting california. Traditional print publications have been facing headwind. Just last week, a Company Announced it was closing teen vogue and limiting other monthly issues, like glamour. Family, who has had a legendary place in a journalism for more 130 years, sat down with us to discuss media. When you are starting a new business, particularly something in the area of this, you dont want to be in that super crowded field. I think announcing a new blog or website, we have been lost. As a publication, it has a certain permanence. It is quarterly so we dont have to keep up with news. We reflect on things that are happening. I was modeling what we did with a little bit of vanity fair and a little bit of new yorker. They come out more often so they have to stay closer to the news. This lasts a longer time culture, politics, technology, trends, larger scale movements. We thought print would be a easy way to do it. Nowadays, the print publication is mostly electronic anyway. Most of the editors work in different places. The printing is just the last step in the process. We are very ready to do anything we do in the Magazine Online almost simultaneously. Emily what do you think is the state of the magazine business as budgets are getting cut, people are being laid off, magazines are being canceled . William it depends on what you are doing. If you want to do a mass pop magazine, that is difficult. If you have a very focused audience and delivering something of value to them, like the economist, i dont see that as a failing business. The New York Times has had a giant search in attention because of the interest in politics. The Washington Post, when jeff bezos bought it, most publishers were saying he had a secret technological idea. Jeff bezos had an unusual idea run it like a newspaper. Report the news, get it straight. Underneath the nose of the Washington Post is washington and politics. The Washington Post newspaper in the old days sort of wanted to be the New York Times. They were opening bureaus in singapore, trying to cover the world. They were a little unstable. Under bezos, they are covering what is under their nose. Washington to cover politics, San Francisco should cover technology. You are entering a crowded field. Emily what do you think of jones as the head of the vanity fair . William it is an interesting choice. A book choice rather than a popculture choice. I will be interested to see what happens but i think they will continue to have very good writing, very good photography and maybe more culture and less politics but that is a guess. Emily Raymond Carter took a very tough stance against president trump. William she knows how to mine old criminal cases and modern stories and melded into a unique conversation. I think graydon himself thought that things were changing. Emily budgets are getting cut. The big glossy pages, maybe they wont survive. William there were also lifestyle issues. Big black cars for everybody, fancy restaurants. The Hearst Company is in the newspaper business and we run a businesslike operation. It is a business reality. Emily what would your advice be to jones . William i hate to give it away because it is advice i want to give to myself but i think arts and culture are a very enduring interest area. More people going to museums and ballets than go to sporting events. Why do people who work in Silicon Valley want to live in San Francisco . It is not because stanford is here or because hewlettpackard was found here. It is because of the city. That is a part of life. That is what our magazine addresses. Emily we have been talking a lot about digital platforms and the responsibility in the age of fake news. What do you think is the responsibility of facebook and twitter . William i think news is news. Fake news is made up stuff. Emily fake stories. William what bothers i think the terminology is wrong. I think i dont believe in the trump terminology. I believe there is opinion and commentary which is very much what modern news has become. People sitting in a studio discussing things rather than reporters covering the news. Emily some of the news is actually inaccurate. William some advertising is inaccurate. Those things have to be right. If it is not accurate, it is not news, it is opinion. An opinion can be wrong, it can be interesting, but it is a completely different genre. If you let everyones opinion be the same, you are in the commentary business. Me, you have to get the names right and the fact right or you get fired. Emily what is the responsibility of facebook . William i think you have to pick. Every business has we are a commentary business and we are good at it. Or you can say you are a News Business like bezos did with the post. Emily they say they are a tech business. William they are a tech business and a much better tech business that most Media Companies are, but Media Companies are better at gathering news that facebook is. There are National Business boundaries between tech. I think what has gotten facebook in trouble is they are selling advertising. Once you are selling advertising, you are playing by a different set of rules. Fox is mostly commentary and sells advertising, but they have to account for where these ads come from and how to report it certain ways because they are taking political ads. If you added transparency, then facebook deciding to be a commentary or news organization, it does not matter, but in the zone of advertising, you have to play by those rules. Emily that was william hearst, chairman of the hearst board and publisher. Coming up, an exclusive interview with blackberry ceo. He will tell us why europe and the middle east are in the companys future. All episodes of Bloomberg Technology are Live Streaming on twitter. You can check us out at bloomberg tech tv, weekdays 5 00 p. M.

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