Attorney general Jeff Sessions says doj officials believe they can ban rapidfire bump stock devices without action from congress. That comes after President Trump ordered the Justice Department to work towards banning those devices, which allows semiautomatic rifles to mimic machine guns. Puerto rico says delays by the Treasury Department in getting Disaster Relief to the island has put the u. S. Territory in a dangerous financial dilemma. The islands governor says the treasury imposed restrictions that made it difficult to access funding. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im alisa parenti. This is bloomberg, and Bloomberg Technology is next. Emily im emily chang and this is Bloomberg Technology. Coming up, amazon arrives at your front door after a 1 billion deal to buy a smart home tech company ring. How this plays into the ecommerce giants larger delivery strategy. Plus, comcast reaches for sky and raises the stakes for disney and fox. The allout bidding war erupting between three of the biggest players in media. Fitbit activity at an alltime low. Shares tank post earnings. But first to our lead. Amazon has agreed to buy a agreed to buy ringgit californiabased smartphone , a company that makes video cameras, doorbells, and other security tech. It is valued at about 1 billion and pushes amazon further in the smart home market. J. P. Morgan chase advising on advised ring on this and deal. Joining us now with more details is alex barinka. It was not long ago that ring was booted off of shark tank. Alex it was just five years , ago. The ceo with on shark tank asking for 700,000, saying it was valued at 7 million to get it now fastforward half a decade later, they are selling for 1 billion to amazon. A nice little ending here for ring. Perhaps a look back to the sharks and say, look at what we have done. For amazon, it is an important step as they continue to push into these more consumer facing hardware. We have seen amazon in the past six months or so really tried to embed themselves in consumerss homes. You saw it with amazon key, where you can unlock it for delivery folks so they can deliver packages, and you have seen it with amazon echo. This fits nicely within the entire ecosystem because, you know what . Amazons goal is not selling hardware but getting more getting the hardware in so they can sell more products on ecommerce platform and get you to open your pocketbook a little more. Emily talk about how this fits into the delivery strategy. Obviously amazon has been focused on that last mile. Now they have this Concierge Service key where amazon can actually go into your home and drop packages. How does it high together . How does it tie together . Alex when you use a ring smart camera, you can have the person on the ground talk to it. If you are on your phone or tablet or pc, you can talk back, so that kind of actual relationship where you are not just a passive watcher but you , can engage with the person who is there, if it is in amazon delivery person who they say is verified, you can open the door for them, tell them where to leave something. But also, amazon has been pushing Services Like housecleaning and dog walking. Anyone who is showing up at your door can potentially be let inside when youre not there. Again, so you keep spending within that broader amazon platform. Emily what do you make of the price of this deal . Full disclosure i own a ring , doorbell, and i was shocked. The product is good, but 1 billion . Alex there are reports from last year from other tech media organizations saying they were valued around 450 million so that is a twotime bump. It is a nice exit. For amazon, it is a small check size. A person familiar with the matter told me jp morgan advised ring. Amazon did not even have an advisor working with of them. They just shelled out the money for this deal. So it seems to be another one of these small things that amazon has been collecting as it continues to fill this set of tools it has to keep getting into peoples homes. Emily they did a big deal with whole foods last year. Do you think amazon will be more acquisitive in the future . Alex i can tell you now covering tech m a, they are definitely number one on my list. We are waiting for the next big deal from them. Dont have anything in the hopper that i know about right now. Does not mean there isnt does not mean that could not always change. The whole foods strategy shows , up with your food, you talked talk to them with your ring camera, you get them in the door. Emily all right. Thank you so much for breaking that one down. In earnings news square reported , fourthQuarter Sales that topped analyst estimates with a for a ninth consecutive quarter. In more than two years as a public company, square has moved beyond its iconic payment dongle to be a onestop Business Manager for small and midsized retailers, providing loans, inventory tracking, and other services. Coming up, shares of fitbit hit an alltime low on disappointing earnings and forecasts. What is next for the Wearable Company . We will hear from the ceo james park. If you like bloomberg news, check us out on the radio. This is bloomberg. Emily a new note takes a closer look at Apples Health unit. Apples plan to start onsite medical clinics for its workers may go beyond its own employees if it succeeds. This comes after a cnbc report that said apple was starting clinics for its workers. Remember, ceo tim cook told investors earlier this month the company can make a significant contribution to the health care space. Fitbits longerterm outlook is facing challenges amidst falling demand. Shares hit a new alltime low tuesday on disappointing earnings results, so what is the next step . Lets get straight to our editor at large cory johnson, who is , standing by in new york. Cory yes i am. Thank you very much. Fitbit not a great quarter, at , least according to wall street with stocks selling off today. James park, the ceo joins us quite a bit, and you care about the stock more than i do, but in terms of the size of the company and what the opportunity is, if you had asked either one of us two years ago if the fourth , Quarter Sales would be below 700 million, hard to imagine it would fall after 571 million. What is going on with the demand for fitbit products . James 2017 definitely a challenging year, played out more challenging than expected. In the wearables category, the shift from activity trackers from more fully featured smart watches is happening even faster than we anticipated. We did launch our first smart watch into the category in q4, and it did outsell our prior highest product surge but it was , not the mass appeal shipment unit driver that we anticipated, and that was reflected in our financials, and that is what investors are reacting to. Cory strikes me as a really interesting problem. When i looked at the apple watch which launched after fitbit, it was a product in search of a use case. I felt fitbit was the use case. It monitored steps, helped people live healthier lives, and enhanced athletic or a physical fitness focused product. As you move from bands that just count steps or altitude to watch watches that can do a lot more, do you start to lose that focus . How do you make it a massmarket product not just for runners, but for people who want to lose 10 pounds . James absolutely i think we will maintain our focus on health and fitness. Even as our emphasis in the trackers tofts from smart watches. A lot of that will come in the product futures. There are specific health and fitness apps, the long battery life over four days helps, and especially with sleep tracking. Our app is the number one app on itunes and android for health and fitness. Platform independence plays a key role, especially as we try to integrate more deeply into the health care ecosystem. So i still believe the focus on health and fitness regardless of the device is a winning strategy. Even in 2017, while ionic was not the success we anticipated, we achieved a lot as a company. We did meet our fullyear guidance and earnings. They are in line with guidance. We actually exceeded our projections for Free Cash Flow. And we are incredibly operationally efficient. We ended up with 50 million below our target that we had stated to investors. We deepened our reach in health care, and one of the more interesting aspects if you think about not just devices, but our active user base grew to over 25 million users even if our unit shipments declined. Cory what is the dynamic . How do you ship fewer products but have more users . I did not understand that. James one of the things investors have been concerned about in the past is, what is our level of retention and usage . Is this a product that people buy and put in their drawer after a few weeks or months . What we are demonstrating is that even though unit shipments declined and the active user base grew, that means we are Getting Better at getting people to stay longer on our devices and platforms, and that is actually going to be important as we start to shift our Business Model from being device centric to one that is more around software paid services. And ltv. Cory lets talk about that, the shift in the business. For a long time, it seemed the real leg up in terms of unit sales might be the market, going into a big company and getting everyone to wear fitbit. In our company, bloomberg, if you monitor your steps using a fitbit and another application from you get credit towards buying stuff for gift cards and so on. Now you are talking a lot about health care and have been for more than a year. Is that different than a corporate focus, or is that one in the same . James it is a little bit different. Primarily our Enterprise Business before had been selling devices to enterprises. We have had large installations, 40,000, 50,000 units. We had a several hundred thousand unit deal with target, but the difference is what our Business Model is behind our health business. We are moving to one that is more based around pmpm, per member per month, which is recurring in nature and more predictable. One of the more interesting things is also looking at risk sharing models where we happened to participate in share of any savings and Health Care Costs that we achieve for our users. Cory you are getting that now . You have done deals like that . James there are promising steps. We have pmpm deals with Blue Cross Blue Shield of south carolina. The recent partnership that we had around diabetes management has the potential to move to a risk sharing payment model. Cory to that, these are the kind of contracts that will be really significant, more than 1 or 2 of revenue per deal . James you know, it is hard to say what the revenue outlook will look like. We are taking a lot of concrete steps in 2018, and you can expect to see health care being a more meaningful part of our business going forward. Cory in terms of product mix going forward, you suggested that to commend you, inventory was not a big problem. Usually there is something that does not work the way it expected to, inventory blows up in Consumer Electronics and has been the death of many companies. That has not happened to you. Particularly difficult as you are moving into new products, are they on the immediate horizon . You announced a deal with adidas today. James definitely last year at this time our inventory overhang was a huge issue, and it took us much of the first half of the year to work through that. I think one of the highlights coming into 2018 is we are coming in with a relatively clean inventory position. Even with ionic we took a market rollout. We are still launching in select apac countries right now. A 679nd you have million in the bank in terms of cash. The Free Cash Flow as you mentioned is bumpy from quarter to quarter as you alluded to a big Fourth Quarter, but the Fourth Quarter numbers not that bad. You have a very long runway in this business even though you lost money in the quarter. You actually generated cash flow. James one of the things investors can look forward to is us remaining disciplined on Free Cash Flow. Even last year despite our challenges, we only consumed about 25 million in cash. In 2018, our outlook is actually to break even on a Free Cash Flow basis while we work through this transition. Cory yeah. Your stock is not reflecting some of the positive things. For the sake of all the people that can get fit, i hope it rectifies itself. Very kind of you to join us today. Really appreciate it. James thanks. Emily thank you so much. Self driving cars are getting ready for the biggest road test in california, that is. Starting on april 2, the state department of Motor Vehicles has authorized the first trial for consumer passenger rides without a safety driver at the wheel. Until now, self driving cars needed a backup driver at the wheel. Participating vehicles will have a backup driver, but this one will be patched in via remote to take over if needed. Coming up, comcast sets the stage to take over sky, challenging 21st century fox and walt disney with a 31 billion offer. We will talk about the Massive Media bidding war, next. This is bloomberg. Emily netflix continues to ramp up its spending. Is expectedg giant to spend up to a billion dollars on content this year. They will have 700 original shows and movies on the platform over the course of 2018. Everyone is shooting for sky. Fox owns a 39 and disney has offered to buy much of fox to get it. Comcast is offering 31 billion for the paid tv company. Early tuesday morning, sky said it was premature for anyone to be doing anything because it is does not yet have a firm offer from comcast. Here to break it down for us is paul sweeney, head of north American Research for Bloomberg Intelligence and our bureau chief, Chris Paul Neary chris palmieri. First, layout were each of these offers stand or does not stand for sky. Well, right now, as you mentioned, fox is saying there is not an official offer out here so there is really nothing can commit to on their end, but they will have highlevel meetings and most likely come out with their own proposal that would at least match what comcast is offering. They have to. They cannot let a higher bid stay out there. Emily so, paul, lets talk about why comcast would want sky. The ceo spoke on a call earlier today. Take a listen to what he had to say. We have admired sky for a long time, and when it became clear that not only was sky for sale but that every share was going to potentially have a change of ownership, we thought now was the time to make the superior cash proposal. We think sky is an outstanding business. Emily so read between the lines for us. What is he saying . Paul the big thing here for Brian Roberts is comcast, while a fantastic company in the u. S. With cable and entertainment assets, it is really underrepresented in the international marketplace. Does not have many businesses outside of the u. S. , so the acquisition of sky would you would dramatically increase their National Exposure to the media business. You think about the paytv business in america. It is highly concentrated, saturated, maturing, cord cutting, so it is a very challenged business. Internationally starting in the u. K. And other parts of europe where sky operates, less penetration on the paytv side. More opportunity for growth, so if you are Brian Roberts and comcast, it is a nice diversification move for you. Emily sky is definitely feeling the love even though it is not on paper yet. Take a listen to what the disney ceo had to say a couple months ago. Sky is just an amazing platform. Not only does it provide consumers with a great Consumer Experience in terms of access to the programming, but also creates a of great programming from sports to news to all forms of entertainment. We have actually distributed to of our programming on sky. We are extremely impressed with the user interface, their ability to attract and retain customers, the Value Proposition to their consumers, and that obviously is a real crown jewel in the assets of 21st century fox. We certainly will be looking forward to having the opportunity to have sky be part of our company. Emily chris, does he really want to buy sky . Chris yes, absolutely. You almost have to feel sorry for him. He was embarrassed announcing this expansion of disneyland with star wars land, and across the channel comes the rebel fighters. He was saying on mondays tech conference very similar to what roberts was saying that he needs interNational Exposure, to tv business in europe is not declining like it is in the u. S. , and their assets like a direct to Consumer Service is similar to what he is trying to do in the u. S. A lot of things that bob iger wants at sky. He will have to work with the murdochs for some sort of a competitive bid. Emily how do you expect fox and disney to respond . Paul i think they will respond. I dont think they will let this comcast bid go unchallenged. If you are bob iger, you have to sit back and think, how badly do you want to be in the european paytv business . The price tag is getting pretty rich here. I think probably disney will come back and be the bidder two to come over top of comcast because disney will have a cleaner regulatory pass to approval even though 21st century fox is already possibly a year into their transaction and the regulatory process. Disney will have a better and easier path and might be the preferred bidder. Emily give us a little more detail on what fox is dealing with and u. K. Regulators and how that pl