And linking up. We get an exclusive check in with the linkedin ceo. Jeff weiner. His thoughts on the Company Three years after microsoft acquired the job listing site. But first, to our top story. A late developing shakeup at the top of oracle. The ceo is stepping down for health reasons. The company did not specify what issues he is facing. But executive chairman released a statement saying oracle has an extremely capable ceo and an extraordinarily deep team of executives, many with long year tenure. Joining me to discuss, Bloomberg IntelligenceSenior Analyst in new york, and with us, Global Executive editor tom giles. Thank you for crashing on this. How surprising was this announcement . Tom as far as his leave, there have been signs over the last year that he may not be unwell. What was not expected was the announcement to come today. And because they had not announced until now, there was a question mark about whether they would and whether he was getting well or not. It took us a little bit by surprise, the timing in particular. Taylor i want to bring you in here. You heard it from larrys mouth, does any of this change the future direction of the company . No, it does not change the future direction of the company. Oracle is a very stable business, given a large on premise database business they have and a large applications business. The key risk for oracle and the key story remains how soon can they get the database customers onto the cloud . That story remains the same. I dont see any changes because of this shift. Taylor mark hurd was known as working on shifting that composition from hardware to software. He touted getting to 50 software. How diheo . Tom it has been a mixed record for oracle over the last several years. Their stock price, i should note, has been really over 20 gained this year because a lot of investors are looking at that staff, the deep bench. They are looking at the shift and they are starting to see signs that it is taking root. It has not been even. There have been quarters where people have doubted. On todays numbers which we will talk about in a minute, looking light. It has not been super even. However, what you are seeing is when customers shift to the cloud, that is where the growth is coming from. The legacy database business, Traditional Software has not been growing as needed. And had the shift been happening as quickly, sometimes the answer has been no. When you look at the stock price, you are seeing an Investor Base giving them the benefit of the doubt. Taylor talk to me about the earnings. Top line is a miss. Margins look healthy. What was your take away . Anurag with almost everything, there was a slight slowdown in the application business. At the same time, we saw margins expanding. We saw buybacks. I was not that surprised with any of the numbers. The key issue remains how soon some of the new database products adoption goes. And that we will see from the colors, how that is going along. Taylor what does a 15 billion buyback tell you . They have nowhere else to invest or they think their shares are undervalued . Tom i think it is both. Are there acquisitions you can make, largesize acquitions you can make . Oracle has been a big acquirer. They have made some big acquisitions. It seems to me that there is not a lot in the pipeline right now that they want to take aim at. But they have a lot of cash. I wouldnt rule it out. 15 billion shows a boat of vote of confidence. When you are announcing a ceo is taking a leave of absence. You want there to be some vote of confidence on the part of the management. As larry said, they have confidence in their bench. Safra catz, capable, very well regarded. Larry, even though he handed over the reins, he has never strayed that far from having a hand in how the company is managed. Taylor did the Cloud Services revenue meet your expectations . Anurag there was slight slowdown in the applications area. Overall, it is lumpy because unlike an adobe or office 365, these large enterprise deals could take time. Nothing surprising from our side, generally in line quarter for us. Taylor tom, generally speaking, how is oracle set up among china and tariffs . Something we have talked to so often about within the tech sector. What is your broad take . Tom right now, a lot of companies in the tech sector are going to be affected by the tariffs. A lot of it has to do in areas such as hardware. Oracle has not been one of the companies that we have looked at and said, this is going to be a huge hit for them. We talk about apple a lot, some of the other companies, some of the chipmakers for example. Oracle, less so. That has not been a big area of overhang. Id be curious to hear what anurag says about that. The tariff issue is one we think that will hit a lot of the other big tech players aside from oracle. Taylor was the revenue not related to tariffs . Anurag i dont think so. As to toms comment, Enterprise Software spending little exposure to china. When you have macro sharks, people pullback spending. You really dont need to upgrade if you dont have to because you can go around another six months before getting that new server or upgrading to the new set of software. That is where we have already started to see some kind of cracks in the Software Growth story with some of the companies talking about weaknesses in europe right now, that is leading to software. Taylor we know that all the glitz and glam is in software. Get us back to basics care and how is the hardware business doing . Anurag hardware business has been weak. That has been the story for a while. People have been delaying their hardware upgrade cycles, just largely because whatever little money they have, they want to spend it on the next digital transformation. Which means you want to spend it on advanced Security Products or you want to spend it on cloud products. People take money from hardware and they are spending more on software. Taylor key take away from the Earnings Call . Tom a lot about the ceo, why didnt they disclose it sooner . There may be questions along those lines. Who will be in charge of what set of responsibilities that mark was in charge of . How concerned are they about his health . How long will he be away . And certainly cloud, cloud, cloud. That is something it always comes back to. As he pointed out, as people move more and more to the cloud, that is something that affects spending on hardware which has not been a real strength business for them. Taylor number one talking point from the call you want to hear . Anurag i want to see what is a transition, the take for the new database product. That is a very important thing for us. That is what dictates how soon people will adopt into the cloud. Any new applications busess, bookings numbers, those would be the areas we will be looking at. Taylor my thank you to anurag rana and tom giles. Coming up, we will get reaction s leave of absence. John chambers joins us next. If you like bloomberg news, check us out on the radio. Listen on the bloomberg app, bloomberg. Com and in the u. S. On sirius xm. This is bloomberg. Taylor all eyes are on oracle after the Company Announced mark hurd will take a leave of absence for health reasons. The Earnings Call will give us more information on those reasons. With more on that, plus of that continued trade tensions between the u. S. And china, i want to bring in ceo and founder and former cisco ceo, john chambers. It helps startups across the globe. Great to have you. Give me your take about this news that mark hurd will take a leave of absence . What is your reaction . John my reaction first and most importantly is, as Larry Ellison, a speedy recovery for mark. He is in my thoughts and prayers. If you really think about the team of Larry Ellison, they work more effectively than anyone envisioned a three some would work. Larry and safran worked together for 25 years. I know all three of them very well. Safra is worldclass off the charts. Larry has always been involved in the engineering side of the house. I think they will navigate through this. I dont think they will have issues at all. They have a deep company, and a lot of capabilities. As i said, larry and safra are worldclass leaders that are very actively involved. My thoughts are with mark for a speedy recovery. Taylor talk about your relationship with mark hurd during cisco and then his time at oracle. How was that relationship . John the relationship with oracle and hp have always been very strong for me. I have a lot of confidence in hp. They helped me when i moved out to silicon valley, to understand the valley when i only had 400 people at cisco and people got us confused with the food truck company. Lou platt helped a great deal. Their new ceo, antonio, is amazingly good. I have a lot of confidence in the direction of hp and they did a nice job on the turnaround. In terms of safra and larry, i have always been close to them. Both on political issues in terms of positioning tech for good in the world. They are very strong leaders. I would always bet on larry and safra and mark together. They have got a deep thing. Deep team. As an investor, i think they will navigate through this very well. Taylor john, another story we continue to monitor, continues to be the u. S. China trade fight. We have not seen it impacted the bottom line of companies. Where are you seeing the impact of tariffs the most . John remember again that im not in any way associated with cisco. That company, when i left, it was important and their leadership run the company and that i was not looking over their shoulder. I have been in china for 30 years. I understand the market extremely well. I think one of your prior colleagues said it well. For enterprise business, the impact is going to be fairly small. Enterprise type companies. Supply chain people are going to have to work through. However, taking this step backwards. There needed to be a resolution. The trade unbalance between the u. S. And china. 570 billion number versus 140 billion. We have to treat American Companies in china fairly we treat Chinese Companies here. I think that needed to be resolved. While all of us wish it would be smoother in the resolution, it was something that had to occur. We had to stop kicking the can down the highway and not dealing with the issues. If you want to look at ones that are going well in handling it right in my opinion, the u. S. India trade issues. If you watch what President Trump and Prime Minister modi, both of them are involved in that. Both have taken constructive roles on how do you get our countries working together . As ive said several times, i think the most important strategic relationship between any two countries in the world for the u. S. Is the u. S. And india. I very much admire Prime Minister modi. I will see him in new york with other ceos. There is a model that i think is going in the right direction. Im cautiously optimistic you will see that trade issue resolve effectively their. Taylor i want to talk about the elasticity of the supply chains. Come into my terminal, i will use cisco as an example knowing you are no longer directly involved. We take a look at the suppliers. A lot of these Big Tech Companies have a big exposure to china. Talk to me about elasticity. Can we start to automatically move to india like you said to vietnam . How quickly can you do that . John it takes time. The time to move to india or mexico or other sources or balance your supply chain takes multiple years to do. You cant do it quickly. India is in the very early stages of Prime Minister modis digital manufacturing focus. I think they are making very solid progress on it. That takes time to really do. For these companies, they have to do it very carefully. All of them focus on supply chain and understanding it. It is in everybodys interest that the supply chain work very effectively during both the good times and when there is a little bit of constructive giveandtake in terms of challenges. Taylor how healthy is the ipo market right now . John i think it is very healthy. This is a great question. When you ask that question, you are asking three or four questions. The first is for jobs in the u. S. In terms of the future, Large Companies will cut dramatically their headcount due to automation, artificial intelligence, digitization, et cetera. It is so important our startup economy and ipo market will work because the 75 of the headcount are after they become unicorns or after they do and ipo in the marketplace. The pipeline looks good. I would like to see it doubled over the next three to five years. I think there will be some ipos that will outperform the market. There will be some that miss on that. The only input i would have to investors and the Companies Going public, i think it is so important as you do this to have a very clear path to profitability and a clear path to cash flow positive. For the 18 companies im providing guidance to and hopefully we bring a number of them public, they will have a clear path to profitability. Most of them will be profitable. I think that is the one caveat i would watch as an investor. Taylor talk to me about that. I want to come back into my terminal. Two things you said struck me. One, Free Cash Flow positive and looking for profitability. One could argue beyond meat has a pass to profitability and being Free Cash Flow positive. They are trading around the average analyst price target. Second, your point on alternative meats, or alternative food sources. Walk me through the start up you like and what you are bullish on. John all right. First of all, i think it is very important to have alternative food sources, given the challenges that we have purely on the agricultural production. You are already taking up the equivalent of all africa and latin america just in geographic areas that are needed to do this. With tremendous damage to the environment in terms of the meat sources. The ability to think about alternatives to meat are very important. In full disclosure, i have to share with your viewership that i bet big time in terms of crickets being one form of protein. Spare foods, the ceo there is doing an amazing job. I think people realize that with beyond meat, that you cannot only produce very good products here that have equally as good quality protein, but you can do it with less damage to the environment and they taste pretty good and likely better for your health. Im betting if beyond meat, i would bet on crickets as the next protein. Taylor you can join me on set next time and we will enjoy some crickets together. That was ceo and founder john chambers. Thank you for joining me. Coming up, reworking wework. Why the company is looking to make changes at the top. Will it be enough to save its ipo as investors worry . We will discuss next. This is bloomberg. Taylor now we turn to a story we are following, weworks troubled ipo. Bloomberg has learned the company is considering major changes to its governance structure to address investor concerns. This coupled with weworks banks worried about going ahead with the share sale that could value the company as low as 15 billion. Joining me to discuss in new york, kevin mcneil, director of technology where it was downgraded to a b. Give me the biggest reason for the downgrade. Kevin essentially since we rated them in april of 2018, the Company Raised subsequent capital and then pursued a more aggressive strategy. It basically increased its cost structure quite substantially. It increased its headcount by over 12,000 people. It is investing ahead of growth. We now see the point at which the company will become profitable has now pushed out several years from where we thought it would be. Taylor going forward, what would be a further catalyst for another downgrade or your biggest Downside Risk . Kevin it is too early to tell at this point. When we made the rating change in august, it was predicated on the Company Going forward with its Capital Raising plan. With the Capital Raising plan, it does plan to grow quite aggressively. To the extent that its financing plan changes and its Investment Plan is changing accordingly, then we will look to potentially reevaluate the rating at that time. Taylor come into my terminal here if you will when the control room is ready and gtv go. We are looking at the 2025 bonds falling below par was gathering some news. I would argue with only . 97 on a dollar, it is hardly distressed. A yield above 8 . Is the company being valued correctly . Kevin with the bonds themselves, one thing to consider is that they do place a limit on the secured debt the company can issue. To the extent that there is a refinancing, then potentially the bonds can be taken out above par. We did downgrade the bonds and lower their recovery rating which assumes there is not going to be a larger recovery value. Taylor what recovery value can you place on them . Kevin with all the discussion of valuation, that is why we dont use that so much as the input into our rating process. We do think about recovery valuation on an organization. Given a company that is not profitable presently, our methodology assigns a moderate doll you wish and upon recovery. Taylor what i liked about your smart note is you talk about the average revenue per physical member. That has declined 6 since your original rating. Is that a macro problem . Macro real estate problem or a wework problem . Kevin i think it is because i think wework is making a decision to move into more tertiary cities and expand its geographic locale. It is moving into areas outside of the new yorks and londons where rents are higher. That is part of the issue. On the flipside, cost could be lower in these regions as well. Taylor talk to me about the ipo. I know as an analyst, we were looking at raising 3 billion in ipo. It would secure 6 billion from banks, have the ipo been successful. Does that extra cash provide some relief or does it concern you about how reliant they are on that cash . Kevin the interesting angle abo