We have more on his appearance, plus reaction. And the huawei perspective. We get thoughts from the chinese telecoms Carrier Business Group on 5g, securities concerns and more. But first, our top story. Ibm fell as much as 6. 5 , the most since october 2015. This comes after the fifth consecutive quarter for posting slower sales. Joined by my am guest. Lets start with the top line decrying. Is there not enough growth from red hat to offset the cost in that core business . Yes. Frankly, this is a question of one word, which is expectations. There are a lot of expectations for red hat that paid a lot for the Company Going forward. If you look at ibms core business, they are managing it for profitability as best they can. But the Global Services segment has historically been a profit driver and a cash cow. But you have to remember as people build the hyper cloud they moveture, as more of the cloud, there needs to be in the Core Technology space that change. They will need to drive efficiency in that area, they need to automate where they can, Deploy Technology that allows them to have less costs in that area so that they can stabilize that part of business. Is an stabilize overstatement. It is that the business was not able to grow in revenue terms. Taylor you mentioned how expensive red hat was. At on whatre and point do you need to see it filtered through to the bottom line . I think if you look closely, we are starting to see it now. What that means is you have a red hat product that is put through this vast ibm machine, and if you look at the move to hybrid clouds, in one of our recent surveys, we saw that many Large Companies have a Cloud Strategy. They have a best fit Cloud Strategy. They have a Cloud Strategy where there will be some in the private cloud and some in the public cloud. What ibm needs to be able to do is enable these hybrid cloud customers, be out there and accelerate growth for that business. We are starting to see that. I think you will see that going into the first half of next year. Taylor i want you to take a look at the chart here for our customers, which you show the story. The gap between the two has really expanded. Software in white, hardware in yellow. Does Software Look overvalued given this runoff . We dont do recommendations here. What i will tell you is the expectations are really high for software. We have seen software continue to accelerate. We believe Software Revenue growth in the overall industry for the next couple of years will be between 8 and 10 annual growth, and that is really steady and fairly predictable. What is changing about software that i think people are starting to understand is it is a subscription business. It is becoming incredibly predictable. Hardware, while some companies are trying to go to everything is a service and sell hardware as a service, we are at the nascent innings for that. That means predictable revenue and you can see out as a Management Team very far in terms of what your revenue is going to be in terms of those subscriptions. Taylor does that mean you are focused on the top line or is it filtering through to an increased focus on the bottom line . Depending on where the company is in its maturity, you are always focused on the bottom line. But in the early stages, you are less so focused. What you are focused on is bookings. Not even revenue, being able to sign new contracts that you know will be a subscription revenue they will be earning over the future year period. That is what we want to focus on. Taylor we have seen good public Success Stories in the ipo market. Now they are at 26 times. Why are . Why do you think those are good stories despite the high valuation . What they do is go back to the 2000 timeframe and say it is a bubble, it is crazy. I would argue what is different is these companies are solving really, really hard problems, whether those problems are around collaboration, around application management in the cloud, whether those those products are incident management. What you find is when technology moved into the cloud, everybody thought, there would be no need for these Software Products any longer because we will be operating in the cloud. They will capture all that revenue. A lot of the same problems exist in the cloud. I have to be able to manage my data and migrate my data. I have to be able to figure out, do i have the right application for the right workload . How do i respond where the . When there is an incident . When i am in the cloud, my entire business will go down if the Cloud Application goes down. These guys are solving realworld problems. What i believe is that over time, you will see these companys create longterm value. You believe they are unfounded . I believe these companies are solving real problems and will create meaningful value going forward. Tactically, i think these companies are creating value longterm. Taylor i want to end broadly looking at the u. S. China trade more. We thought there was a little bit of a resolution, but we have not gotten a firm line. How does that play out in the market . In the tech market, the way it plays out is we saw a relatively small impact in 2018. Tariffsto 2019, we saw that have been crafty in terms of how they have been constructed. That as the things that are on the tariff list gets pushed out, we are seeing relatively small impact. However, if we end up enacting that list, you will see smartphones be effected be affected. That could cost us from half a point to 1. 5 points going into the market. 4 toould take us down to 3 of overall growth. That is the scenario we are working with. However, i think the likely scenario is the tariff deadline gets pushed out even further. Taylor thank you for joining me. Paypal is trying to boost income from the popular venmo persontoperson payment app. It will come out with a venmo credit card in the second half of the year. Financial was chosen as a partner. Coming up, one of the companies that helped power its sales also with data dog, zoom, and more. If you like bloomberg news, check us out on the radio. You can listen on the bloomberg app, Bloomberg Radio and sirius xm. This is bloomberg. Taylor juul is suspending the sale of most of its ecigarette flavors in the u. S. Fruit and dessert flavors will no longer be available. Juul took action after a review, but the devices had helped a generation of teens and young adults. Crowd strike, zoom, and data dog. Besides being three companies that went public in 2019, they shared something in common. They all use ai powered software to drive Revenue Operations. Last week, clari announced 60 million in series d funding, bringing the total to over 100 million. For more, we are bringing in the partner atr guest, a bain capital. Let me start with you. Congratulations on the funding. Are you using the proceeds for . Across all areas of the business. First of all, we are super excited for the fund raise. In terms of what we are using the funds for, we will be investing in not Just Marketing and sales to drive topline andyh, but also in our because our customer in r d because our customers are looking for expanded value. Taylor henrique, with so much focus on driving topline Revenue Growth, there is focus on making sure you can at least see that path to profitability with clari and the other companies. How important is it . Seeingink today, you are Public Market investors looking for profitability. This is a company that has such a big Market Opportunity ahead because every Business Needs to generate revenue. In the shortterm, our focus is how do we reach more customers excessively . Companies . We help taylor we talk a lot about companies that come on this program. They are trying to use ai. They are coming out with this latest technology. It is a really caught it is a really crowded really crowded space. How do you stand out . Based on the momentum and the based on the momentum and the value we deliver. When i think about the value we have delivered to Companies Like zoom, qual tricks, what is interesting is these ceos and boards are looking at the application of ai across the revenue process. And how can we use that to help them accelerate their revenue and boost the accuracy and protect ability of their forecast . Because they view revenue not just as an outcome, but an actual business process they can streamline and automate. That is leading to Remarkable Growth and shareholder value. It happens that our platform from clari is underpinning all of this. Taylor we talked about what a volatile environment it has been as of late. What Business Model is working for you now . We are seeing in the Marketplace Companies really need to move to a recurring revenue model. That is what matters because it has a high level of predictability and it gives you the ability to have lots of visibility in the future and investors are always looking at what generates cash flow. What andy has done from day one, and we have been working with andy for six years since the beginning, and he has always had the vision on what is the right Business Model for the country for the company . Taylor while you are focused on running the business and the daytoday operations of that, when you look out, what is the appropriate not exit strategy, but i am thinking of an ipo, your end of the line goal . We have learned that not all ipos are successful right now. We are really focused on growing the value within the customer base. I have customers that spent 100,000 with me two years ago and are now spending 1 million with me this year. A ceo in boston of a company, a medical device manufacturer. He was mentioning to me we have reduced their slip rates on deals, increased their conversion rates, we are accelerating their revenue. We are really focused on spending around r d, and making sure we can help our customers optimize every single revenue moment in what they call the Revenue Operations process. Taylor what is your ideal exit strategy . We are always investing in companies to build a that matter. What andy has done with his team is they are solving a problem that matters to business. We also talked a lot of the differences between the direct list and an ipo. We know what the difference is, whether you need to raise money or not. Do you expect more direct listings continue to take more market share within that ipo market . When you look at ipos, and i sit on the board of four public companies, you want the market to decide, what is the best pricing for the ipo . My expectation is over the next couple of years, you will start seeing more direct listings. Not for everybody. High quality names with great Brand Awareness makes a lot of sense. For other companies that may be need to raise their profile, that might not be as simple a process. Taylor finally in the last six months, what has been the extra focus, the extra attention, not only on profitability, but valuation, corporate governance, all of those things that are in so much attention . I think in our market, we look at the focus has been around certain regular cake regulations. All government regulations that are being applied so our customers can have confidence that they can deploy ai and not be worried about privacy or security. What that has done is it has accelerated the adoption of our Revenue Operations platform in ai across a myriad of industries. Taylor wonderful. Andy byrne and enrique salem. Chinese tech giant huawei has been a target of the Trump Administration criticism, most recently as the company pushes for 5g technology in the u. S. In an interview with huaweis chief executive officer, that is next. Check us out at sign technology. Check us out at technology. This is bloomberg. Taylor lets get a check on todays top tech calls. Apple received an upgrade from barclays. The analysts cited slightly better than demand for the. Phone 11 following that upgrade, apple supplier cirrus logic was upgraded from underweight at barclays. They are at full benefit from the release of the 5g version of the iphone next year. The price target was raised to 55 dollars, after what had been a low of 40 a share. Surged afterworks reporting revenues that beat expectations. Analysts who covered the operator of content delivery says that results suggest a growth is underway. Those were todays top tech calls. Now, the Trump Administration has made no secret of its giantity to chinese tech huawei moving into 5g, placing restrictions on sales and equipment into the u. S. And on sales of components to it by u. S. Companies. For the perspective from huawei s side, bloombergs david westin sat down with the chief Technology Officer of the huawei Carrier Business Group. We work in 172 countries globally. 100 70 of those administrations we talk to. Of these administrations we talk to. It would be lovely to have a discussion with the Current Administration here in the u. S. And understand the rules. How would you like to explain our company and do our business together . If you set the rules and the standards, we follow the law. Huaweis technologies in the u. S. Is a legal entity. It will not do anything against the law. The ceo and our founders said that. We comply with the law in every country. There is no way we will comply with what cannot be done in china. That is outside the law, and that is not what huawei does. And we will never do those things. If we can have constructive discussion with the u. S. To explain why we do things, how we do things, how the company is structured. There is nothing secret about huawei. We traveled every country in the world to meet customers. We dont do anything that is secret or different. What we do differently is we invest heavily in r d because we understood 30 years ago that if you dont have your own products, you are just a reseller. Where is your core value . Why do we spend so much on r d . We have learned for u. S. Companies to take a snapshot of our product and put it into u. S. Companies and let the u. S. Grow and develop. We have done it before, in 2003. It is not something new or mysterious. Understandsuawei how to play. Reporter let me just raise this possibility that the problem that the administration has or some people might have is not with huawei. It is not saying huawei is a bad company that does bad things, and certainly not with the success of huawei if anything, it might be the reverse. If you are successful, you might become dominant. The concern is with beijing. You cannot control what they do and i think that is the concern. Doesnt that make your position somewhat more difficult . I dont agree. I have been in the company 11 years and i dont agree. I would not agree with that position at all. Our job, our focus, the board, every time i meet any board board is quite clear. He has stated many times you cannot have too much market share. If you take too much market share, what will happen with you . There is no competition, especially with went with western companies. There is no innovation. Mucheason 5g holds so promise is the opportunities it can do, especially to industry. That is where it can transform things. Could you imagine if everything was connected, all the advances we could make by throwing it into the cloud . Fixould think we could things like cancer, different types of diseases. He has always said you cannot take too much market share and you must provide a healthy ecosystem. Last year, we spent more than 11 billion u. S. With american suppliers of components and software and other parts. We would continue to do that if the u. S. Would allow us to be part of a Global Supply chain. That is what we are. Reporter can i ask you just one last quick question, which is putting it the other way, to what extent is the u. S. At risk of falling behind on 5g . Is there a competitive danger . Do you know what the u. S. Could do . We already build a lot of 4g networks in the rural u. S. Maybe we dont talk enough about this. I am not sure why that is. Ruralme of the regions in u. S. I have been to, we can perver 450 megabytes second. Those things are available. The u. S. Moving down the line was necessary because of the constraints they have in the free band spectrum. But the good thing is Companies Like at t and verizon and tmobile, by trying this 5g technology, you start to learn about where the Business Opportunities are. We could see by 2025, somewhere around almost 300 billion dollars in gdp improvement globally. At, the u. S. Is good pulling the data up and looking at what google and microsoft in amazon do and applying ai. Why not let huawei come in and provide the best technology and Work Together with the Trump Administration . And improve society . Taylor that was david westin. He was with paul scanlon, chief Technology Officer of huawei. Coming up, despite the competition up for netflix, wall street is pretty thrilled with its latest earnings report. We talk about the companys subscription growth next. This is bloomberg. From the couldnt be prouders to the wait did we just winners. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. Now you can share it between lines. 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