Will the tesla turnaround continue . And price targets for apple raised to 300 per share. Rbc and bank of america. We will discuss the optimism of iphone sales in the holiday quarter. But first, to our top stories. A u. S. Air strike that killed one of irans top military officials. In the wake of the attack, the director of the u. S. Cybersecurity and infrastructure security agency, heeded warning urging the public to brush up on iranian tactics in order to Pay Attention to critical systems. To discuss, we are joined from boulder colorado by tom telemann and in studio bloomberg reporter. Want to start with you. Thank you for joining us. I often read that iran will respond to our sanctions and sometimes it has been the in and increasingly, it looks like it is cybersecurity. Do you see increasing Cyber Security threats as you have been covering them . I think there has been persistent threats. I think most organizations are constantly being bombarded by iranian actors, russian actors, chinese actors, anyone who has the capability. The question now after the attack in what way does that change . In what way might new tactics me to those attacks exacerbate . What new tactics might be in play and how exactly the Major Companies and organizations that manage the control system respond or bolster their defenses . Taylor tom, do you agree that iran will be responding to cyber warfare . Very much so. It will be met by a cyber strike. They will take their gloves off as they have the technical acumen and the weaponry to leverage attacks against the energy, technology and cyber transportation sector. Taylor you said they were looking at any new tactic. What in the space you cover could some of those new tactics be . I think there is a major question about what they have had up their sleeve for some time. Seve seen them drop ddo attacks, send malware or ransomware, but if they have be beatg that cant back immediately, there is no quick solution for. This might be one of those cases where they actually use it. The problem with anticipating that attack is you dont know exactly what you are in for. The best solution is knowing what your network looks like and in those Industrial Control Systems, what we are hearing is a lot of companies that have machines talking to machines dont always know exactly what that network looks like. Tom, you mentioned energy, transportation, some financial institutions. Walk me through each of those arguments, if you will, about how those sectors present the most vulnerability. Lets back it up a bit and pay a little respect to the coding in iran. They have constructed numerous destructive malware throughout the year. Oil took down the largest and gas company in saudi arabia through destructive attacks. Destroye the ability to systems and we should be very concerned about that kind of attack against the Energy Sector and Financial Sector to read sector. Even though the Financial Sector is much more secure than the Energy Sector as a whole. It has interconnectedness and dependency is so vast that they can hop through the trusted ecosystems whether it is the isps, service providers, security vendors themselves. Destructive attacks, according to research, are up 11 last year and i can only imagine that they will explode in the coming months. Taylor as you look, how much more vulnerable are the energy, are the transportation sectors relative to the Financial Sector where mainly in the past, that has been the most targeted and that is an area where they have really tried to get a good defense up. How much more vulnerable does it make the other sectors . Kartikuy i dont know that it makes the many more vulnerable than they already were, but the concern is there is very little visibility in their networks to start with. If for instance, an Iranian Group was already in that network, now might be the time ence turn their pres into a kinetic attack, where they take Cyber Weapons and use them to derail a hydro plant through a that is an excellent that actually causeosts live. Taylor walk me through that. Tom thats an excellent point. That is why i highlighted insurgency. They already have footprints on system that they can now relies an attack against that infrastructure. We should be very concerned with Lateral Movement within systems. The lack of visibility is quite profound because Many Organizations have not asked the tough questions. Ceos should be convening meetings as we speak and ask do we have visibility across all our devices . Are our systems integrated . And most important, do we have a Cyber Threat Team that is conducting exercises to root out that type of insurgency . Taylor tom, you also mentioned that coding in iran had become advanced, but we too have some very strong coders in the u. S. Are we able to, are we as prepared as we should be to heed off irans coders . Tom i think we are, but the challenges are the constitution, so much that the nsa cannot actively protect american businesses unless they are invited in to do so. Number two is the Iranian Cyber Army is larger than what you would think of a division of a military, because they are a collective of cyber hackers who pay omars to the regime for activities around the world. All they have to do is be right once. All they have to do is deploy one destructive payload to destroy the integrity of that data which could cause a energy systemwide failure, cause Transportation Systems to fail resulting in physical deaths, and more importantly, they could leverage attacks against Emergency Management services during times of crisis. Taylor what are you hearing as the potential biggest threat . As to whether we are prepared or not . What would you advise to make sure they are prepared . Kartikuy we started looking at banks and the Financial Sector to understand where things are things stand and most businesses that got back to us said we are constantly paying attention. Nothing really changes because we have the infrastructure, we have the groups that communicate with each other to prepare for this. We are looking at this everyday. I think it is in these Industrial Control Systems in power plants, in the transmission of electricity systems where the greatest vulnerability lies. I think what has to happen first is iran needs to understand how they got beat this week, where those vulnerabilities came from before they start planning a new attack. Taylor tom, final thoughts as we shift to conducting cyber warfare instead of military physical warfare, does the u. S. Star shifting to doing that as well to take on iran . Do we do Cyber Attacks to take on iran . Tom i cant speak to the doctrine of the military or strategies being implemented, but i will tell you there are certain red lines that if there are cyberattacks that result in physical harm or significant attacks against the health care or Energy Sector. Cyber command will respond. That being said, what type of proportional response will be leverage or prestrike we will leverage is unbeknownst to me. The number one thing that every ceo who is watching this needs to do, ask them have we deployed our Cyber Threat Hunting Team . Vmware Tom Kellerman of and kartikuy, thank you. Wall street is increasingly pessimistic that tmobile will complete its 20th 26. 5 billion takeover of sprint. The spread between the offer price and trading price is the highest since the deal was announced in 2018. The fcc and Justice Department has okayed the transaction, but 13 states have come out against gone to court over it, saying it will lead to higher prices and weaker service. Tesla is on a roll, topping wall street records in the Fourth Quarter. Can ceo elon musk keep up the momentum . And if you like bloomberg news, check us out on the radio. You can listen on the bloomberg bloomberg. Com, and in the u. S. On sirius xm. This is bloomberg. Taylor the tesla turnaround continues. The electric carmaker delivered a record 112,000 cars in the Fourth Quarter. Buyers rushed to take advantage of subsidies being dialed back or eliminated in three key markets. The biggest seller was the tesla model three. We are joined by dan ives and bloombergs david welsh in detroit. I have to start with you, 112 deliveries in the Fourth Quarter, 367,000 deliveries in 2019. Are you surprised elon musk did it again . Ultimately, if you look at what musk has done and tesla over the past six months, he proved many of the skeptics including ourselves wrong in terms of demand, especially in europe. I think if they are able to continue that, especially with china, we talked about 600 and that is where it becomes reachable. Taylor the one caveat is you had a lot of buyers rushed to rush to the market to take it vantage of subsidies that were lowered or expired at the end of the year. Without those, is there enough demand here . Thats a big question in the u. S. Because as of january 1, there are no longer incentives available to buy a tesla and we have seen model three demand in the u. S. Down. Thats the argument here. Did sales go down because people dont want them or as elon musk told us, he is diverting production into europe and china . My guess is it is the latter. There is any of demand in the u. S. For the model three. The biggest question is will you sell all the cars . As you get past the early adopters who wanted the bigger cars with the bigger batteries and you start selling less expensive model threes, can they make money doing that . Can they bring enough cost out of the system . Can they lower the cost of the batteries to consistently make good profits on the cars and high enough margins to justify this huge valuation. Taylor reacts a little to that. As we look at the Fourth Quarter numbers of 112,000, about 93000 and of those were the model three. Are you comfortable with the composition mix, given 93 of 112,000 our model three and those are low on profits . They are really betting the company on model three. Coming later this year and eventually cyber truck, but no doubt i do like the mix, especially what you are seeing in europe. China is 75 to 100 per share and that is why giga three is the linchpin of teslas china strategy. Taylor i want to show you a chart that i am showing inside my terminal and i showed us every time we talk about tesla because this continues to be the big surprise, which was the banner earningspershare in the last quarter that we saw. Can they continue to cut down to cut their way down to a profit . Where can they continue to cut . It is a big issue, because even though they did make a nice profit, surprising to the upside, there were a lot of onetimers. That is why there is still a bull case on this company for some analysts and investors who are not convinced the profitability will be there. Remember, they just cant cant just make money. You have to have the margins to and cash flow consistently to do that. I think they will get the growth, particularly in china. They have got to really lower their costs, operationally, not just by trimming operations. , they haveles staff to bring cost out of the vehicle and get the scale to make real money. Lor dan, talk to more talk more about how they could cut costs operationally to boost the bottom line. I was speaking to an analyst earlier this week and he was saying on the same Assembly Line , tesla is working on producing model threes and some of the other higher profit models on the same line. But they hadnt really been able to do that before. Have you noticed that in your analysis as another way to cut costs . Dan they are doing Factory Stores and what you have seen, there are two areas. One could be in terms of taking over some of those lines and giga, andiency in just operating efficiencies, especially as they start to scale. You will start to see profits increase, especially model three with software and self driving and some of these other pieces. That is all margin. That all flows to the bottom line. I think the combo is what elon musk is betting on. To continue to see profitability. Taylor while i have you, i wanted to show another chart that im looking at in my terminal and it is a runaway stock price that we have seen. Now 8443. The median price is that 303. At 443. The median price is that 303. Are you comfortable given the size and scope . Dan it is a parabolic runup. You could say half of that is short covering, but i think what is starting to happen here is that the vision, the ev vision in terms of europe and especially china, it is now starting to happen and no doubt, dark days the past nine months and we criticize them as well as others, but now this thing starts to really take off and you can get 500k units and you look at the stock and it could be 580 or 600 and i think that is what the bulls are starting to see and many of the bears will have to going to hibernation mode. Taylor we will have to get you back to keep you posted. Thank you for joining us and dan will be sticking around with us because up next, we will talk about another stock and that is apple. They start to the year and why analysts are so optimistic about this holiday season. Bloomberg technology is Live Streaming on twitter. Check us out on technology. Be sure to follow us on quick take on twitter. This is bloomberg. Taylor apples price target was raised by at least two analysts on friday. Both citing optimism over iphone sales in the quarter. Rbc Capital Markets and bank of america boosted their targets to 330 per share. For more on apple, i will get back to dan ives of wedbush. Look at the chart i am showing in my terminal quickly. You see apple at 300 per share, today, pulling back at 297. Share, overvalued, overextended, or breaking out to a new trading range . Dan breaking out to a new trading range. It has been a twopart thesis for us over the past few years. In the first part, you saw stocks had a massive move and it is a 5g super cycle we are going through. You look at where penetration is, i think a third of those the next few years, that remains for play and it is continuing to happen on apple and many are starting to come around. Taylor if you look at another chart inside of my terminal, i know my producers kill me every time i do this, your price target now, you are leading the way at 350. Weve got two of those price target raises to 330, but after an 86 runup in 2019, how much food of the good news is already baked into the share price in your opinion . I think only half of it. I can tell you, we talked to Institutional Investors on a daily basis, many not believing in the 5g super cycle and i the upgrade cycle in terms of what is happening and think for i a company that is 12 to 16 times now breaking out in terms of where it is trading. Theres still a lot of haters out there. I think that is what i like to see. You do not like to see everyone loving this, and they will continue over the coming quarters, not just iphones rock of gibraltar, but what they are doing on services. You get to 350 or north of that as we go into next year. Taylor what if 5g does not pan out . What is your estimate for that left side, downside, tail risk event . It is, what happens if 5g is a dud . That point, if you look at what is baked into numbers, it was 200 Million Units that lie in the sand. I think what is being baked in here is not overly bullish numbers in terms of the stream and that is what i love about the setup. And if it is a dud and you see some disappointment, you see some sort of speed bumps, which i see as creating opportunities in the stock, it is a twopart 5g cycle, so i dont view this as a 69month cycle, i view it as 12 to 18 months. Taylor you said a onetwo punch is not only 5g, but services. So much of the frustrations over this company is the cyclicality. Because they get over half of their revenue still from the iphone. What percent of revenue do you want to see from services to reduce that cyclicality and become a more stable stock . For now and the foreseeable future, iphone will continue to be the core part of apple. We know it will change, but i would say on the services piece, north of 50 billion. Next year, north of 60 billion. Aboutluation, what i love it, services valuation, 600 billion. You are starting to see more occurring revenue and i think rerated byis being the street and that is what i love about the system playing out. Taylor we are waiting to get a rare apple appearance over at ces. Anything you are looking out for for the company at ces . Dan we will be there at person and that is obviously more about privacy. I think you saw last year at ces, that is apples line in the sand, being like we are here and these others are over here. That is really them trying to continue to delineate themselves in terms of where they view themselves from a data privacy perspective. A totally different Business Model in terms of facebook and google, but this is where cupertino try to draw the line in the sand where they stand on data privacy, especially with the beltway and the 202 area code knocking this year. Taylor dan ives of wedbush, thank you as always for joining us. Coming up, tensions mount. We continue to look at the standoff between the u. S. And iran following that deadly american attack. All of that next. This is bloomberg. Taylor this is bloomberg technology. Im taylor riggs in her emily in for emily chang. Our top story, escalating tensions between the u. S. And iran. Speaking in florida, the president defended u. S. Airstrikes that killed a top iranian leader. If americans anywhere are threatened, we have all of those targets already fully identified, and i am ready and prepared to take whatever action is necessary. And that in particular refers to iran. Taylor to discuss, we are joined from washington by jamil jaffer from ironnet, Security Firm started by former director of the nsa, retired general