Sharing how americas biggest money manufacturer returned. First to our lead. This week, longawaited ipo. 3 million dollars. 4 billion in the ipo. Worth 25 billion for those familiar. Snapchat is the First Social Media Company to go public since three years ago. Is company ipo prospectus giving a first look. Ipoaught up with the reporter. And the managing director. Was looking at a revenue of 464 million last year and a net loss. You can see theyre just how much cash the company is burning through. I bring that up because we have seen the revenue numbers but we did not have it a sense for how much they are having to spend to get there. They will have to take into it account, can i balance the amount they are spending with the opportunities being pitched to me when i am trying to get to 25 billion evaluation. Looking at the Business Model in general, there are losses at the moment but the evaluation we do you see . What i started looking at the risk factors. There are a lot of familiar things. There is the creative landscape. It keeps getting copied by facebook and instagram, these have a lot more resources and breach. There are issues like the founder control. Who wants to bet on this company longterm. Maintaining the majority control. Into the user growth. The number one thing people are talking about. User growth. It is 158 billion dollars billion active users daily. It is just a little bit more the yen caroline we have a company exiting, investors how excited and willing have they been . This is a down time for tech ipos. There has not been a lot of new issuance out there. That does bode well for the snapchat listing, and they have not been able to make a big bet with a lot of shares offered that promises returns and big growth, which is what snap is pitching here. And as may kind of cycle through, looking at the first few pages, we do see a lot of looking back on the past development. We dont see a lot of roadmapping going forward. There is strategic vision, but again, to sarahs point, when you look at the information that investors will digest, you have the numbers, and you have to believe the story management is pitching throughout the roadshow when you are considering opening your pocketbook. Caroline you didnt go public. What are the trepidations as a you founder when looking to go to the market . Why is there not as much meat to the bone as the potential of snap . I think it is always a tradeoff between access to capital and how much distraction there is. And as a ceo and founder, you pick the best combination of that. Where we were at at a smaller scale, it was easy to have as much access as we needed on the private markets, and going public is a lot of work and kind of a distraction because you wind up having to be more open and match wall street time estimates. Snap is doing amazing and innovation, look at all of the products they have built augmented reality, wearables. They probably have more stuff that is in a longer timeframe then quarter to quarter. Snap said its performance will be lumpy. That they will have to make fits and starts of investment in new products, and their Revenue Growth may not be predictable. Caroline it is the addiction as well. When you are looking at 158 million daily active users, they are going back every hour, minute. Right. They are so engaged. The engagement is the behavior change. This is why it is a good time for snap to go public because they have done something to transform the way hundreds of liveons of people their lives. And it is morally great to give everybody about once a part of that in opportunity to do it. Caroline sticking with snapchat, how does the app make money . Dont know how an app that since disappearing pictures actually makes money . You are not alone. The first thing to note is that snapchat is not just selfies. Now they are pitching themselves to investors as a camera company. And unlike facebook and twitter, snap is not just about ads. Core to their concept is creating content. And that is what revenue generators are all about. Thats what lenses, geo filters are all about. First up, lenses, you are straight into the camera. Brands can pay for filters that you can overlay on photos and videos and send them to a friend or group. Geofilters overlay the where and when that the businesses and people can pay to include a app. Now, i can also send my snap to a feed which my friends can see. Which brings us to our third revenue generator. Our story. It is basically a group feed that goes through and grabs and snaps one video feed. We have seen this around in events like the womens march or Donald Trumps inauguration. Every day people are not the only ones uploading snapchat. Interdiscover enter discover starting in 2015, brands started you can grab these for 30 bucks 130 bucks at popup vending machines around major cities. You take a 10 second videos and it goes straight to your snapchat app. And lets mentioned for a second that advertisers for a while have been wary of using snapchat, because they are insistent on vertical video ads, when advertisers are used to the horizontal shape of tv. They are warming up to it. How does it work . Well the true test will come in , the years after snap goes public, because the revenue model is only a couple of years old. Caroline coming up, fitbit struggling to maintain momentum. The stock taking a hit this week. More details ahead. Plus, we will dive into apple earnings. Ceo tim cook said the Companys Services business will be the size of a fortune 100 businesses in 2017. Here he is with more. This is bloomberg. It was our best quarter ever for services. With almost 7. 2 billion in revenue. App store customers broke alltime records during the holiday, including 3 billion in purchases in december alone, making it the app stores single best month ever. Caroline fitbit had a rough week, plunging 16 . The company is eliminating 6 of its workforce because of falling demand. That is about 110 jobs. The fitness tracker is forecasting fullyear revenue grew 17 , down from a previous forecast of 26 . And another big mover for the week, apple shares popped after reporting firstquarter revenue of just under 78. 5 billion. That is up 3 . Also encouraging investors, a beat on iphone unit sales, 78 Million Units in the quarter due to Strong Demand for the iphone 7, and its Services Business saw 18 Revenue Growth. That includes itunes and apple pay. A principal analyst with Forest Research joins us with more. Iphone sales make up the majority of apples revenue at this time. While we look at global smart phone subscribers, that number will grow about 50 over the next five years, but apple makes a lot of money selling phones, unlike some of their competitors. If we look at the markets they are pursuing, middleclass and upperclass, that growth will not be as high. When you take all of that into account it is doubly impressive, the numbers that they have posted for 2016. Caroline what was coming across was they are doubling down on the services area, doubling the size of this unit, which is as big as a fortune 100 company, they say, doubling that over the next four years. How much do you think that services is the right bet for apple . It is absolutely the right bet, until they start selling other appliances like refrigerators and cars, there are only so many smart phones and apple tvs and smart watches you can sell. I think there are some areas like apple pay where there is low consumer adoption, a love only 11 in the u. S. , but a lot of services on the upside. Caroline when you look at the other products they sell, the cfo saying this is ipods, apple tv, a new product from last year, but do they need another product . The watch actually looks like it is selling relatively well, a record Fourth Quarter . I dont know if they need another product. If we look at the smart watches today, they are only a fraction of total wearables, but but they will be about 40 in five years, so there is a lot of upside as we move from 18 of u. S. Adults owning a wearable to 29 in four years. Caroline i think also what struck me was the lack of mention of china. Particularly from the cfo. Brazil is going well, turkey going well, but china seems to be a slow down area. Are they right to focus on china or switching attention to india . Getting back to the point, apple makes it a lot of money selling phones. They are profitable. They want to sell phones profitably. You have to look at the markets where there is the most upside. China is a tougher market, but they have done well. But not where their biggest growth will come from. Caroline would india be the right sort of country given the average earnings power in india is less than china. Do they have as much of an opportunity in that country, do you think . I think there is almost more of an opportunity in india. If we look at the growth of smartphone adoption in china, 50 over the next five years, but in india, that will almost double. If you look at each market, about one billion people, the middleclass and upperclass are still very large markets, even bigger than the United States. A lot of upside. Caroline staying with apple, a bloomberg scoop. The company is designing a new chip for mac laptops. The new chips would take on more functionality currently handled by intel processors. They are already used in the latest macbook pro. Facebook earnings out this week, and mobile ads continue to dominate the companys revenue. We will break down all the numbers next. Caroline now to facebook earnings, a 51 jump in sales to 8. 8 billion, topping projections. The big driver, advertisers continue to push to reach consumers on mobile phones. The social Networks User base is continuing to grow, 2 billion monthly active users reported. 1. 7 5 billion users using their smartphones. This move solidifies facebooks behindn in the market google. I am sure there are some people who would be upset that the numbers arent even better than they are, but come on, i think that analysts were expecting some incredible results, and pretty much everything beat it. We have 25 of the worlds population using the platform on a monthly basis. I cannot see any clouds there. Caroline amazing. On a daily basis three times the u. S. Population. That is 1. 2 billion people addicted to this particular app. David, dig into the growth of drivers. When i was speaking to the cfo, he was trying to point out that its business is mobile, now 5 65 million on instagram. That is big growth. David they are doing superbly on mobile. When i look at Growth Drivers and think about where they are, the real prospects going forward, it is the truly Global Nature of their business. If you look at the growth in asia and the rest of the world, africa, latin america, they are doing surprisingly well, and this is where ive thought their longterm potential was, because they make 10 times more per user in the United States than they do in asia, and yet, the opportunity down the road to build those numbers more to parity is real, so they are getting faster user growth in those regions and making more money per user. So, i would start there. Their asian revenue was up 59 . That is really impressive. And the rest of the world, 52 , so even though the numbers are small compared to the u. S. And europe, this is where the opportunity is longterm. Caroline the potential needs feeding. We are hearing the cfo saying they are not backing away from the view that they do need to spend aggressively. It seemed to be the head count, 34 ramping up in the Fourth Quarter, and they will accelerate that more in 2017. Are they spending wisely . I think so. I mean, to achieve innovation, whether youre talking about at products or mobile expansion, you have to have the resources to do it. If you have the cash, that is where to spend it. The idea of added product add Product Innovation goes hand in hand with feature set innovation goes, and that will change as they Global Markets as well. The expectations in asia are different than the u. S. , the u. K. , and europe, so you have to invest smartly and get the best engineers to do it. Yes i do think it is smart. Caroline david, what about the move to video . Video is what Sheryl Sandberg and Mark Zuckerberg have been bringing up. Still mobile, still video, and there is a wall street journal piece out saying they may be developing a tv app. Is video still hot . David i think that is where they can compensate for this problem where they have saturated our news feeds, particularly on mobile, so either they have to charge more per ad or grow their user base, or find other kinds of ads that make more money, and video ads can do that. I thought the journal piece suggesting that they could have a settop box, a tv app, but my guess is down the road they would like to have some kind of app that allows you to watch tv and still be on facebook on tv. They have tried various versions of this in the past, but it has not worked. If they can make it work and show us ads while were watching tv, they can continue raking in more dough. Caroline Mark Zuckerberg saying he will seek original content deals and he is still putting video first. Melissa, i will find a cloud in the silver lining. Because earlier today, it looks like facebook did lose out in court, oculus intentionally built on stolen technology. 500 million, the damages they will have to pay. That is a quarter of the price tag of what they bought it for in 2014. Is this of particular concern . Melissa oh, gosh, i dont know. Of course, it is a concern. It is a court ruling that will hit the pocket book. That is always a concern. I do not want to minimize that. And of course, oculus being an engine for innovation, anything that questions its source code is going to be of concern, but 500 million is something that i am sure will continue to be litigated for a while, versus the growth for the core platform. I am sure it is a concern. Is it a dealbreaker . I cant see it as being that. Caroline david, what about fake news and how much zuckerberg has been trying to respond to this, potentially a little awkwardly to begin with, but now with some fervor and perhaps trying to orchestrate how he interacts with his own user base. David it is a concern to the intelligentsia. It is not a concern to the average facebook user. Mostly they want to be entertained and diverted, and they are. I do think facebook is taking the issue seriously. I think you will see them taking more and more measures to try to avoid seeming to compound the partisanship that is so big a problem in so many societies around the world. The problem is they are so global and operating in so many languages that this problem is global, even the russian interference in the media, so it is not going to be that easy for facebook to get a grip on this right away. I think on oculus, i think oculus is looking like something they overpaid for. Unlike instagram on which they got a spectacular deal. Palmer lucky who may take some of the blame for this lawsuit loss, also some embarrassing behavior around politics. It may be that they are regretting their association with him. On the other hand, they have brought hugo barra in to take over oculus. I think he will be a great leader for that part of the company. Caroline coming up, tech mobilizes against the travel ban. We will cut to the chaos and confusion and analyze the opposition out of Silicon Valley. A reminder, all episodes are now Live Streaming on twitter. Check us out at bloombergtechtv weekdays at 5 00 p. M. In new weekdays at 5 00 p. M. In new york, 2 00 p. M. In san francisco. This is bloomberg. Caroline welcome back to the best of bloomberg technology. I am caroline hyde. Silicon valley finds its voice as President Trumps immigration ban fuels outrage across the tech sector. Trumps next executive order restricted immigration. And trumps next order on immigration may even be a greater blow, targeting work releases that google and apple used to recruit talent overseas. On monday, sean spicer address ed the reform effort. You have already seen a lot of action on immigration. Whether it is that or spousal visas, there is a need overall to look at all of these programs, and you will see executive action and comprehensive measures to address immigration as a whole and the visa program. Caroline we caught up with alex wayne in washington for more. This h1b order is a much bigger threat to Silicon Valley than the order that trump issued on friday, although i think this h1b visa order could be more popular among average americans than the immigration order on friday. There has been, especially in congress, republicans and democrats, there has been concern that Tech Companies have abused the h1b process to recruit overseas engineers at a the expense of american ones, and essentially used it to suppress salaries for tech workers in the u. S. Caroline we have just seen pictures of the protest that occurred over the weekend. There has been fighting talk coming back from President Trump about the reasoning behind these i particular demonstrations, perhaps the chaos we saw in the airports. For sure, he says this order was entirely aimed at making the u. S. Safer. He has compared it to a review a of iraqi refugee, the flow of iraqi refugees from that country in 2011 by president obama, but there are key differences. In 2011, the Obama Administration said they had specific, credible evidence that iraqi nationals might be planning terrorist attacks in the u. S. Wo iraqi refugees were arrested in kentucky shortly before obama issued that order. In this case the administration has not offered any evidence of a credible threat to the United States. They have simply imposed the order and claimed it has to be in place for security reasons. Caroline fascinating and analysis, alex wayne, thank you. Now, u. S. Tech leaders came together in unified anger over the weekend in response to President Trumps order. Bloomberg has this recap of who said what so far. Facebook ceo Mark Zuckerberg was one of the first to speak out. In a post he wrot