Teslas luxury cars. And the square continues its banner year with a betterthanexpected quarter. First our lead, apples shares surged to record highs. The figures called and analysts concerns that the new iphone may be delayed. In a phone call with ceo tim cook, he told me that more users are waiting to upgrade to reports about the new iphone. He said it feels like the rumors are much larger and more frequent this year than in the past. We do believe that has created a pause. It is likely larger than previously. We broke down the guidance and earnings with the julie ask. And our bloomberg gadfly cheryl. There is a lot to look forward to hear. On the one hand, the market is going to grow about 50 , so over the next five years, so there is a lot of upside in that market. There is a lot more to come with the smartphone needing a bigger ecosystem in peoples homes, a lot of upside to come with things like virtual or voice assistants, and then there is all of the services they sell, whether it is apple pay or other services. Emily he told me that over the last 12 months, services have become the size of a fortune 500 company. It is a milestone that we had wanted to meet, but not this soon. We cannot be happier without that business is going. Yes, i think they have to be happy about that. It is an important revenue stream for apple as it will be for other competitors going forward. As these other hardware markets begin to mature. Emily what is your take on the broader Apple Ecosystem . We focus a lot on the iphone, and we know we are expecting a new iphone in the fall. But Everything Else is also moving the boat, essentially. Yes, i agree with that. It was impressive that in the Third Quarter when you saw iphone unit sales be basically flat, that Services Like store downloads and apple music subscriptions, that rose very strongly. So the big question for me, was can that service revenue, continue to grow quickly, even as iphone sales dont . So how independent is Services Revenue from the iphone . Emily on that note, everyone was focused on this revenue guidance, because it may give us some indication, julie, of when the iphone will start being accounted for in the revenue. What do you make of it . On the one hand, the services could make up for a greater portion of the revenue and on the other hand the iphone could come sooner than we think . Services will move the needle that much in the near term. Apple is still a hardware company. 60 to 70 of their revenue still comes from the smartphone. That is going to be their biggest category in the foreseeable future. Emily lets talk a little better about china. We saw a 10 decline yearoveryear, but that decline is slowing. So, last quarter was a 14 decline. When i spoke with tim cook about china, he said the results were encouraging. We thought we would improve some, but we improved a bit more. Ipad results were strong, and the Services Industry was extremely strong. The iphone on a yearoveryear basis was essentially flat, so of the to the projection market. So we feel really good. Cheryl, what do you make of this . No matter what tim cook says, the most important question for apple is, how will the next versions of the iphone cell in china . And we somewhat i see, i dont see a lot of encouraging signs. This was the sixth quarter in a row that apple had declining revenue in china. The declining market in china has changed, markedly since late 2014 when apple got a big lift from iphone 6 sales in china. I dont know what the iphone demand is in china for the next version of the iphone. To me, that is the biggest question hanging over the company. Emily we do of course look at the rankings all the time and there are local brands that are now surpassing apple in china. One of the things to look at is that apple still gets 85 to 95 of the profits in iphone as hardware sales. Apple is not trying to win the race. They are not trying to be, and they wont be the, the number one smartphone maker in the world. The thing that will guide how well apple doesnt china is how will they do with services and the chinese language, and providing the services that the chinese ovulation wants. Emily Something Else that is of course, interesting, is that with the new iphone we are expecting in the fall, whether it is called the iphone eight or , we could see a four digit price tag on the highest priced iphone. The one we are expecting will have an oled screen. Even as competition in china is rising, the prices going up. Are consumers going to want to pay for it . I dont think anyone knows what the demand is going to be for an iphone that is in the 1000 to 1400 range. Some analysts who follow the market in china, they say price is sort of an interesting signal. If it is expensive, then it is considered a luxury good and people might want it more. But, i do not think anyone knows what the demand is going to be like for a 1000 and up iphone. Emily i want to point out a couple of other things. We saw ipad sales increase. Julie, and the state of the ipad has been a question. Also, tim cook pointed out to me the enthusiasm for air pods. This is a lower revenue product. They are increasing their Production Capacity for it and are very optimistic. Yeah, there has been a six to eight week wait for air pods since they first launched. They should increase capacity, right . Its a good product. The ipad market, that is a little bit harder. From the business side, is it going to compete with Something Like the surface or microsoft tablets . It doesnt quite have that functionality. But is it more than a device for entertainment, and that lean back experience in the home . So i think it will be a a bit of weight and see to see what it makes a difference to the sales in the longterm. Emily last word. Even if air pods are doing well, the ipad is doing better. Is the iphone all that matters . Apple is the iphone company for the foreseeable future, yes. That was forrester principal analyst julie, and number gadflys cheryl. In other earnings, sonys turnaround seems to be on the right track. The Company Reported quarterly profits that topped analysts estimates. Sony sell Strong Demand for smartphone. They showed a healthy music business and brisk sales for their consoles and games. They beat the analyst average projections. We will have more earnings later in the show, including teslas record cash burn. How elon musk continues to spend big to bring more electric cars to the road. Plus, our exclusive interview with jack dorsey on squares booming lending business. And sky high tech evaluations and Silicon Valleys relationship with the white house. This is bloomberg. Emily squares lending business is booming. I sat down with chairman and Ceo Jack Dorsey to ask him about what is driving growth. He talked about squares burgeoning market of customers. New end under banked. We are notzed that really competing with Financial Institutions and banks and traditional lenders. Our average loan size is 6,000. We are competing with people going to their friends and family and asking for a loan. And that is a massive market. Emily i also asked dorsey what he thinks of the skyhigh valuations of other Tech Companies. Take a listen. Jack i am not an economist, so i dont know how to answer that question. We live in a market, and markets decide to evaluate it at this particular thing, so we will always have ebb and flows. That is not something we can control. What we control is whether people want to use something we are building. Our job is to make sure that the answer is yes, and they want to use it so much that they cannot help but talk about it with people who ask for recommendations about what tools they use. Trying to get out of this nasty contract, where should i go . That is the thing we control and and that is what we focus on. Emily you must have a keen insight into the health of the u. S. And the global consumer. Where do you see people spending and not spending . And what is your confidence . Jack you know, we see people going to our sellers, and we see people purchasing and those trends continue to be positive. And i think the great thing about squares business is that it is nondiscretionary. So, Everything Else can fade away, but you have to be able to make the sale. I feel really good about what we are seeing in the economy and also how we will continue to thrive and support that. Emily there have been a number of reports about Sexual Harassment in the tech industry. People have lost their jobs. It is renewed concern about the lack of women in tech. What are your thoughts on that . Jack it is a situation where we have to bring a lot more attention to. Our focus has always been on inclusion first, making sure that we are building an organization and an environment, and a company that people feel like they belong, and people feel like they can contribute to. And they feel a part of. We can say that but we also need to make sure that it is not just an environment where people are long, where they can actually help contribute to decisionmaking. ,nd make sure they continue they help own our outcome. Emily the gap between Silicon Valley and President Trump still seems quite large. What roles do Tech Companies play, and leaders like you, jack dorsey, can do in closing that gap . Jack i dont think there is any difference in the role that tech play companies play or individuals like i play. I think the most important thing is to have an open conversation and speak up. If we cant to speak up and transparent about how we feel about policy shifts, we are going to move backwards as a country and as a world. So, that is my role. That is our caps role and our that is our companys role, and our industrys role, and it is every citizen in this countrys role as well. I will use my role and my experience to inform what i believe is right, and what i believe is necessary. Emily as somebody who runs a company that moves a lot of money around, how concerned are you about not just economic, but Political Uncertainty right now . Jack well, every entrepreneur or leader has to deal with uncertainty. We just have to be comfortable with it. And the economic uncertainty, let people talk about is not something i necessarily feel on a daily basis to affect my decisionmaking. What i am concerned with is the economic disparity that we are seeing not just in this country, but around the world. Our goal as a company, we have a very small part, but it is a part nonetheless to continue to , provide tools for people to engage in the economy and participate in the economy. And we will do our best to do that. That is what were focused on, trying to help fix the red were not going to do it alone. But we are going to have a loud voice as we do. Emily last question. How does that impact where square goes next . You have been expanding abroad. Where to next . Jack we want to go everywhere. We want to be a tool and service that is successful for everyone in the world. We have a lot more friction in our industry because we have to work with banking partners and we have to work with regulators, and every local market has its own rules and regulations, so we are going to take our time because we want to do it right. We do not need to be first in market. We just need to be the best option out there. Emily our exclusive interview with square Ceo Jack Dorsey. Coming up, bitcoins big split. How the top crypto currency exchanges are reacting to the offshoot. Next, this is bloomberg. Emily earnings season is wrapping up, but not before we get the numbers from snap and alibaba next week. We spoke with mark mahaney to get his take on what is ahead for tech stocks. To takeaways the demand , one, trends remain consistent. I think this is our 30th quarter in a row, and our 17th quarter in a row at 50 year over year as revenue for facebook. And about 20 yearoveryear for 10 years now, for amazon. We have seen very consistent trends. Investments are heavy and will be heavy the next year. These companies clearly want to maintain these growth rates and they think they have a lot of new opportunities to go after, whether it is amazon talking about advertising revenue, or it or netflix spending money to build its International Content library. These Companies Remain in growth and investment mode. There is no scenario under which margins are not want to expand are going to materially expand here. Emily lets talk about advertising revenue. Facebook and google still dominate the pie. I mean, is there any room for other players at this point . Like a snap for a twitter . A snap or a twitter . Emily yeah. That is a big sigh. Yeah. It is. It is unknown. Whether they can get to a couple billion in revenue, probably. We call it the experimental budget zone. You can get a couple of billion dollars from advertisers, they all want a bit of diversification from google and facebook. But in order to get much more than that, there is no one out there really getting 5 billion in ad revenue. You have to prove your roi, and come up with Innovative Advertising formats. We think of the two, snap has a better chance of getting there, but it is starting from a much smaller base. Emily snap has been struggling. Facebook has been taking on some of snaps most popular ideas. Are you worried about snap . Absolutely. We initiated 24. About three months ago, so we clearly do not know the stock yet. We will see what happens. Emily you are holding that . Yes, we are sticking with it, because there are two things that the Company Needs to do. First, they need to reassert that their average user growth, and it is the same thing with twitter. If the users decline, the stock will decline. Snap needs to get that growth rate accelerating. They rolled out a selfservice advertising solution. They need to do that to get more advertisers on the network and cause their ad Revenue Growth to stabilize. Look, it is still growing triple digits. There is no triple digit grower ad revenue there triple digit ad revenue growing out there. It is snap. We think the valuation does not reflect that. Emily do you think they can keep it up though, . I think so. One, they are fixing their android problem. They were blindsided. Like facebook was, four or five years ago, with the mobile thing. Back then that was new . Emily the mobile thing . Yeah, the mobile thing. [laughter] the android thing is what blindsided a snap. Snap needs to make sure its app is fully integrated on all android devices. That is a couple of quarters fixed, the second thing, is that they need to get their users growing again, or continue to grow at a faster level, and that is by continuing to roll out better and better features. Snap maps falls into that. I thought that was a pretty cool feature. They have to do more of that. If they do, they will grow. If they do not innovate, the average user growth will flat line and the stock will flat line. Emily amazon forecasting potential quarterly loss for the first time in a while, being very aggressive about moving into new investments like groceries. Are you concerned . No, not really. I mean, come on 20 years of growth, investments, losses, gains i think they have proven , emily big bets. Yes, but they are successful they bets. The best single trend is Cloud Computing and that was amazons big bet. They have had a series of other good bets like the thirdparty marketplace, the kindle family of devices has been pretty good. I think these echo devices, they have a home run on their hands. So, im willing to allow them to invest. By the way, groceries is a very large, logistics business, and amazon is logistics. A little bit of concern. But over time they have built up the trust, at least for me. Emily amazon seeing more success. With original content, and at netflix, of course spending , billions of dollars on original content. Now you have competitors like hulu now. With the handmaids tale, do you think netflixs burn is sustainable . Is it paying off . I will not side so much with netflix. The reason is, we have run surveys now, for three years in a row, and we find that amongst amazon customers, 50 of them are netflix subscribers. Customers,zon prime those who get their free video, revenue percent of them and a growing percentage of them are netflix subscribers. I think what is happening here is the death of the big bundle. And consumers, especially the more advanced internet users, dont go into prime, and they are going to netflix. I think you have this huge secular tailwind, the shift over to streaming and netflix is the biggest beneficiary of that. Do you know why . They have great content, that is the proof of that point is the one. Fact they are going to add more subscribers this year than last year in the u. S. We are not at the end of the s curve for netflix. Emily that was mark haney. Mark mahaney of abc capital markets. History has been made in crypto currency. The number one Digital Currency, bitcoin, has split in two. The move comes after a long debate over how to scale bitcoin and increased block size. Those are the files in which transactions are recorded. Causing some miners to start a new strand called bitcoin cash. Caroline hyde joins us from london to explain what is next. Caroline the split is really almost philosophical in nature. It is what they want to see bitcoin become. Part of the ecosystem is wanting to see bitcoin remaining a basically a stored value a safe, Digital Asset class. But theyre up also been a growing clamor for the scalability to keep up. The fact that transactions have become sluggish and costly. How do you scale . And they have been able to compromise this so far, with a segue up to that in that they , a Software Upgrade where they agree toged to increase the block sizes by double. From one megabyte to two megabytes. That was not enough for a small group of asian entrepreneurs and investors. And developers. They wanted even more scalability, they wanted to go from one megabyte to eight megabytes. It happened today with bitcoin cash. Almost like a stock split in the same way they have the same history, now we have two different currencies goin