Buylie ergen failed to sprint. Barclays millions in fees. Shares of tiffanys are falling in the premarket, posting fourthquarter profit that missed estimates and the earnings outlook came up short. Vladimir putin has cleared the russia,crimea to join causing tensions at the highest levels we have seen since the cold war. Ryan chilcote is live in brussels where leaders are meeting. Is this a done deal crimea is part of russia . It is a done deal. Signednt Vladimir Putin la, crimeants and voi is part of russia. This is the first expansion of its territory since the collapse of the soviet union in 1991. It is the First Official or semi official expansion because someone say there have been land grabs. You, and thet ukrainians will not put crimea on their map of russia. It feels like an oldfashioned territory grab, but perhaps there is more than that. There are rational reasons as to why Vladimir Putin wanted crimea. The naval port is one, given porthe has that warm water. Are there other areas that strategically he might want to go after right now . It is an interesting question. I do not want to speculate too much, but russia already has control in a couple of different countries, like the country of multiple. Russianspeaking population. They have asked for the same referendum they had in crimea. It was on the back of that referendum that russia has accepted crimea. There was another one in the former soviet republic of georgia. They, too, could have these referendums and become part of russias territory if chose to have them. Having said that, president putin has not said that he intends to add other territories. What everybody is watching, particularly president obama making clear yesterday, is east of the ukraine. They are concerned about the amassing of troops. This is all coming at a cost. There is a lot of data associated with ukraine, and this is not easy from a monetary economic standpoint for Vladimir Putin. What would this mean for his economy in terms of what he will have to do in ukraine and the sanctions he will have to face . The answer to that is quite clearly president putin did not have the russian economy in mind as his motivating factor for taking crimea. This is what he considered important for the reconstitution of what should be in russia and economic considerations come second. There are talks, kid for cap in terms of sanctions. Members of hised inner circle and a russian bank. Vladimir putin said he sees no need to retaliate despite there are problems i had for the russian economy ahead for the russian economy. As for the russian bank, Vladimir Putin asked the central bank to support it, and he said personally on monday he will go there and open a bank account and have his salary direct deposited, which is a little bit of a joke. The next place to watch is ukraine. President putin got a report from the government that the ukraine owes russia 16 million. Putin did not say anything. Maybe they are about to call that 16 million worth of debt and of course ukraine does not have the money to pay it back. Debt get see russias downgraded. Well put by you, Ryan Chilcote, it is more of a political move. Ryan chilcote in london. You want to tune into his interview, a bloomberg first, with the ukraine opposition leader. We have total integration of the region. It will be complicated and expensive. Scarlet fu checks out russias potential tab. We know it will be at least 16 billion. It will be a big one. The annexation is official, and the bill is building up. There is one russian newspaper that puts the bill at almost what he billion dollars over three years. In terms of the bigticket items, basic infrastructure. Russia and crimea are not connected by land, so you need to build a bridge. One bridge will cost an estimated 1. 4 billion and take several years. Also, utilities. Forea relies on ukraine gas, water, electricity, so the alternative is to build a plant that could cost 1. 7 billion. Lets not forget pensions. Russia has to adopt them into its system. The russian pension is double the amount of crimeas pensions, so the cost there is 1. 9 billion per year. Also receives subsidies. The ukraine budget is subsidies. Russia has to match that amount. Gdp per capita is about 14,000. Crimea, 5000. Pretty big. There are also logistical issues. It could be as easy as people being able to travel and move around. Russian passports are being given to crimeas residents. The russian ruble will also become legal tender in crimea. The cost of integrating the ukraine currency is untold. Russia spent 50 billion on the sochi olympics, so 20 billion over three years might not seem like a lot, but it is something the economy cannot afford. It all adds up. You had better hope the Energy Prices stay high. Scarlet fu, thank you very much. Moving and shaking this hour, facebook ceo Mark Zuckerberg. He will be at the white house today. He will sit down with president barack obama and other tech executives to talk about privacy and spying. You will recall that last week zuckerberg called the president about the nsa to complain and he wrote unfortunately it seems like it will take a long time for true, real, reform in surveillance. Marissa mayer was invited, but could not make the trip. Speaking of zuckerberg, facebook just bought a mobile messaging. Ompany westapp i am in seven cisco where there is a tremendous interest in the San Francisco where there is a tremendous interest in a valuation of companies. I want to bring in the guest host for the hour who knows what it is like to take companies public. Trip hawkins is the founder of Electronic Arts and a new venture that applies Game Technology to education. Eaave an affinity for because i was a sims fan for so long. A lot of women played that game, if i recall. I want to start with a meeting between the president , zuckerberg, and others. There is great tension between Silicon Valley and washington with surveillance. How do we sort this out question mark where is the balance . It does feel like sort this out . It does feel like big brother. It does. , people are technology are trying to figure it out, and with new Technology Comes ways to spy on people. You can see that with a gaming console, spying right into your living room. Balance, or do americans have to face the reality that more of their information is online and will be out there . Therengs tend to stay out may even if you do not want them out there, or even if it is incorrect, which is frustrating at times. Absolutely. Speaking of incorrect, are some of the valuations, especially for the mobile messaging companies, incorrect . It is like a fashion industry. Trendy . Habits are changing quickly. Time about how short of a the iphone or facebook has been around. What people will be doing in 10 years is much more difficult to predict. It is challenging if you are a platform like facebook and you have everybodys attention. Right. How do you make sure you are holding onto that . Do you do that by overpaying app . Est you have over one billion customers, and there are waves of habit changes and fashion changes, and in some ways you feel compelled. You can not choose not to be part of it. Our valuations getting out of hand . They will need to grow into businesses that generate profits over years to grow into those valuations. Hithen does the reality cash value hit question when does the value hit . Everything is about forecasting the future, and sometimes it happens, and sometimes it does not work out that way. We could be talking about a big shakeup. It is not as if everybody is seeing valuations grow bigger and bigger, so when the reality hits, could we see a big washing out . Exit could happen. If you recall, for the last five or six years, technology valuations were suppressed, and multiples went way down. It is not a shock to think that multiples could come back up and stay up for a while. The companies that turn up to be the future, everybody is placing bets and competing. Anytime a company is going public or been acquired, there is a been going on for those shares. Right, and then who is the next one after that, right question at right . So true that smartphones have not been around so long. There are people in the newsroom, 25 years old, they have never used a blackberry. It makes me feel so old. Thank you, trip hawkins. He will be with us for the hour. The art of the deal jeff bezos making it possible for you to buy your neck work you by your next work of art online. Twitterulls the plug on and warns that facebook and youtube could be next. You are watching in the loop , live on Bloomberg Television and streaming on your phone, tablet, and on bloomberg. Com. I want to bring in my guest host, trip hawkins. Day for youperfect to host. It is always the perfect day, but the candy crush parent pany, came the digital, digitaldigital king is about to go public. Is it a onehit wonder and what do you do after that . Results in the gaming industry are lopsided. Again that gets to the top of store tends to perpetuate that position and consumers seem to only know about the topranked games. It is more of a winner take all n it has ever been good ben. Is that a good or bad thing . It depends if you are at the top of the chart. A generate a huge amount of revenue quickly. Youquestion is how do repeat that, get into a steady rhythm . How do you . You founded Electronic Arts which had several games that are several hits. That . You do what is different now is the Business Model changed. In the old days you could try to in aover more shelf space retail store and maintain a bigger and broader product line. You could become member of the club that has that space. Now you have more than one app storeps in an and a consumer is only likely to look at one screen. They are not looking at thousands of different choices. It tends to funnel down. One of the things what are the things people are talking about, at the top of the list . Is sound like it is almost luck of the draw. There is some serendipity involved. What ends up getting there is a bit of a puzzle. From that, can you build a Sustainable Business . You look at a company like zynga that had a huge hit with farmville and they have not been able to repeat that. Is that a lesson for king digital . If only five games fit on the screen, if you have six, not all of them can fit. That is the problem with the scale. Companies like zynga that have tried to bring too many outings to the market. They find they have a hard time doing that, as they cannot repeat the same success. The way a modern channels of distribution or, they put a bright spotlight work, they put a bright spotlight on a smaller number of products. They do. When youre developing the games, and you develop through Digital Chocolate and on the educational front. How do you cut through the noise . My new company, if you somethingre making that is in a unique space helping children learn social and emotional skills. It is a new area. But gaming is antisocial. It is both ways. It is like real life in that regard. Store we are the only game that teaches childrens social and emotional skills. If word gets around, people will find it. It is a change in the Business Model in the way people are looking for things and being able to try them for free. Trip hawkins, founder of ea the3do, my guest host for hour. Well be back on how much it will cost banks to them, and the volcker rule implement double dribble. First. Bloomberg. You are watching in the loop , live on Bloomberg Television and streaming on your phone, tablet, and on bloomberg. Com. Good morning. I am betty liu. Hour,26 minutes past the which means Bloomberg Television is on the markets. I want to bring in trish regan. Features are a touch higher. We will be watching this carefully. We have a number of tech leaders today meeting with the president to talk about the nsa and cyber security. We will be watching that, and of course continuing concerns about ukraine as well. We have an important interview at 2 00 p. M. With Ryan Chilcote sitting down with ukraines opposition leader. Here is a look at the top headlines. The bond market, which is the subject of a new sec investigation. Regulators are looking into the practice of dealers showing clients different prices for similar products on electric trading. The volcker rule will cost u. S. National banks as much as 4. 3 billion to implement. This is according to a study by the office of the comptroller of the currency. Shing the biggest irs phi scam. People pretending to be irs officials have taken 1 billion from taxpayers. Callers tell people that they ae the agency and must use debit card to make a payment. Be on the lookout for that. Definitely. Thank you, trish regan. I want to bring in electronic ceo tripder and former hawkins, who was an early executive at apple, one of the first employees with steve jobs. It is interesting. There is a whole entire industry out of what has happened to apple since steve jobs passed away, and you worked directly under jobs. There is a new book out that is aaunted empire which is not good look at what has happened to apple. Do you agree with at least one viewpoint that there is a little less shine their . He is impossible to replace. He will be in the history books in 500 years. While he is flourishing in the organization around him will do amazing things, once he is gone, he is not the kind of guy that would have been good at developing a successor. O. T is not really his m. He did the best he could with tim cook . Shadowould cast a large and have a lot of different people working with him that could accommodate and support him. The queen bee disappears, and that is a challenging problem. It would be hard to be in tim cooks shoes. So, how do you think he has done . Again, you have to look at what temp did before. Cook did before. He was the perfect partner if you have steve jobs. There is a yang yang. It is a difficult transformation. Did you find that your own company . Driving inhen i was my thriving in my career, that is one i have had the best experience, with the balance between your skills and those around you. What did you learn from steve jobs . Innovation. You are recognizing here is something that is emerging, and there is a way to create new markets, new products, and served new needs that are not very well understood because you cannot do Market Research and prove it because nobody has heard of the technology at. Gift to recognize the Computer Technology could be made accessible to everyday people, and have it be something that they use every day. What was the nugget from him that you then applied . You left apple and started Electronic Arts. I had always wanted to apply Computer Technology to games, waswhat i got from steve the details of how to be innovative and build an innovative organization. Nowadays, with the generation of new leaders and we were talking about zuckerberg earlier, but you have marissa nadella, michael dell taking the company private. What is your take on the generation . I think our superstars. Thingse next 10 years, will happen that people cannot anticipate. Just like 10 years ago, things we did not see coming that we now take for granted. Technology will not slow down. In terms of people like satya nadella, who are not as well known, taking over a company that has had so many big personalities bill gates, steve ballmer, is it much harder for him to prove his success . When you have an established theyny like microsoft, have so many organizational habits that have been formed over a long time. Are they still innovative . I am sure there are pockets of innovation that still happen, but it is so large that they probably get overshadowed by the mainstream vector the whole mother ship is on. When you have had these really big longterm businesses is very difficult to innovate in a way that can really replace or supplant that. At that point, what should be done . Should the company be broken up . How do you refresh the innovation cycle . 10 years, last fiveto we saw apple do that. They were focused on the pc, then they went into a new market, music, and that was a radical shift to create a new Business Model. Not breaking up, but going into a different model. You have to have the courage to get side outside of the you have been in and recognize thatg that has been will be as big in the next decade that has not been as big. You cemented your legacy pretty well in the gaming industry. Starting a new company, selling their business, to beey all in this race the next steve jobs . I do not think entrepreneurs think about it that way. No . Egos, two,. Come on. Os, too, they are like artists. They read Success Stories and you could get your ego caught up in that, but what really drives them is the desire to have a product that means something. And that everybody is using. Stay with me, trip hawkins. Trish regan, i will turn it back to you for some breaking news. Well, we have some news crossing right now on blackberry , just getting these headlines in. They are selling the majority of their Real Estate Holdings in canada. This is a company that has been incredibly challenged as of late. They have made repeated attempts to make it clear to everyone in the media that it is selling itself. It has hired an investment banker. Now they are selling the majority of Real Estate Holdings in canada. Perhaps it is an opportunity for them to line its pockets with a little bit more cash as it continues to struggle to reinvent in this kind of environment. We want to show you a piece of music history. You will have your chance next week at a very special guitar auction. We have a look at some rare instruments that will be available for purchase. If you are looking to buy some art, you do not need to go to an auction. O to amazon. Com they are bringing you work from some of the finest artists in the world with just a click of the mouse, but will anybody really buy expensive art online . Stay in the loop. We will be back from new york and San Francisco. See you in two. He may be a billionaire, but jeff bezos is bringing fine art to