Red despite betterthanexpected durable good. A lot of concerns on the International Front with ukraine weighing on the market. Getting over to julie hyman with a look at the big stocks as we watch things heading into the close. A big potential deal in the satellitetv business. Ergen has had talks with his rivals over direct to be about potentially some kind of deal. Share look at the reaction, both stock surging. Up 6. 4 . Facebook heading in the other direction after buying a virtual and agreeing to for 2 billion. Investors not to thrilled about the news and seeing facebook shares selloff today. Finally, looking at qwest diagnostics and lab corp. Both of those groups rising. Bill that is positive that removes an overhang about concern about clinical reimbursement rates at labs that these companies own. Shares are rising over that. Thank you so much. Time for the big story. Taking tech timebomb. First facebook announcing a 2 billion bets on Virtual Reality company oculus. A company that makes Virtual Reality headset. It is a product that cannot even be bought yet. This comes on the heel of a month ago. 19 billion. A massive valuation there. King digital going public at 22. 50 per share. Just over 7 billion. What is going on here . Deja vu 2000 again . In al of these mean we are tech bubble . Certainly seems that way. Joining me now Bloomberg News reporter. Our very own julie hyman who spoke with the king digital ceo today. Before we go to that, i want to. O over to cory what is going on behind the huge this is a big number for them to pay for a company who does not have a product yet, let alone but ridiculous phrase about the companys been. Rerevenue people seriously use this phrase. This is a preproduct company. They have a developer kit and have shown demonstrations. They were out raising money. We learned that there were other bidders out there for the company. Facebook steps in and take them out. The interesting thing is that is the notion of what the future might be in computing and might be some kind of Virtual Reality but this kind of Virtual Reality. Facebook says this is the platform upon computing being done in the future. Ok. Back to the prerevenue, preproduct idea. Money is soanger easy and so cheap to borrow that it is fueling return acquisition activity in a way that is not healthy . ] said can connect the dot policy with this one. Is of the reasons facebook up so much is the hope that everything will go well for facebook and because money is looking for returns it cannot find in other things. The money continues to go up. The money flowing into venture capital, tech stocks and story stocks. It has the potential for future return. That is where the money is going. We see the stock price, which by the way did not used to happen. Shareholders basically thinking this will be a better return on the capital. Another tech Company Making news today, king digital going public at a path valuation of 7 billion. I know you spoke to the ceo this morning. To pointuple of things out. King digital does have revenue and has profits as well. Not talking about a company aced on nothing. An 11yearold company. In terms of being in a bubble, it the value is a discount to some of its peers. The stock is down. You would think if we were in a bubble environment, people would still be buying this thing. 10 times earnings . Whether it is fair or not is not fair of me. The market is making a judgment that it was higher than they wanted to buy. This is a company that has basically one game that people play. They are making fun money off of it, which is great. In an environment such as gaming risk here that while it is popular today and making money today, it will not be popular tomorrow. Of course. We saw that was zynga. Do is to say that cannot happen with candy creche users defecting to Something Else . Is this what is fueling the concern . Absolutely. Investors thought it would pop on day one and make a quick flip. When that did not happen they said i am out and them done. What does the ceos say . I said what is going on here . What is the next big hit . Here is what he had to say. My focus is not on the prize. Strategy is a longterm strategy. By focusing on the long term we create shareholder value. Credit is in a strong position. One really interesting point he made is yes, you have these various games that come and go in terms of popularity, however, the top games do tend to have staying power. He is right. If it catches on, they tend to stay in the top tier for a little while. Most creche has been the popular game. Tech company after tech company that is demanding our attention these days. It is not a valuation in terms of king digital. Are in attention. If you watch the numbers facebook is putting forward and the craze over social media right now, does it feel anything any similarities . I was here during the gold rush in the 1840s. Quite similar. Same neighborhood even. You look fantastic. There are a lot of similarities. I think it is more useful and think our work is more fun to do when we look at the things that are different. One of the things that is different this time, one thing is these companies have a lot more age on them when they come to the public arctic. A Company Going public tomorrow that i profiled 10 years ago that is going public with well over one billion in revenue. The Software Company does Human Resource software and competes and is part of oracle now. I think we see more maturity and some of the companies coming out. One of the other differences is, a lot of the companies in the bubble relied on each other for revenues. They were not selling technology to consumers, they were selling technology to businesses. Except for those being fueled by other Technology Money and that has changed a little bit as well. Some of the Companies Might have a future if there were not a market collapse or if the bubble did not continue for some of the valuations are really rough. When you see what is coming down the pipeline, is that particular sector more crowded man consumer or health care or any other sector . Certainly back. We have seen a low over the past several years and now the pipeline is extremely strongly reported. Talks just filed this week. Another one losing a lot more making. An it is another example of a company trying to capitalize off balance. It makes you wonder when so many are coming out at a particular time. Feels like were talking about a life lots of ipos. That is certainly one reason. If you look at king digital as an example, they are not using the cash for the business. Most of the money is going to pay off a tax partner, which was one of the early investors in it. In that case, definitely have a cash out. Right nowre out there i would be looking for the opportunity to take my money out in Public Markets or acquisition , that is the way to do it. There are 100 73 ipos pending right now. 240 three percent increase. Leslie will be buried the busy if those deals comes out trying to make heads or tails. Clearly wall street once more speculative stuff. Investors seem to be looking for that. Doking for companies that not have proven results. They might and might not. I think we might have expected to see this kind of thing, but as we remember, this does not end in a week. Does not always end well. We have seen the movie before and cannot help but ask the questions. Thank you very much, cory johnson. A busy couple of months. Thank you. Terrific interview. Target executives testifying about why the company ignored warning signs that lead to a massive hack attack. We will head there to get the latest. President obama on the european tour. I will be back right after this. Plans it is about time about time. Target executives being grilled on capitol hill about the massive hack attack. We broke the story that target actually ignored warnings from the hacker detection tool. I am joined by andy dunn, ceo of a new book and the man covering the hearing. Bring us up to speed on what is happening right now on capitol hill. Was the theme of the hearing but only to a point. The cfo apologize for the damage they have done and admitted that they have had early clues early on and took weeks to respond and now performing an internal review to see why it took them as long as it did to react. Byh all that said, standing the fact that they met hundreds of standards. And that no system is perfect. Things like this happen and trying to move this forward, we saw mulligan say prevention, it will need to be a team effort. To prevent breaches like this from happening again, none of us can go at it alone. All businesses and customers are facing sophisticated attacks by criminals. The texting American Consumers is a shared responsibility and target remains committed to being part of that solution. Trying to divert the attention. Target was a victim. In all not a perfect system may need to do this as a team effort. For the most part senators seem to be in agreement with that. The hearing is temporarily on pause while the senators vote. Have not been quite as stern or strict with target. Perhaps that will change in seymour fireworks when they come back. Thank you for getting us caught up. I am joined by andy dunn, ceo of the notebook. Is find the senators actually it is not find that the senator seemed to be taking this in stride. This company have multiple warning signs. They did not tell everyone right away. Learn thelly did system had been compromised and peoples credit card information had been taken but did not alert customers right away. This happened for several years ago. They had done the same thing. Took them two years to tell people what had happened. Everyesponsibility should at a retailer have in this situation . I have been in the situation. Our site went down on cyber monday. A lot of people upset because they could not shop. Different from theft of private information. I think you have to own it quickly. The real victim here is the consumer. Are wherertunate they they are. I think i would own that. There is the tip different take away from that. Retail is now a technology business. You have to be incredibly technology able to do the work. Been all about brickandmortar stores. I think technology is equally important. There is an incentive for you to be proactive. We saw traffic declined considerably. Sales were down in the quarter after this news. Reluctant to go and use a credit card target. I cant tell you how many people said i was in target but i made sure i used cash. A lot of as they the retailer. I would think companies would be incentivized to try to do their darndest to make sure this thing does not happen and then let customers know if it does. I think it is all about trust. A moment the trust is jeopardized, you come out and apologize, own it and say here is what were doing. I think people will understand that. You own it and move forward with an action fan but says here is why the technology will be awesome and security will be great and why it will not happen again and have it not happen again. You do not get on capitol hill to say were the victims, the ones compromised, even if earnings are down because people do not want to shop there. It is a tough spot. Hopefully they can get on with enabling the company and making it secured. Nothe fact that they are required by law to let customers know. The bank and let the customers know, but the bank does not have to tell you and is not supposed to tell you who the retailer is that actually had the hacking attack. Do we need better protection for consumers . Or is the Consumer Protection agency in all of this . It is one of the situations where it feels like people have a right to know. We should have a set of policies that alerts you so you can do something about it. We have taken our eyes off of days. Or a couple i will have to ask you about that later. We will took about talk about that. Coming up, president obama in brussels and telling russia to back off or pay the price. Is his warning for russia enough . We will talk about that next. If anyone in the russian leadership of the world would not care about their actions in ukraine or they could drive a wedge between the European Union and the united states, they clearly miscalculated. President obama in brussels trying to strengthen american ties with the eu allies. Hans nichols in the belgian capital. The president s trip has been dominated by the crisis in ukraine. Tell us the latest in brussels. Washat president obama did robust, rhetorical defense of nato, western alliance, western virtues and norms. Everything like treaties signed in the places he has been visiting. He also buried laid bare the. Imit very clear he would not authorize military action either for crimea and the ukraine. In terms of additional sanction, he did hit at the possibility of what could have been. If the russian leadership stays on its current course, thisher, we will ensure isolation deepens. Sanctions will expand. The toll on russias economy as well at six standing in the world will only increase. If russia stays on its current course, a slight tweak from what they said before, which is bad for new sanctions to be triggered, they would have to go into the ukraine. One thing earlier is energy independent. Once we have a trade agreement in place, export licenses for projects for liquefied natural gas would be much easier. Assets will be deployed in Eastern Europe in the new nato companies countries as well as poland. The president is off to rome. Definitely on the set of the red line. Interesting. Inc. You. Coming up, we will talk about Malaysian Airline problems. Thank you. Missing flight 370. Satellite images from a French Defense satellite camera identified more than 100 potential objects in the southern indian ocean. Families id have some sort of closure. The airline has been criticized for poor decisionmaking in the aftermath of the planes disappearance but they did not start with 370. Here with more it says kaplan. I know you have looked extensively at the Malaysia Airlines financial issue. Where do you think the trouble really began for this company . We are talking about an airline losing warm money than almost any other around the world. Do star before 270. The problem is some of the other airlines growing our airlines like air asia. A rogue carrier based in kuala lumpur has very low cost of production. Is more than one way to make money. You could be mcdonalds or ruths chris essentially. You better get paid more for your product. The problem with Malaysia Airlines is it a silly ruths chris but getting paid make donald prices for it. The margins were extraordinarily slim. What is the crisis now doing to the company . A company that seems to have concerns before this. Part of the reason is it is a governmentowned carrier. Malaysia airlines from a financial perspective was not one of them. The iron age that perhaps it is government owned may help it because the government likely providing cash infusions, although the airline has not provided government updates. We know this has cost of a lot of money. Typically you have a revenue impact. You can understand it. Other disasters in history. You think about air france after it situation off the coast of brazil. It survived. What is different about Malaysia Airlines hearses air france . Rate point. These types of disasters rarely prove the undoing of her otherwise strong airline. France, greatair example. They often prove the undoing of an airline that is teetering anyway. The other problem here is the story will not go away. Tragicl the others, as as they were, they were off the front pages within a couple of us. Here that has not happened yet. If you are doing a flight search right now and have a lot of airlines to choose from, Malaysia Airlines probably will not be their first choice. Probably certainly not the first choice. You have closure much more quickly than anything like this. What is the best path forward for them now . Will they need to rely heavily on the government and get every investment . In all likelihood, yes. Is the blessing. This comes on the other side of government ownership that has not been helpful. Management, they have tried. They have tried labor reforms and you get meddling from government. You have to continue flying on profitable route. Maybe the other blessing in disguise is the government finally lets them run the airline for commercial benefit, recognizing there is plenty of air service from other airlines. To meet the market demand. They will have to get this off the front pages. It will take some time. Until they know what has happened, it will continue to dominate. Appreciate you joining us here today. Are the winds of change blowing . Across satellite airwaves, dish and directv may have been in touch over a merger. How this could affect your tv bill. And he done that will discuss his key to getting start up off the ground. Andy dunn. Back after this. The landscape in media may be shifting yet again. Dish network chairman Charlie Ergen contacted directv ceo mike white. Here to discuss this is porter bit. And bloomberg head of research for Bloomberg Business week in tv, eric timmy. We also have antiwith us. This . It take on is not news. Charlie ergen for months and months and months. That was the catalyst. Charlie has been amassing enormous amounts of spectrum. For dish andans direct, not just in broadcast and video, but in telecom. Changing industry. Changing quite rapidly. Plans, what doig you think might entail . He has to get regulatory approval. He will have the biggest aggregation of video customers in the country if he can put dish and direct together. As we talk about the changing industry am a what are some of observations in terms of how the landscape is shifting . This time warner opportunity, its them an opportunity because they got rejected a decade ago to do this. If they allow satellite radio to emerge, why night not satellite video . Given that, it is a great time to say me, too. In terms of my research i have done, we look at advertisement rates and talk about how network time time tv is demanding higher rates now than before. Normally think of all wholesale discount when you go to costco. Premium all the as audiences have gone down, you see fewer people watching primetime tv. Still relatively bigger than the alternative they can charge of bigger prem