Sun. Astronomers have called the socalled xo planets exo planets [inaudible] this is bloomberg. Cory this is bloomberg technology. The roadshow rolls into new york and is facing a slow of a slew of investor concerns. What investors are saying ahead. Over goes into damage control. We will look at allegations of Sexual Harassment and gender dissemination. 350 million compromise. We will look at the new terms of a verizon yahoo deal. First, to the lead. Snap kicking off its first u. S. Investor roadshow in new york to with a plan to ipo next work. Slower usingd engagement and the euclid and uniquely week shareholder rights. Up with sean steeple who attended the roadshow. I think you have to justify the valuation. The questions are around user growth as well as monetization. I think they dance around the issue of user growth alluding to issues with the android and monetization, they touched on lightly but certainly as the story progresses and as this valuation, you will need to see more metrics. Corey joining us from new york jenniferarinka and [inaudible] what happened at the roadshow . Investorsried to grab like sean to hear their take into his point, the when asked what was your big takeaway that is on your mind, user growth was the first thing that a lot of potential investors said. They limit on android but i heard a lot of instagram being called out by investors who point to the stories feature that instagram introduced that mimics snapchat. Others brought up the new whatsapp feature rollout where you can send images that mimic snapchat. Into nap is turning turning to internal issues like its noncore markets but investors still question the competition factor and it will surely be on the minds when they are running their comps between the facebooks and twitters of the world. Corey the monetization issue is a euphemism if there was one. Tons of people are using snap, not tens of people are jeff it generating revenue. The underlying opportunity for snap is around the data and the audience. As you know, they skew to a much is aer audience, that content creating machine and tapping into that and targeting that audience and be able to use that data much more effectively than a lot of their peers is where they opt. Corey is advertising the only real opportunity for these guys in terms of revenue and theres nothing wrong with an advertising on the model, the history of media is mostly about that. Jennifer there a lot of different ways you can monetize around what youre calling advertising. Very targeted marketing and marketing dollars are getting more segmented. A larger opportunity will be around how they use that data and selling that data to a whole host of different applications. Advertising being the largest bucket and you skew down from there. Corey the valuations for the business are aske astounding. There is lack of Gross Margins. The most basic concept of businesses sell for things more than the cost but that is not what snapchat does. Did you get that feedback from the Money Managers that this might be a bad is this the highpriced . Alex it is a high price. We have seen the price come down. As we reported since october of last year they were looking at valuations around 30 30 billion to 35 billion. The terms are set at a market value of 16. 2 to 18. 5 billion. Expectations came down as more information about the company has come out. When you look at where they are spending money the profitability factor is the next set for them. They talk about that as phase three. Phase one was development, phase two was user growth and engagement and phase three will be profitability. The biggest cost for them is their technology infrastructure. There was some new conversation around that today. The company said it expects the cost of infrastructure, paying for cloud and storage to ntually decline as it is as the two providers being google cloud and amazon compete on pricing. It is open to building its own infrastructure. A little bit as the two providers being google cloud and of new commenty around that and that is important because that is the bulk of their expenses right now which outpaced the revenue. Fonstad, of that you would have no complaints of publicvestments could go at 17 times sales. Jennifer that is an awesome number. What they are banking on his monetization and taking him out advantage of the massive amount of users and content. It is a to them, it is their game to prove that out. It is common for stock a standup to prove that in the Public Market where they can build predictability into their business and that will be the name of the game. Lot carere of a a lot about predictability and demonstrating growth while being thatto build them predict into the business. Corey the gross margin is a serious one. Negative Gross Margins over the last year, the last two quarters and better. Those are the quarters when they are dressing up the ipo so i would discount it. Investorestment would have discounted that into a former roadshow. Gross margins are generally horrendous. Were not talking operating margins or what al frankel was referring to was expenditures on the cloud. The basic pieces of what they sell. Jennifer a cosmic two different issues, what alex was referring to in terms of their into cost structure. They have been on a tear in terms of users and content growth. That has enabled them to, forced them to not focus on cost just until they got to a size with a size with the could take advantage of scale and think about creating a competitive dynamic and creating infrastructure. Google made a similar exercise when they first started out and built phenomenal low cost infrastructure. And Gross Margins overtime. Be in boston,l they are heading that way tomorrow and we will be listening as they head out to the west coast. This process will continue, they will keep pitching their wares and fielding questions from investors. Q a for an hour. There was not a lot of presentation. When you think about it they might feel like they express their message before shares are scheduled to price next week on the first of march. That would put a listing day on march 2. That is where i am putting my focus for the rest of the next two weeks. Corey you do that. Ipo reporter with something to do with an appeal ipo in the pipeline. Trading. Wist in prosecutors will allege that walter made 43 million trading insider information. Jurors ato show history of engaging in illegal trading with apple. They did not reveal the details but walter was indicted last buy trading on tips to [inaudible] big time butiting is it enough to take on online giant amazon . Bloomberg technology streaming on twitter. Check us out 5 00 in new york and 2 00 p. M. On the west coast. This is bloomberg. Corey u. S. Tech giants continue to face ago tori hurdles in the eu. Microsoft facing european windows 10. Es over regulators from seven countries are concerned that even after making privacy related changes microsoft is still not in compliance with fundamental privacy rules. Microsoft said it will continue to cooperate with the working party and National Production agencies. Walmart posted fourthquarter earnings which beat estimates. That tells you more about the analysts it than that does the company. The stock up 4 . The biggest intraday gain since may 20 26 2016. Benefiting from last years acquisition of jet. Com. Andking out sales growth posting. 9 growth in the u. S. In the fourth quarter. Walmartanjo covers joining me from new york city. I am struck by the comparison to s. Cys, target, kohl walmart showing something very different. Has been ais struggle for walmart. Walmart has been the Worlds Largest retailer. The thought was why cant it catch up to amazon . This is a finally a right step in the right direction. Corey we do not know the actual numbers. They gave the percentage of your over year growth, not the actual numbers. Some companies you get used to that. Google never tells us how many clicks they have. Is seems a good kind of number they should be breaking out. Shelley we know a little bit about it. Did a little bit around 14 billion in sales. So the bulk of that does come in online sales. That comes from the u. S. It is still a tiny number when you think about the fact that walmart is almost half a , and sales per t year. Corey we heard from the walmart ceo. Check this out what he had to say. We continue to invest in ecommerce to accelerate growth. We are gaining traction in moving faster. With the second we are the second largest u. S. Retailer by value. Our warm out our will walmart app is one of the top three. The characterization that they are the second largest retailer is kind of up for discussion because that does not take into account apple, for example, or hewlettpackard. If you think about traditional retailers, walmart is the secondlargest. Corey and to that, what do we know about their traditional is this and is that going the way of other retailers that had a tough quarter . Shelly one thing that is going for them is the online grocery. That is included in the u. S. Sales. Online, they and a picking up instore and walmart does include that in their online sales. Your strength is you are starting to see walmart benefit from and mortar which they always said was an asset to them compared to amazon. They are still much smaller than amazon. It looks like they are starting to take ecommerce much more seriously. Corey i am sure they did the responsible thing and broke out separately organic sales of walmart. Com and told us what jet. Com is is a post to buying those jet revenues. Shelly we do not know what jet was doing. Corey shocker. Thet really know exact numbers but we know they were not that big. What is more important for them than jet sales is mark lori, the new ceo who has an eye toward ecommerce and someone that could change things up for walmart. The chart we were just showing shows you that those online sales were not about last quarters acquisition, maybe there was a pickup in terms of the increase in the percentage growth of online sales for three quarters in a row. Ly we will start to see that in the third quarter. Jet is not included on their online sales. What this shows you does reflect a few changes they have made to ecommerce. That is the global chart but what theyre are starting to break up now is theres u. S. Is this u. S. Ecommerce growth. We do not know where the numbers are coming from. It shows you what walmart is reorienting to. It is saying Global Growth might have been a focus for us before but now we are focusing on u. S. , so walmart breaks out a number, it is like amazon and does so intentionally, that it is what it wants to draw the markets attention to and that is what they are saying is the focus going forward. Corey maybe more focused than amazon when they come out and list 40 different objectors objectives from the last quarter. Their profitsay could range from 100 to 100 million, who knows . Corey ec you see walmart steering toward [indiscernible] great stuff as always. Check her out on bloomberg gadfly. Terrific stuff as always. Scrambling in light of its second pr crisis. How the company is responding to Sexual Harassment claims. Function,teractive tv on bloomberg go. You can watch us go live and andprevious interviews bloomberg functions we talk about. You can be part of the conversation by sending me messages. Do it. Subscribers get that privilege. Check it out. This is bloomberg. Corey for the second time in a month, uber is facing some backlash. The ceo sparked controversy for his participation on president trumps business council. His company depends on a lot of immigrants who work hard as drivers. Down before the delete Uber Campaign was born. Uber acted quickly promising an urgent investigation led by eric holder. Bloomberg Technology ReporterEric Newcomer joins us now. This is not a new issue for uber, the issue has come up quite a bit for this company. Isc the issue of whether it forgynistic has dogged uber a while. Booberd the company at one point. The specific allegations and how the companys Human Resources team handled it, that is new in moving the conversation forward and throwing the company into a bit of shock. Best telles about the us about the blog post. It was an interesting read. Susan fowler. She said one of her managers, as soon as she joined the team message her and propositioned her saying he was in an open relationship and most more troubling she says she took that Human Resources and they basically said he was a High Performer so they were not going to do anything about it. She could change teams or do deal with it. Pretty troubling allegations and theres a lot more in her blog post. Been issues have about what has happened with the companys response to complaints against drivers, rape allegations against drivers and with the company has done to do with that. Eric with the drivers side, there are millions of them. Drivers they have to deal with. We do not know the incident rate which confuses the whole situation. Abouthave been questions how they handle support, whether they do enough background checks on drivers, here we have the 11,000 or more actual employees they are worried about then they also have these millions of drivers with a have had to do with all sorts of allegations there. Cory we refer to them as a starter but that belies what they are. They have 11,000 employees. Maybe one million u. S. Drivers. Has is a egg company that seems to have some aspects of baby company behavior. I do not mean that in an insulting way but going through this cultural definition within the business even know it has operated on a large scale. Eric it is nearly eight years old, our best guest for revenue guess for revenue was a billion. It has had to grow quickly. The majority of those 11,000 employees i said joined in the joined in the last two years. A lot of the process is are still getting created and there is a historical silicon valley, we do not need a chart. To build theed processes but they do not have everything. when i was an investor, if i sought employees had their stuff on a box it meant that they were changing desk so often that the business was growing and id did not want to own the stock. Place wheresame change is happening fast. If the allegations prove true andthe companys cul. They are companies that there are companies that grow fast and break things. Ese are very big moves and addressing the team is hard to do but it is hard for a company to figure out something they do need to do. Eric this is a company that has had a lot of pr nightmares. Ete uber,y after del and they needed to respond quickly. Engineeringftware company. They need to recruit away from google and facebook. Uber star story that Software Engineers are going to leave and think it is a hostile culture that will put them at a major disadvantage to the competition. Corey is this a sign that uber will respond more quickly than they have in the past . Eric eric holder is as top a gun as they can hire. They take this very seriously and they are putting a lot behind it. We will see. Om Bloomberg News the way in the other room. Ou very much. Coming up next. Anlas roles drive shares to alltime high. Solarcitys impact on the bottom line, cash flow burn could be a nightmare. We will discuss. This is bloomberg. You are watching bloomberg technology. Lets start with a check of your first word news. French president the french president ial candidate regained some of the ground he lost last month. The latest poll finds he gained three Percentage Points to a total of 21 . He lost five points. The poll shows far right candidate Marine Le Pen with the most votes in the first ballot set for april 23. Matt theresa may at londons downing street today as he tries to rally support from french expats in the british capital. Macron addressed supporters at a rally in london. He said in order to have access to the single market, it is necessary to be a member of the eu. The Italian Coast Guard released video showing refugees in a packed boat about to be rescued in the mediterranean sea. 630 people were transferred to the italian ghost card that is coast guard ship. Including 70 women and children. More than 12,000 people have arrived by see in europe according to the united nations. An admirer says the policy resonated with his thinking. He is the worlds oldest head of state. He says he hopes the u. S. Will remove sanctions imposed more than a decade ago over alleged human rights abuses and electoral irregularities. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. I am alisa parenti. This is bloomberg. It is just after 5 30 p. M. Tuesday here in new york. 6 30 a. M. Wednesday morning and singapore. I am joined by bloombergs haslinda amin. Is dragged down by Fletcher Building and frontera. Down as much as 4. 5 . Limit on expectations of a drop in sales. Futures industrial your pointing to a higher open. We are keeping an eye on fortescue metals. The loss they are out with earnings right now. Firsthalf profit coming in at announced a dividend of 20 australia iensense. The company has a policy of payout as much as 40 of profit to shareholders. If you take a look at the shares have reached seven aussie dollars for the second time in six years. Bloomberg shares that is a target revision. Bloomberg technology is next. Top our top story. Ipo slated for next month. On the heels of what weakening metrics. Guest attended the roadshow and was troubled. That was a big concern among ksmoove people in the audience going into this and i do not think that the roadshow addressed it. Pointing to problems with lower and androids is not adjusting the interesting addressing the elephant in the room which is instagram. He needs to clarify that. Certainly there is more questions than answers in that regard. Sarah frier is in new york, our bloomberg Technology Reporter. We talked earlier on Bloomberg Radio and you said you thought sentiment from investors was pretty strong coming out of the meeting. Sarah it was a packed room. Refers to Isom Evan Spiegel who that good ratings from the people who watch the roadshow. They said he was polished and confident. But youre right. There were these concerns about user growth. He is not the only person who thought that instagram needed to be mentioned a little bit more by snapchat as a threat. They were mentioning that it was all android and a