I am guy johnson. And i am francine lacqua. If you have 250,000 for a night out, we are back with the vegas whale who says sin cities most expensive table is worth every penny. Looking forward to that one. Lets begin with our big story of the morning. Shares are on the decline. Europes biggest oil and gas company has warned that Fourth Quarter profit will be significantly lower than recent levels due to a mix of lower than expected production and higherthanexpected costs. N. Joining us is bria thanks for joining us. A surprise, what happened today. It is very unusual for them to put out a statement two weeks before they were supposed to do earnings anyway. They have not done it for over a decade and they had a big scandal. Faceds new ceo has never the press. His first arrest conference will be quite entertaining even what he said this morning. How we gone from a situation where the numbers were cruising along ok, not great, but ok, to this . Has anything changed in the last 17 days . Forhe reasons they gave earnings missing estimates are the similar one that they gave in the Third Quarter, problems they have had all along. They have had problems in nigeria. They have had problems in the states with the value of their shale assets. Problems in australia, where costs are going up it is all the same reasons that they cited today. Apparently, it is worse than anyone thought. Specifics a company problem. The issues they are facing, their rivals are facing the same. The problem is, how do you increase your volumes now that oil prices are higher than they were before us to mark before . Returns on the projects they are doing are similar to where they were when oil was 30 per barrel. The cost of getting oil out of the ground is much higher. They have got to execute and keep costs under control. They face a big challenge in capital discipline, making sure they do not spend too much to get there reduction numbers up to production numbers up. Thank you so much for that. Lets turn to apples major expansion opportunity in china. As of today, they are selling their iphone with china mobile, the biggest mobile carrier in the nation. Jonathan ferro joins us with the details. It is an important market for anyone. How important is it for apple . Deal, 700s particular million, that is how many subscribers china mobile has. It is a big deal for iphone to get more penetration in the worlds Biggest Smartphone market. Wondering where the people were today, because there were not many at all at this launch. Ues, about ao que dozen people inside the store. That is because you can already buy the iphone in china. It is about boosting scale now. When you look at some of the numbers, the preorders, china mobile says one million on pre order could go on to set to sell 10 million this year alone. Already, it is looking promising. Promising, butg they are number five. Yet the margins are going to be higher. You do not have the store base for other apple products. It is an androidfacing market. What is the opportunity really here . How big can this become for apple . The way i look at it now, you have two hurdles. Functionality, all of this talk about the screen being too small and the chinese wanting something larger. Number two is pricing. It will take you back over 800. Traditionally, the phones that have done well are the low, entrylevel pricing phones. The bottom line is this. This is a luxury product. You have seen apple commit to the premium pricing, even with the 5c. Yes, market share has been dwindling in china. That is about 650 dollars u. S. That is where apple has 50 of the market. Perhaps this is the story going forward, a luxury product, a rising middle class in china, more disposable income and money to spend. Down the line, this is where apple starts to do well, just as they have done in developed markets. Fascinating to see those graphics on where it is most expensive to buy an iphone. The u. K. Is phenomenally expensive. States, 600 against 800. If you get it with a plan, you do not pay those prices. But you still have your nokia. Fairpoint. Touche. President barack obama will speak today on efforts to limit nsa security programs. The speech is a longawaited by edwardo the leaks snowden. Manus cranny has more. Tell us about the scope of the havee, the collection we seen. Let me show you the front page of the guardian newspaper, which has a relationship with Edward Snowden. What they have done is talk about scale, the sheer quantum of text. Texts a day being collated in terms of the data. It is almost like everything you can eat at mcdonalds. It is like a buffet of data on a global basis. How many times have you crossed the border . The contacts in your phone. Financial transactions. The sheer scale of what the nsa is doing. What comes into play here, it is about obama trying to deliver transparency, trying to say, i have listened to the panel and taken on the views. Week,led cameron last david cameron, the Prime Minister here in the United Kingdom grade he also called Angela Merkel. Again, for their opinion. He is trying to reach out and have i have listened, i heard, i am responding. It is up to congress, rather than be dealing with the eager issues of access, bulk, and collating data on the scale we have done. Ofsibly because this scale backlash, the backlash against the scale of data that has been consumed or retained, could be 20 million for the United States of america. There are still issues to be resolved. ,ne of them is bulk records still allowed to do that at that size. You mentioned access. What exactly are we expecting . And you give us detail of what we can expect from obamas speech . Day, the end of the number one priority for the american president and obama is the presidency is the of privacy in the United States of america. He will most likely retain the security agencies can have access without necessarily having to go to court to get them. Way,o somewhere along the the american data or the data they have collated, but the access, it looks like he will still push on to allow unimpeded access to it. For the vendors, microsoft, yahoo , facebook, aol, what they are lobbying for is, if you want access to the data and you make these requests, you must allow us the opportunity, afford us the opportunity to go public when you have made the significant requests. To that end, that will be a hard one to get across the line. Transparency and spying, those ,re very different issues arent they . Thank you so much. Manus cranny with the latest on this possible nsa overhaul. I say possible. Is it a real overhaul . That is what we want to do want to know. Is it big enough to be a real overhaul . I guess we will not know until someone tells us. Obama. Or Edward Snowden. Google isl you, diversifying into contact lenses. The company said in a blog post that it is testing an ocular device designed to measure glucose levels in tears. Glucose is said to provide readings nokia is focusing on insiders in its search for a new chief executive. The company is seeking a manager who will set a new strategy in its Wireless Technology company. It is looking to replace the former chief executive officer, who will rejoin microsoft did nintendo has revised its forecast for the fiscal year to a net loss of 25 billion yen. It cut projections for the wii u console and said yearend Software Sales were far below expectations. Coming up, great things are coming to china. Chinas the message to mobile users. Are these sales just a start in what would be the next apple upset . Differences,ural such as having a wider screen, get in the way . We will discuss that next. Welcome back, everybody. Happy friday. You are watching the pulse on bloomberg television. A lets carry on our conversation surrounding apple. They begin selling the iphone to millions of china mobile customers. A sixyear wait. Apple is already available in terms of the iphone, but in terms of the scale that china mobile brings, this is a game changer. Will the iphone be successful in china . It has been incredibly successful elsewhere. You can already buy it through a different operator. Are we going to see a different story . Join us to discuss this is pelham smithers, a tech specialists. Good morning. Apple is targeting is currently number five in china. Clearly today is a game changer. Once you get on china mobile, you have access to significantly more subscribers. Are we going to see them leapfrog up . I think starting off by moving gently forward. The first thing they want to do is do what they did when the original iphone was launched, get people accustomed to the world in which apple wants you to operate in. We go back to 2006. Talks were of the iphone selling 500,000 units. This launch is one million units, which gives you a rough idea that the starting point is very similar. When the iphone first came out, people had no idea what they could really do with it. People in china think the iphone is a phone. The users who have it use it in a way that is different to how everybody else uses mobile in china. They are almost used as entertainment devices with the phone ringing. If you look at the statistics for the chinese market, 57 of mobile searching is done on an ased machine. Despite the small installation base, the people who want to use a mobile phone like a computer use apple. It is not about volume necessarily, but it is about apple. That is one of the key differentiators out there, in terms of the apple against android story, the apps market. Is the app market there to support china becoming a bigger story . Android,have seen with the china Customer Base does not want to pay for apps. If you want to make money that way that has been one of the key french waiters in developed markets. Inthe key differentiators developed markets. Apple is going to come back with its Core Products and tried to drive the value added through where they have succeeded on the nonapp side. A lowp side itself is game. Talk to me about screen size. This is something that has been flagged time and time again. The Chinese Consumer likes a bigger screen. That may be goes to the story of using these things for entertainment devices. There are two issues with the size of screens for chinese markets. This is an asiawide story. First, the tendency to hold the tablet with one hand and use your other hand to type or the stylus. We tend to hold it in one and finger type at the same time. That is two different mentalities of how to use the phone. The second thing, they use the phones as an entertainment device. Like you do use another one of their products as an entertainment device. The ipad. Exactly. The apple technique will be to see if you can buy the iphone for its core flexibility use and on top of that, buy the ipad is that going to work . That is going against cultural norms that are very hard to crack. The advantage of low expectations and being able to set their own pace on this. If the original strategy does not prove to be as successful, they can adjust the strategy to. Oming out with a bigger phone i suspect they will want to do this in conjunction with what they are doing elsewhere. I do not think they want to create a separate universe for china. A want to bring the markets to them rather than they go to the markets. When you look at the razzmatazz that surrounded this launch, very different to that around the launch in new york or london. K to me about the kind of you talk about the lowkey entry strategy. It was incredibly lowkey. Apple has done very well generating buzz. Generated this and cook has carried it on. Samsung has mimicked it. Why different when you approach a market like china . They do not want to get it wrong. You go back to how the iphone was launched in 2006. It was almost seen as an ipod with a Wireless Phone to it. It was not this revolutionary it was an evolutionary project. Nobody really knew what they could do with it. It became this issue, lets go softly. Thats not mess up the market. Lets try to work out what works and what does not and build from there. Thank you for joining us. Back over to you. Now lets get some company news. And orange arem not pursuing a share sale of their u. K. Unit. The companies have ended their Strategic Review of the nations largest wireless carrier and there is no time for further action. 1. 2 billionest dollars to expand its cloud services. The Worlds Largest provider of Technology Services has been relying on the business for growth. Its been 2 billion last year to acquire software technology. Ubs is said to be boosting and annual bonuses by about 10 . Total compensation for star bankers could exceed 2. 5 million in the region. Something here is those bankers could blow some of that cash on, a new club in vegas. They have unveiled a table worth 250,000 a night. Johnson Shows Bloomberg why it is worth every penny. Inside the bellagio casino at the exclusive hyde nightclub, one of the most expensive tables in the world. Wow. I like this table. Absolutely gorgeous. Part of its value is the view. 1200 waterspraying robots. Feet,ost asgh as blasio. Cost of untains, million. Inside the club, the fountains are made of champagne. Hyde is the most profitable club foot. As per square the average table costs 8,000 a night. This 1, 200 50,000. What makes it different . This red button. Here we go. Set off these bounds, 10,000. These fountains, 10,000. The number of people who have reserved these tables in 2013, 2. And you can tune into our vegas special on january 21 at nine a clock p. M. Eastern time. Ryan had to break, jack today. Actor chris pine follows in the footsteps of Harrison Ford and ben affleck. He will take the role in the franchises 24year history. In todays hotshots, the Monte Carlo Rally is over. Drivers battling wine the roads and icy conditions. You cannot see that there, but only a handful of drivers used snow tires. It was necessary in some portions of the circuit. Quite a race. Hundreds of horses and their riders, part of an ancient festival in northern spain. The ceremony celebrates the feast day of saint anthony. Unsurprising. Riding a horse through fire, not necessarily a good idea. Lets find out exactly what is keeping the markets unlike this morning. This morning. Manis granny is here. Equities have had manus cranny is here. Equities have had a very good week. The drivers. Ks are autos along with construction. The stoxx 600 up over 1. 25 . Basic resources caught my eye. Then i had a look at what drove the stoxx 600 and basic resources. It was angloamerican. This stock is storming away this week. The imf have upgraded their views. The world bank has upgraded their views for growth. Angloamerican absolutely pacing the way. When you drill into the numbers, it tells a very interesting story. In terms of u. S. Equities, you are going to get a little bit more of an indication later in the day. You are going to get the Michigan Consumer sentiment index, the housing starts. A swirling ball, how about we popped some numbers in . There we go. You also have Industrial Production and little bit later on. Actor you. Thank you very much indeed. Manus cranny on the markets. Still to come, a rude new boss. For shells the chief executive says 2013 was not what he expected for the company. More on their profit warning as shares continued to slide. Do you want to follow us on twitter . We would be delighted to have you along for the ride. See you in a moment. The 1. 1 trillion bill to fund the u. S. Government till the end of december has been cleared by the senate. President barack obama is expected to sign it into law on saturday. Began stanley is set to reducing the honest if roles for top banks. Banks will pay some portion of the rewards for last years laws. And show shares are lower this morning. Ell shares are lower this morning. Squeezed byeing losses in america. Bloomberg industries makes up 140 analysts who provide research so it is different from the news department. First of all, what exactly happened . Came out with a Statement Today surprisingly saying that these earnings would be much lower than they had guided or anyone had expected. Its the first time they have done a profit warning like this in 10 years. The reason they said profits would be so much lower was because production was a much lower. The refining margins were hurt. And the whole year 2013 was disappointing to the new ceo. He has been in the job for 17 days. It is quite tough one for him. When you look at the numbers, when you crunch the numbers, the analysis, they had issues already. Were they not addressed or is it bad luck that things are compounding all at once . The costs are rising especially for these highyield fields. They are increasingly coming from offshore and costs are rising throughout the industry. It is a clear sign that this issue will be tackled by shell and other companies. But others have tackled it at her, right . , from what i understand, a problem that shell has. I think the confluence is difference. Stilloblem with costs is relevant for all the companies and they will just have to were close together with Services Companies and among themselves through themselves to generate more savings potential. Chevron has guided lower for the Fourth Quarter as well. Everyone has the same problems. Tavis rising they are also hurting industrially where costs are rising very quickly. They said that hurt their bottom line is well. The new ceo has been in charge for 17 days. How does he tackle this . Well have to see how they will continue with the show gas exposure in north america. European auto majors are not too happy with their activities there. So they will have to see how they will continue with that. And just get rid of hard jets that are not that yielding and just focus really on the high impact projects. Question so the highrisk projects they will have to get rid of . The oil industry is about chasing value over volume. Everyone had these big production targets. Theyhey are saying that shouldnt worry about the overall production but how profitable we are. Having problems on both sides. , you you dont take risks wont make it big in the oil industry because you can have an amazing find. Every oil Company Needs a assetsportfolio, risky where the discoveries come from. You need to be able to re