We have been in separate places for a month. [laughter] one of the interesting things about the nsa, the tech leaders pointing fingers squarely at the government. It is interesting. Certainly sac,o, and yahoo as well getting these requests from the nsa. Here they are at the World Economic forum talking about the impact on their businesses. Could askd if you president obama one thing, what would you ask for . Lets look at Marissa Mayer. What one thing would you ask president for . Transparency. So users understand the background requests we are getting and how that data is going to be used. We need to be able to rebuild trust with our users. Trustyou think that the has fallen because of this . I definitely think so. Not only within the u. S. , but also internationally. Me there are other countries that have concerns we are looking at. I think transparency is something that would ultimately help this. You do wonder what the fallout is going to be internationally in terms of how it affects the growth of these economies. Of these companies. If they do not trust yahoo , they will look somewhere else. Yahoo they have all been to the white house to talk about this issue specifically. We also know that cisco has been more candid than any company out there. Cisco came out last quarter, saying that sales of hardware precipitously. John chambers has been very outspoken on this. He has been very outspoken about this policy because it is hurting his business. One thing he is coming for he specifically talked about the need for more regulation. I dont know if this is too optimistic on his parts. The idea that the United States and its allies can come up with a map for the road, how we are going to do business, how we are going to survey all . Surveil . What happenedk at to cisco in china. Reports from Hewlett Packard last quarter. Ibm. You can really see this playing out throughout the information technologies. Its not just the privacy issue. They actually put it back on the companies. Take a look at what he had to say. Transparency transparency is not just about the government. It is also about the vendors. Vendors have to have transparency themselves. They cannot put it all on the government. Who is he calling out there . Yahoo , cisco . Ut i think he is talking about the fumbling around there, with the prism revelation and edward snowden. But i think one of the things that the company fell back on, i think, its not that big an issue to tell you, but were going to tell you its not that big a deal. I will be interesting to see what the numbers look like when we can see them and if the numbers really matter. Is it just really big metadata . At t is cooperating very quietly. Yahoo , one of the early ones complaining about this. I think they recognize the threat to their business. Speaking about yahoo s business, Marissa Mayer did dig deeper. She talked about mobile. That has been a fema verse for the past year. She has been talking about how mobile has been has been affecting her business. By the end of this year we will have more mobile users and other traffic. We pride ourselves on running the Worlds Largest start up. Can we be flat . It really enables people to think, how should we be changing . What are the new disruptive things . Here is the thing. She has been talking about mobile for more than a year. The thing thing is happening with facebook and twitter. It does not mean more people are using yahoo , just that they are using yahoo differently. What does it say about their traffic . What does it say about the growth . The first thing, every Single Person matters big time for this company. Hugee in this transformation across businesses where it is not just about adapting their existing business to mobile. A company like yahoo is trying to find its way and find new relevance. It has lost its way for, lets call it 10 years. Looking to be relevant on mobile. Some numbers tell us in the last quarter of two 390 million mobile users. Thats a 15 growth. Thats a really massive growth and change in behavior. Now they will be almost required not actually require investors will demand of them, tell us your metrics, because we want to know how many users you have out there. We want to see if it is accelerating or declining. They want to see them accelerate. He was brought over from google. She just fired him. Obviously she is not happy with the performance. A lot of companies that made their way initially on the desk they are mobile first. We keep hearing mobile first development. It is hard for a company to be mobile first. You can argue that twitter is mobile first. Their mobile revenues exceed desk top revenues. We have not heard that from facebook. We certainly have not heard that from google and yahoo we will see how that transition goes. At some point, the company is going to be required we know that yahoo has fought with the fcc about what they can disclose. They did not want to disclose they had as much of 30 of revenue coming from microsoft. Rely on that agreement, which could expire in a short time. You can be sure if the mobile numbers look really good, they would disclose them. If they have not, they are probably not as strong. Asked georgetor connolly of foursquare, asked technology isat transformed the market the most . Marissa mayer said the iphone. Another said the fit but fitbit. Story a really funny about michael dell. Take a listen. Questionu feeling ok mark are you feeling ok, mark . What do you mean, michael . Im really worried about you. Im your friend. I have noticed in the last re days, you have not worked out. Its its almost a little creepy that michael dell could know that marc benioff is not working out. Both of them really built their empire on the desk top. They are thinking about and actively engaged in this world up not getting fit. These guys are both in their late 40s, i think. 40s, because i like both of these guys personally. What is interesting is they are actively engaged in learning about this world were lots of data is being created and users outside of the social network i know that they have the Facebook Team with the fitbit. With a few other devices, the fuel band maybe a little less so, the sharing is massive amounts of data being collected. Or in the case of marc benioff collected for a few days. Im sure these guys are thinking what this means in terms of big business. But what does it mean in terms of right to see . Where does in terms of privacy . Where is this data stored . Who gets to see it . What about privacy . Im sure they are thinking about gathering the data and spending that data in seeing how it can be used, and not just trying to get his friends off the couch. Definitely a great conversation. I know, i know you will sound it out. I truly have commitment issues. I have so many at home. Our editor at large, thank you. Coming up, we will talk about the future of ibm. Is whats in it . Why not . Welcome back to bloomberg west. Im emily chang. Ibm reporting earnings yesterday 420 are teen and the fourth 42013 for 2013 and the fourth quarter. What is going on with ibm . This is the one company that Warren Buffett have a lot of faith then, that ibm had the smart decision to sell the pc business a few years ago. They were supposed to be on the up and not. They have had arise. I have been on tv for so long. They have been able to increase servers per share. You have to think about how much Financial Engineering is going on. They have reduced their share, goch helped a lot of the eps up. But a lot of the numbers look bad for this company. What do you get in for . These guys have seen sales fall. I think really consistently over two years. The of a rating rockets profits have also continued to fall and those numbers are looking pretty weak. Is happening before she took over . Ceoeople forget there is a transition at ibm about every 10 years and they tend to be kind of rough. The ceo was forced to undo some pension changes. That heard the number the company and the gross numbers. Similarly, there was an attempt to revive ibm and he has done what a joke quite a job of that. Years of great patents, the leading number of patents of all u. S. Corporations. What have they missed . They have missed social. Not just social for computers, but social for networks. This could have been an ibm opportunity. They missed software as a surface. For all their inventing, they are not big in the against areas. With watson, the idea of that being some form of service. They say this could be a 10 billion dollar revenue opportunity. The customers say, it take so long to teach watson about us, its not really worth the investment. Have they made a strategic misstep in terms of pouring money into this Artificial Intelligence thing . Ofi think its a little bit monday morning quarterbacking. The notion of renting out watson as a Service Comes rim years and years of trying to sell watson to every company. Trying to convince companies they need this big computing power. You can see that in the numbers. Its only speculative. The technology services, quarter after quarter after quarter decline. They are supposedly moving away from slinging hardware like comen. Most of their sales from software. And theyre supposed to be moving into lenovo as well. Software numbers have only grown three percent on a yearoveryear basis. N you get into the numbers the tax rate, for example, falling really dramatically. I think that is overlooked with all the other things going on in the business. Average, about 26 , and you have an 11 number lower than most analysts are looking for. The analysts are not going to come out and say, i got it wrong. They have a lot worse average than in previous years. Eventually, that might come back to bite them even further. All right, ibm is something we will be watching, of course. Amazon has denied they are building up a tv service to rival cable and satellite companies. This is a story that we reported yesterday. Thele familiar with situation say that they are building a prime video selection that would have a live component. I want to bring in our senior west coast correspondent jon l. A. Hman nla in so, they are building drones but not up Pay Tv Service . Should we believe them . Amazon says, youre right, we are now working on a paytv service, but sources have told bloomberg and other Media Outlets conversations have taken place. I think when you look at what amazon has become, there is logic to them at least having conversations on this front. They spend a lot of time on tv. They obviously have value in making tv and movies available through their instrument instead video instant Video Service that members are consuming through amazon prime. Lubricant is reported that they hasworking bloomberg reported that theyre working on their own apple tv device. Amazon, a, the ceo of very smart person who thinks a lot about the consumer. And when you look at the frustration a lot of consumers have with the paytv experience, amazon is a company im sure a lot of people are looking to for ideas. Would it be for amazon to cut a deal with other content companies . Content Companies Know they have got a good thing going. Becomes a key hurdle, getting the Media Players on board. Our understanding is they are to amazon,ll content for example. Whether they can get that same pricing for what traditional paytv players are paying is another story. Something that we highlighted last night on the late edition likely theyg west, would have to have a few players on board so everybody feels like, ok, we are all jumping into the ring together. All right, a story we will continue to follow. Thank you, jon erlichman. We will be back with more. Welcome back to bloomberg west. Flip motors is. Hoping to do the same thing for electric motorcycles. Take a look at their plan to reboot the commute. From the front, it looks like a normal electric scooter, but inside, its anything but. A big hole in the middle of the frame means that the scooter has as much trunk space as a car. It is a vehicle for everyday things. Is the visionary behind the electric vehicle start up. They have two vehicles in the works. They have a take on the commuter scooter. The other vehicle looks like something from a scifi movie. Part car, part motorcycle, it itl cost over 4000. Takes all the safety of a car and the convenience of the car and marries that with the romance of the motorcycle. Is also electric, is less price. Somebody can take a little bit of this and a little bit of that. After years of development, and hope to get both vehicles into production this year. Y im part of this generation , and i am developing a car for me to read for us. To do that, he has joined forces with a creative designer who works for big brands like Herman Miller and bmw. What im excited to do is look at the complete package. How does this new type of vehicle become attractive to people who know and ride motorcycles . But also people who never have. They are working on the prototype. Lessic makes normal cars desirable. Thinks that it makes flip ready for the fast lane. We are creating a fast vehicle for any type of short commutes. Really great story there. Love that collision animation. All right, its time for on the markets. Olivia sterns joins us on new york. Hey, olivia. Hey, emily. Lets get you caught up on what is happening on the stock markets. You can see the market is mixed. Season. R earnings the one stock we are really watching is general dynamics. We will be back on the markets in 30 minutes. This is the Early Edition of bloomberg west. Im emily chang. You can also catch us at our later time of 3 p. M. Pacific, six p. M. Eastern. Now to headlines. Deaths in the ukraine after antigovernment protest. Protesters were killed after the fourth straight day of protest in kiev. Verizon has published its first annual report on Law Enforcement request. It has received inquiries from Companies Last year. Just 11,000ved requests in the First Six Months of last year. Frigid temperatures hitting the northeast after the area hit with a major snowstorm. 11 inches fell on new yorks central park. There are still scattered flight delays at new york airports. Would you pay 2 million to in your house . Dear lord. Its a great movie, but that is a lot of money. Stephanie ruhle and rick chapter spoke with the imac ceo ought at the World Economic forum in davos and asked if imax is ing from the rich getting richer. They do not have to travel to davos because they can see you on the screen home. On a serious note, that is a very niche product for a small market. In fact, if we sell 10 of those a year, it is a lot. Are looking at revenues that are still 700 million worldwide. Did 20 of the north american box office. This is just sort of an niche. Partome theater is just a of it. We have another home theater. We have china, the middle east, and russia. Wins a ton of awards, do you make money off of that . We might. Not a lot of money. The way we may money is if it is released. For us, we are excited if the film really broke new ground and used special effects in a new way and that is for imax really takes off and that is why we index so hot. So, i will index so high. So i would like to see it when because its a really great movie, but it was shown off in imax. It is associated with that brand. I think that is more important. Imax movies just a few years ago a were in the museum of natural history. They were almost documentary style. That has to be a big payday for you. Time flies. It seems like yesterday for me, too. Apollo 13back to with tom hanks, the harry potter movies. Yes, its a new business model. Obviously people will pay a certain amount of money for documentary movies. Ringsu see lord of the in imax, kerry potter, things like that, that is special. , michael bay film part of transformers. He filmed part of it with imax cameras. Spectacular. When i was going to school trying to learn french, guess where i work . At imax . No way. Soda was this, my popcorn was that. How much will people really pay . They paid the equivalent of 23. In new york city, about 20. We have almost no complaints, because you get what you pay for. Its a really special experience. If you think of watching a film like gravity on a small device or small screen, it is a value. There comes a point where people will there come a point where people think about imax like maybe not apple, but maybe think of you as a Consumer Technology company . Because you are making these home theater systems for 2 million, 250 thousand dollars, and it computes what Something Like sony brought via television Bravia Television . Our Brand Awareness in places like china is higher than in the u. S. In russia, its a big deal. This is their old view of imax. Theater, the big one, the small one, i think that is a test for us. We will see. We would not put our name on it if it was not something really special and transporting in a way. If it all works, yes. Do you look to the future and think, how can imax be the name in the home that sony was once upon a time and maybe samsung is now . Is different than those companies, but definitely we will look at how we can broaden our name in the home. When you ask about that, you think about things like gaming or virtualreality which is not part of your game at all. We have to think about the regular consumer electronic experience. I think apple is a great example. They rethought the experience. Culturally, that is how we help ceo richard g on. Could google have been insulating its Search Engine ranking . This is the Early Edition of bloomberg west. Emily chang. Is google trying to punish expedia . Take a look at this. Expedia results under google the last week. This is according to a German Research firm called search metric. It will does not like it when companies try to tame the system. Cory johnson, what do you think . I think a lot of companies try to game the system. Google is in this industry. It did not happen to everybody. Priceline, traveler, kayak those numbers seemed stable. Expedias shares taking a hit from these news. Down four percent yesterday. Me live via skype from berlin, the search metrics president. Tell me what you saw