Offer that boosted the deals with 5 million. We look at the risks they face as they try to live up to the hype. Figuring out which Health Insurance plan to choose can be confusing. We speak with an hr startup designed to help employees choose the best health care coverage. To the lead, apples new iphones are off to a fast start, setting a new record for Opening Weekend sales. Apple sold more than 10 million iphone six and six pluses, beating the five and five c by a million. We manage the manufacturing rent better than before, we couldve sold more iphones with better supply. We are working hard to fill orders as quickly as possible. The phones went on sale in nine countries, able go on sale in 20 additional countries later this week. One place that will not be happening yet as china, where the new phones are delayed. When will chinese consumers be able to get their hands on them . Joining us now, cory johnson. I have been playing with my new phone over the weekend. The iphone 6 in gold. I love it. This 10ou make of million cash 10 million . Franco, we would have liked to see a slightly larger number. As tim cook said, they had manufacturing constraints. Most likely thats on the six plus side. Our indications were manufacturing start it later. Start, 115 markets by the of this year. Hopefully china will be among them. You think this is manufacturing, not marketing . We have been discussing the issue of does apple purposely hold back supply to increase the hype . And a believe apple does that. Think they do the best they can. It is a phenomenal rep. Less than two weeks from announcement to wrap. Samsung couldnt do that with the note four. Well be waiting a month. Marvel, andacturing some people will have to wait a bit longer, including a lot of people in north america. Do think there is a particular component that is difficult . Or is it that they push the design already up there, still working on it in weeks before the announcement . The speculation is the larger screen sizes on the iphone 6 plus were problematic from a yield perspective. The yield of the sapphire is it sapphire . Sapphire protection. They are not able to successfully make enough of the stuff. J b securities hasnt been able to confirm that ourselves. Thats widely believed to be the case. Its unclear which is more popular. It seems the six pluses sold out in more places. That doesnt necessarily mean thats the phone people are buying more. I think there are fewer of them to be bought. There are indications that there have been outsized demand for the larger screen phone. When we get to launching in china, i expect those to be extremely popular in china as well. There have been unconfirmed reports that the Chinese Government has not approved the phone. And they might not improve the phone approve the phone for a while. China is supporting local manufacturers, whether it is lenovo, or you name it. What isyou know about going on in china in terms of religion or a approval, ability to sell the phone not demand for the phone . China is going to happen. Its a question of when not if. We already have the five s on sale in china. China was a great geography for apple last quarter. China mobile is working hand over fist to install it for structure. Forupside of their targets 4g basis. I think theyre getting ready. Thats good for apple, and other companies for x volterra is a company that jp security should be bought. With stock. Apple is going to come after that. I think it is wise for apple to wait until it has sufficient supply to go after that markets. Is there a regulatory portion of this . Probably, but its not insurmountable. When it comes other country, how do you expect the sale to play out . Very strong. Othernorth america, the geographies have been starved for larger screen iphones. There are a lot of geographies where people can afford a phone and a tablet. A hybrid device that can serve both roles is very advantageous. There also nations were theres a greater degree of commuting were larger screens come into play. We think it will be a very Strong International rollout. Year, after the release, they said the quarter looks even better than we expected. Today. Re mum does that mean things are just as expected . When you make of that . We havent had them talk about the preorders and initial weekend sales. There is actually more information the sheer than there was last year to feed off of. Perhaps they are just teasing it out. We will have to see. All still have to rollout these. The ipad coming in october. What are you expecting there . We know that apple is working with ibm to increase their penetration of enterprises. We would like to see what these new ipad refreshes a little bit more on strategy come on how they are going to do that. We know they can go a long way with replacing and modernizing the way people do business. Part of the pay attractiveness can also bleed into the ipad. On thelked to sources sale cited ibm. Im serious what you think. One was that the sales force is really stoked to have the ipad to offer their customers. Instead of having to offer them subpar tablets or Say Something go get them yourself. But also the application development, they think will be a real driver. This coming from the bottom of sales field. We can look at pay. Apple pay is a wonderful marriage between hardware and application, and bring along an ego structure. Let that ibm to this equation. All of those fortune 500 relationships. They can now bring specific Technology Solutions with an elegant hardware solution behind us. Apple pay, we will discuss later in the show. I cant use it on here just yet, but next month, that is when it is coming. Securities. F jmp thank you. You can use your phone to pay in october, but how secure that will be, thats next. Welcome back to bloomberg west, im emily chang. Ipo on friday was the largest ever in the world. Shares surging 30 on the companys trading debut. 38 on the copies trading debut. Today it is down slightly. One of the risks with ali babas to 90 a down share. Join me as cory johnson. What do you make . A lot of investors saw they ported to the ipo, they got it. I wish they had more. Now that the stock is trading 93, its a different Value Proposition. It gives us a chance to care about it. You do want to look at the business with a higher valuation. Imagine what is it worth, what are the challenges to get to grow into the value it has now achieved in the market. And how might the business changed to grow to that valuation . Its trading in terms of operating profit. The price to operating rough it is 55 times the last four quarters. It is trading at 55 times its operating profit. Forou were to buy something 55 times its operating profit, if you were to buy an ice cream shop or a rickshaw on the street, 55 years of earnings is what is trading at right now. Growth is at 52 . Those earnings are growing really fast on a trailing basis. When you break it down to a quarter level, you see a dramatic slowdown in the growth from a yeartoyear basis. It was growing at to enter percent, its down to twice 6 last quarter. 22 the last quarter. A big slowdown for this company. Thats not good enough for 93 share price. You have the biggest shareholder not selling anything. His son made it clear on friday he is still a believer, this is just the beginning. He told me. Whats with hence did you get from jack ma about whether business goes next . He said he was hoping for a joint venture with amazon. Who knows how serious he was about that. But he really talked about helping Small Businesses expand in the u. S. And around the world. You know me. Talking,elieve people especially when they are trying to sell me shares. When i look at the numbers, yeah, International Revenues are going up. But the pace of growth, or the relevance alibaba is very small. The percentage of revenues, it was only 9 . Thats a lot less than what we were looking at even three years ago. More like 26 . To paraphrase myself, international is an important. Said, dont look and listen to the sound of his voice. Look at the numbers. Look at what they are excellent doing. That doesnt mean it couldnt be a greater portion of the business going forward. I think the things investors are looking at right now is, there saying this business is going to get better. They are not looking at international as much as they are looking at china itself. I asked you about the nature of the Chinese People. You lived in china. In the perspectives, it said that Chinese People are spending 30 of gdp is that a real consumptive. In the u. S. At 60 . They spend more than we do. And yet 80 of the commerce that does happen in china goes through alibaba. U. S. Investors are hoping that number changes. They might bump it up to 40 or even 60 . But also they are spending more frequently at alibaba. Three years ago, the average 35ma consumer in china made purchases the year. Last year was 32. Their customers by something every single week. The investor in this deal, the hope further business is the consumers generally will spend more of their income, and specifically will spend more at alibaba. At least one of those trends is an alibaba favor right now. We will watch growth in china internationally. Cory johnson, our editor at large, thank you. We will be more back. Im emily chang and this is bloomberg west. One feature we will find a months apple pay, allowing people to waive their phone or watch to make a purchase. This is chip and Pin Technology for credit cards is starting to penetrate the United States. How do all these technologies Work Together . For more now, im joined with cory johnson, and Ellen Ritchie in new york. Ellen, thanks for joining us. As a partner with apple, how does apple pay actually work . The way it works is, you provision your card onto an apple phone, sibley by taking a photo of it. In the background, these it technology, working with your bank that issues the card, will verify that it is really you adding the card. Once you have done that, it all happens in the background. You sibley wave the phone simply wave the phone after pressing your fingerprint reader, and it will make the payment for you. From a risk perspective, obviously, we have seen major credit card reaches target and home depot recently. Had apple pay been more mainstream, with those of happened . No one thing can ever solve the problem. We have very enterprising criminals attacking our Financial System every day. But apple pay, and Similar Technology that you can get soon on other phones, will be a big part of the solution along with the new chip cards you mentioned. Specifically about these haveologies, does visa more cards using the Chip Technology than say using different while it formats wallet formats . Most of our payments in the u. S. Take place on plastic cards. The mobile technologies are relatively new. We think they will be taking off. Right now, the overwhelming majority is on your plastic cards. They will be swapped out for those new chip cards over the next two or three years. How fast will you guys actually be swapping them out at visa . Great question. Visa itself doesnt put the cards out, it is our issuing bank partners. So whatever bank issues are card, they have told us that by the end of 2015, we should have 575 million chip cards in the u. S. Market. Huge numbers. Thinkcifically, do you that the Value Proposition for apple is different because they have biometric id on the device . Therefore they will have lot less risk . I think the apple proposition is a strong one from a Security Point of view. Really about the fingerprints a much, as the technology that operates in the background. That includes Chip Technology, which generates a onetime code, cant be regulated applicator by criminals. It makes the data useless to criminals. It will be a big part of devaluing the data, making the system safer in the future. The same thing most chip cards do. I dont understand fundamental difference. Right now, when you use your plastic card, the store reader will read the card, and it will have a series of numbers that could be used to make a fake card. That is why they are stealing the data from places like target and home depot. Once you have a onetime code, it wont matter whether that data is ever stolen. You cant use it without a new onetime code that is generated by that little chip either in the card over the phone. Words, the retailer of creditthat cache cards. Hackers can break and all they want, there is nothing in there. Essentially correct. That is why we say that these can take the retail Tech Industry out of harms way. Out of the line of sight of criminals. Apple pay, the technology that integrated into apple pay allows you to waive your phone, that is different from chip and Pin Technology. How do you see these working together . If its just adding layers of security to the actual transaction . Is adding layers of security to all the transactions. That important to know insecurity, the criminals will always go to the weakest link. You have to secure the physical pointofsale, where youre are going to use your card in a terminal physically. And also the digital pointofsale, whether that be mobile or electronic. The technology in the background will be operated on much the same principle. But it is implemented differently, depending on whether you were there with her carter transacting really. Remotely. Said they will have five or 75 million chip and pin cards out there by next year. Will retailers have the hardware to accept these cards . Retailers are coming along, perhaps more slowly. They have to take the trouble to swap out their terminals. I have done a lot of that work already. Many of them are in the process right now of upgrading back and systems to read the chip information. We expect there will be significant numbers. I dont have an exact number. Some of the industry gurus are projecting that up to 30 of all ,ayments will be chip on chip chip card which took terminal, by the end of 2015. It explained for the credit card processing business is so hot right now. If i were apple, i would be visa, thebe set thumbprint is reducing your risk. We should get a piece of the transaction. Explain to me what the thumbprint biometric is not reducing risk . Let me start with the tokenization. That technology is what makes the data useless, by creating a single digital accountable account number. That is what is really reducing the risk. The thumbprint is a great thing. Dont get me wrong. But it is what we call static data. It doesnt change from used to use. So in theory, our ingenious colonel minds could eventually be able to counterfeit that thumbprint data as well. It is good, but it is the commendation of things that really makes it work. And especially the static data, illuminating the static data through tokenization. As either standard, apple is taking a portion of bank fees from the apple pay transactions. But it is not taking anything from the credit card companies. Does your takeaway change . Is apple taking any part of your cut . Apples arrangements are primarily directly with Financial Institutions. The economics for visa does not change. Ellen ritchie, the chief and a prize risk officer. We will be back with more of bloomberg west. Its 26 minutes after the hour, which means bloomberg is on the markets. Im julie hyman. We are seeing declines across the board. A onetwo punch of commons out from a chinese officials saying the Chinese Government may not pump as much stimulus into the economy as the globe is expecting. That affecting stocks. An existing home sales reports here in the u. S. Showing the first decline in five months for the measure. All of that combining to push stocks lower. More the markets later. More bloomberg west. You are watching bloomberg west, we focus on innovation, technology, and the future of business. Im emily chang. The open Enrollment Period for healthcare. Gov opens in a month. One company is helping sell totware for businesses handle employee benefits. Parker conrad joins me here in the studio. This is a company that is getting a lot of buzz. What exactly is this . We solve this problem is coming to every business in the United States with less than 1000 employees. Businesses have all of these separate and disconnected systems related to Human Resources and their employees. , i cannotnefits think. It creates a problem when you have to hire or terminate someone, you have to set them up or remove them from 15 different places. Someone has to do this work manually, often on paper. We take all that stuff, put in one place, we move it all on line, and we automate a tremendous amount of work so that you can focus on your work. You have an interesting personal story that im sure has upped inspired you to do this. You actually better battled cancer yourself. Had cancer about 10 years ago. Thatone of those things once you have a condition like that, you always have to be vigilant about Health Insurance. As a result, why started this company, i was looking around for what it wanted to do after my last job. I wanted to do something that was related to be a Affordable Care act, that was in some way tied in with the Health Insurance market. I saw these broad changes coming as a result of that legislation. And potentially an opportunity for new companies to be more nimble and news move more quickly to grab market share. How does the science of via Affordable Care act, how does zenefits impact them . We think that everyone who is focused on the employer mandate, and what that is going to do to employees in 2015 is looking at the wrong thing. The employer mandate doesnt matter as much as people think. Most employers already offer Health Insurance coverage, at least the ones who would be affected by this. Mandate issue is the for employers to jump through a series of compliance hoops that the federal government imposes on them. The irs released guidelines on this a couple of weeks ago. The form t