Massive charge to turn itself around . We will look into hp financial. And the next decade could be the decade of the robot. In 10 years, one third of the Global Workforce is predicted to be replaced by robots. Super machines can do both physical and intellectual jobs. Our leadough, to story. Samsung is still the Worlds Largest smart phone maker, but is starting to show up in samsungs earnings. The company forecasted a sales , its biggest since 2009 when a report orderly earnings next month. This is after about after apple rolled out its iphone. Samsung is also getting pressure from other competition. These Companies Make cheaper phones. Joining me now, editor at large cory johnson, and in washington, senior director of trade at the economic institute. Are samsungs glory days behind it . It may not be behind it, but it is getting squeezed by both apple at the highend side and in the lowend side by a series of newcomers. Star being introduced by firefox throughout south new models are being introduced by firefox throughout southeast asia. We will have to see how it is able to adjust. Cori, read between the lines for us. There is more than just this headline, what it might suggest. But there is certain there are certainly more, because the headlines are sparse. Right after the quarter, and here we are just a week after the end of the quarter, they are required to tell us what happened in the quarter just in the topline and bottomline. What are your revenues, and what are your profits, ballpark . So we dont know where. But we dont know if it could be it could be horrible sales in refrigerators at best buy for all we know. But we have seen declining sales, or increasing sales declined for three quarters now from samsung. They are losing shares cross the board. You will see a lot of stories out there saying that the apple iphone 6 is killing samsung. There were only three days in the quarter that was available. Right, but people could have been holding out to buy it. Yes, but the big change because of the new iphone is probably not true. That there is a trend that goes way back before this quarter. We will see exactly why this is happening right now. Lets speculate, troy. Where do you think the problems are happening . Samsung is still the league the leader in the Global Market share. Are they getting hit on highend, the lowend, or is this acrosstheboard . Is this just smartphone saturation . Iing i agree with agree with cory on this. Ultimately, what we are seeing is these margins getting hit in the emerging markets and on the lower end. Samsung has spent a lot of its energy doing it highend products. But they have let the separate markets get behind and go. This is falling behind with companies coming in with products that are just as good, but significantly lower price. That is the challenge for them. But there is the suggestion that there is the suggestion that they are losing money in china and india. What about ships, for example . Example . For certainly, chips are a huge deal for this company. As bad as the scales the klein sales decline is, the profit decline is much more alarming. In order to move product, they are cutting cross cutting prices. If you imagine stones in china for example, a very fullfeatured phone for a lower price. Competing with apple, they have to offer all kinds of features that are expensive to offer. The combination of those things could be the reason we are seeing this impact on the Profit Margins of this company. Throw in the price of the chip and you have a company that could be having issues with profits. Troy, talk about samsungs other businesses and where they should be placing their bets. Its not going to be happening if its not going to be happening in smartphones, should it be in ships, in connected cars in ships, in connected cars, inhome . Out a fewad laid years ago 5 they had laid out a few years ago five growth areas. One of them was the solar powered industry. In terms of the internet of things, that is where they are pushing now. Them,opportunity for given that samsung is a producer of household goods. We are talking appliances, suggest washers and dryers, refrigerators. Bought smart things a few months ago. They can really try to tap into the connection to their products and how we are moving in the future. But i really think they need to look to other areas for growth and to try to not focus so much on the Global Industry the phone industry as a whole. There has been pricecutting the crazy. There has been flooding from chinese manufacturers into the market. It has been principally governed not on growing business, but big changes in a handful of policies big changes in policy with a handful of countries. Samsung is also in the midst of a product transition here. The Fourth Quarter can be the slowest the Third Quarter can be the slowest quarter for them because they are ramping up for fourthquarter sales. The deathly to ring knell for samsung. What about robots . More and more jobs are going to be replaced by robots. Certainly, mine. [laughter] but that would be in much smaller markets, even solar that would be in much smaller market, even solar. Joining you so much for us. We will continue to follow this story in more detail between the headlines later this month. Up into twoak separate companies doesnt come without a cost. We took a look at the extraordinary numbers behind the separation. Im emily chang and this is bloomberg west. Ibm is once again trying to offload its chipmaking business to global boundaries. In july, it had resume, according to a person familiar with the matter. They are offering to pay more than 1 billion more than the 1 billion it had previously offer the company to take the chipmaking unit. Ibm is trying to get less profitable businesses off its books as the ceo deals with nine straight quarters of falling revenue. Hps separation into two Different Companies is leaving investors hoping for a revival of the Silicon Valley pioneer. What do the changes really mean . Cory johnson has been digging into the financials of the company, as he loves to do. What have you found . Tohp also announced lands lay off another 5000 plans to a off another 5000 workers and another 6 million in extraordinary restructuring charges. Restructuring restructuring is up to 4. 7 billion right now. The question is what is behind this sort of permanent state of catching up behind hewlettpackard . Professor is stanford of accounting, charles lee. Great to have you on this show. Talk about what the restructuring is supposed to be. Cori, when a company goes through its lifecycle, theyre going to encounter what we call life events, and restructuring is opposed to reposition the company to be more competitive going forward. Is restructuring as an accounting treatment represented of of a midlife crisis for hewlettpackard . Is at the sports car, blonde, drug problem, or Something Different . Well, i think that in each case, we look at it as an opportunity to reinvigorate the companyies. In this case, hewlettpackard is facing a lot of issues and the separation is one way for the two entities to try to refocus. One of the things that jumped out to me is that it has, over not to julie from wegman meg whitmans restructuring or others, but this company over a dozen years has had significant restructuring charges over and over and over and over again. Is this a common thing . How where would you say this kind of thing is in the role of technology and or in the role of Corporate Finance . Well, stuff happens. But you do not want to see is is fortime charges these to be called onetime charges when, in fact, they happen every year. These are charges that have to do with major changes in the companys operations. Year, theyns every are asking you to ignore losses year after year, which is probably a not a good thing. Not good to see at a company year after year . What we have seen in Academic Research is that when you see companies who are recurrent restructures, the market seems to under react to this, to these charges. And over the next three years, the firms that do this tend to have lower cash flows as well as lower market returns. That restructure more tend to have lower returns and lower cash flow. Certainly, theres an impact on the number. When the analysts look at hewlettpackard, for years, they look at the nongap number. Which is not the earnings, but the adjusted earnings including the restructuring. Because the gap earnings are significantly lower. 44 billion, compared to the nongap never, the not real number of 80 billion. Yes, you will find that is pretty pervasive a large dash across large companies, particularly tech companies. You will find that is pretty pervasive across large companies, particularly large tech companies. And with a pro forma number that realistically reflects cash flows, on the other hand it to take that they want that out of earnings. Who wouldnt want that . Is this a unique thing with Technology Companies because they are so well known for embracing and affecting change . Olderthis more with Industrial Companies that are affected by that change . I think happens in both, but in the case of Technology Companies, a very large item is, in fact, stockbased, and nation compensation. D and the adjustment between many thehese numbers is ga difference between gaap income and pro forma income. Do we see that these dont work out . Across the board, there was a time when more than half of the s p 500 had restructuring charges in their income in a single year, which is pretty broad. You think the hewlettpackard thing is not unusual, or otherwise . The event itself is not unusual. I think the magnitude and the consistency with which theyve done it, well, it raises eyebrows. Stanford accounting professor, charles lee. We always appreciate your time. Thanks very much, cory johnson. Also, be sure to catch our special coverage all day tomorrow live from vanity fairs new establishment summit. We have a great lineup of guests, including shane smith, seo and cofounder of vice media ofwell as tom freston viacom. That is at 3 30 p. M. Eastern and 12 30 p. M. Pacific right here on bloomberg television. Just how much is the action camera go pro changing the Video Industry echo more of that next the Video Industry . More of that next on bloomberg west. Fax welcome back welcome back. Im emily chang. Go pro has launched its newest line of cameras this week. Tripled their space at best buy stores. Shares are up this week and have soared nearly 300 since the june ipo. But does go pro need to prove itself echo prove itself echo it is partnering with a public retailer. A smart strategist is here with us in studio. It is a good idea to partner . Andt is a very good Visionary Company and its a good idea to partner with best buy. We did store checks. It looks to us like its the standout performer. They have successfully moved the bar up to the 499 price point, a 25 increase over the high end of the hero three plus. We think that is because it is delivering real value to consumers. Is an outstanding camera. And an outstanding price. Do they have a lot more to prove . I think they are proving it right now. Earlyro arrived arguably for the holiday season. Its the kind of execution you like to see, back the way apple used to execute when steve jobs was around. I think this company is proving itself right now. The early indicators on sales prove that they are into Something Special with the hero for black. Jobs steve jobs at apple, really echo a camera on a stick . We have been looking at it as just an action capture device. And thoseyoung team with experience that is proving it gets it in the new age of facebook, twitter. I love the go pro on the surfboard, on my helmet. Snowboard. Kite boarding. The company has a valuation of 12 billion. 18 has valuation of billion. Those should easily be flipflopped already. And its going to be at some point. You have to give them a little bit of time to get there. What you missed in that litany that you stated was the go pro network. You are not spending enough time watching go pro video. This is a lifestyle company. But they dont have enough revenue. They do get a little bit of revenue from the go pro network. That was my question, how well are they managing this transition to becoming more of a Media Company . Is that really happening . Yes, we are looking at this video and they have certainly changed the sports Video Industry, and Human Interest video to a certain respect, but is it helping their business . Yet, because if you look back in time, to same way walt disney transformed the animation industry, the way nike transformed the shoe industry. If you spend time on their branded channel, you will see there is Something Special here. So youre saying its the next disney, the next steve jobs. Is that what youre saying . They have virtually no revenues from media. Disney didnt start making cameras when they discovered menu mickey mouse. It was mortimer. But here is my question. When will we see you meaningful revenues in media when will we see meaningful revenues in media . If you spend time looking at what this company is doing, you will see the seeds of it today. You will see that tiein with xbox. Its a great opportunity with the appropriate platform. You see what they have democrat success of youtube, the branded channel of go pro. You are seeing the seeds of it already today. Says go pro is the next apple. Up, with hp splitting its enterprise business, separating into two. Two, what do these changes mean . It is 56 minutes after the hour. Lets take a look at where markets are. Cutting global forecasts with german production missing forecast. Take a look at atco. It is thinking today. The Agricultural Equipment maker is cutting its fullyear forecast for a second time. It may be heard by sales that are low in all regions, as well as a stronger dollar. We will have more on the markets throughout the afternoon. You are watching bloomberg west, where we focus on the future of technology and innovation in business. Im andrew im emily chang. Down afteron stepped decades as ceo of oracle. Hp is living up enterprise into two businesses splitting up its enterprise into two businesses. Dreaming out to discuss the shakeups going on in the cloud business, sales and marketing president Vice President , lynn. You have a huge lineup. O, incredible. What will you be talking about . Force is the super bowl of Cloud Computing and its now the largest Software Conference on the planet. We have 135,000 registered attendees and will have millions watching online. It is not only the biggest dream force, but also the most exciting. Ours is about innovation and heaving back. Hitting back. Some of the speakers, Hillary Clinton, al gore, Mark Andreessen how do you create this lineup . How do you get someone like Hillary Clinton to your conference . Everyone is coming next week. We have government leaders like hillary, but also the economic form founder, les schwab, tony and technical luminaries like Mark Andreessen. And we are so excited that you will be interviewing him. I will be with him on stage. It will be phenomenal. And we have so many customers. There is something for everyone. How much does dream force impact the bottom line . What does dream force get out of this other than marketing . This is a Huge Investment for our community and for our customers. This is the place to be. Its a gathering to learn what is next in technology, to inspire, to motivate, but also about giving back. And that is so much of what we do at salesforce. It is an opportunity for each of us to give it back. Its all about fighting hunger. We will raise one million meals. We want the whole committee to come out and help us with that. On tuesday, its all about childrens education and childrens health. We have the bruno mars benefit concert tuesday night. Weve already raised since 7 million to benefit childrens health. And that is coming to dream force and we have thats coming to dream force on wednesday. Coming to dream force on wednesday. But there is so much going on in this space. Larry ellison and mark benioff have had a friendly and sometimes not so friendly rivalry over the years. How does this change things for salesforce . At salesforce, we are 100 focus on our customers success and we know that our success is predicated on their success. Our customers have propelled us as a leader and innovator. Forbes has named us one of the most Innovative Companies in the world for the last four years. Our focus has remained the same, helping our customers connect with their customers in new ways and helping our customers become more successful. But what about hp what about hp splitting into two businesses . How does this affect salesforce . Do you watch what is going on . Of course we watch what is going on. Partner andt customer. Us at salesforce work with hp photo we are deeply involved with what is going on. Our success depends on the customers success. Benioffuickly, mark tweeted a photo of the agenda thing ismajor new coming. Any hints . We will be announcing the Analytics Cloud at dream force, but that is just one of our new announcements that weve got. Weve been working in the last few years on major innovations in technology. Youve got to come to dream force to see. And if you cannot join us in san francisco, you can join us on salesforce live. We will be broadcasting to millions of viewers. Will be watching. I want to give you a can of food. Thank you so much. Marketing vicef president. Find out how the future of robotics is changing the future of labor. Im emily chang and this is bloomberg west. Get ready for a robot workforce. Gardner picks that robots and drones and smart machines will all workers by the year 2025 one third of all workers by the year of 25. They can accomplish a variety of work, includi