This afternoon, a group of outrageous officers attacked our attacked our officers. We have seven officers with injuries, including broken bones. One officer is unconscious. We will do whatever is appropriate to protect the safety of our Police Officers and ensure the safety of the people that live and work in the area. Cory the protests are over the death of freddie gray, a 25yearold who died in Police Custody from spinal injuries eight days ago. Deutsche Bank Investors are not big fans of the banks strategic plan. Shares fell today after they reduced targets. Here is the coceo you will see us build on the momentum we have had over the last two years. You will see us considerably stronger in global finance, but you will probably see us as a smaller fixed income house. Less transactional and more advisory. Cory he says the bank will be able to maintain profit despite rising legal costs, including a 2. 5 billion fine for attending to rate interest rates. The battle for a cheaper smaller cable option is heating up. Espn has sued verizon over its custom tv service. Verizon says its use of the channel violates a contract. Custom tv gives users a base package of channels based on certain categories. Nbc and fox have expressed opposition, but have not sued. Facebook is adding video calling to its messaging app. It will work on android and ios phones. They compete with facetime, google hangouts, and more. Facebook accounts for 10 of all voice over internet calls may globally already. Now to the lede. Apple reports and other huge quarter. Revenues up 27 year over year. Profit of 13. 6 billion dollars up 33 from last year. Apple sold more phones in china than in the u. S. They expanded their Capital Return Program to 200 billion boosting share buybacks by 50 billion and hiking the dividend 11 . One concern, ipad sales fell again. The big deal tim higgins covers apple for bloomberg. There are comparisons to analyst estimates. These are largely in line. What do you make of this quarter . This quarter shows apple can continue to defy the laws of physics. With a product people absolutely love, and an ecosystem that gets stronger and stronger every single day. When you go through this, the Gross Margins of 48 , and the gross margin guidance, that basically says that we have a premium for our products, and people will continue to pay for those products over time. This was a great quarter and it just really speaks to the power of the ecosystem, which gets stronger and stronger. Tim the importance of this quarter was for the iphone to have a strong quarter. That would suggest they can go into the second half of the fiscal year and perform well and go into a second year. Cory this is the Second Quarter of the iphone 6. One might have expected something of a slowdown. It was an exciting product to launch. We covered it. I was breathless. You were catching a good breath but not me. Tim there was lots of breathing going on. [laughter] it was a good quarter because of china. Chinese new year is like christmas in the u. S. A great giftgiven time. What we see, this quarter has become almost as important to apple as the Holiday Season here in the states is, for the first quarter. Cory amazing, 40 yearoveryear growth. Crawford, their other businesses are doing better. What do you make of china in particular . Crawford i think they will continue to see growth in china. I would argue they are going after the most amending customer, and winning the customer, proving it is not just a small slice in china. This is a common aspirational product, all the way down to lowerend models they have. It is tough for me to see a time where china is not their Biggest Country going forward. Cory lets talk about the ipad. I wonder, here is my iphone 6. Did this thing kill the ipad . Tim, ipad numbers were bad. Tim tim cook admitted on the Conference Call that they are seeing cannibalization in ipad numbers, from the iphone and mac sales as well. Cory that is a significant decline. Tim how soon can apple get the largerscreen ipads, which sources tell us are in the works . They should start production later this year. Cory crawford, what do you make of it . Crawford the larger phone is hurting the ipad. With the largerscreen ipads they will see more moves into new markets, new use cases potentially more adoption into vertical market applications. But they need to rethink it more. Experiment with different form factors. I want to point one thing out, the ipad is dropping faster than the overall tablet market. It is getting hit by pent up demand for the larger phone. Cory we had a graphic. It demonstrated this for my model, so lets hope my numbers are right or last quarter, the average price of the ipad 419. More ipad minis than the bigger ipads. This quarter, it is not insignificant, dealing with the size we are talking about, and 11dollar per unit increase. I wonder, crawford, if you think that maybe the bigger ipads, or the ipad mini is hurting more than the larger ipad, which is what we see in the increase. Crawford you are absolutely seeing that. I think that is also why you saw the drop off in sales, right . The ipad mini, a lowend product, is hurt more than the larger ipad. That is the kind of transition you are seeing. Going forward, the largerscreen ipad will save it, but you will still see lackluster unit numbers going forward. Cory lets talk about the macintosh. The macintosh that was released, which just hit the streets on friday. I wonder, if you look at these numbers, the pc business anywhere else stinks. Around the pc business. But apples pc numbers look better and better. Tim students are rushing out and buy new laptops for the school year. It is a positive sign, going into the second half of the year, when we get to the new school year. Cory you will have these new macs available. There were delays when they first launched these things. The last quarter, 10 yearoveryear growth, in industry, they are coming out with 10 yearoveryear growth. Those growth rates are declining, but new products just hit the street. Dell, hp, they would kill for 10 . They would kill for 5 pc growth. Tim we are seeing an interesting moment here. We are seeing a moment where the mac platform is a Computing Platform that is expanding far beyond people who have been interested in the platform for a long time. We are seeing it now bleed into business in new ways. We are seeing it bleed deeper into the consumer in new ways. It is not just the premium slice of the market. When people think about the pc market, they think about the market with windows. We are starting to see the ecosystem move beyond that for macs, moving into new areas. Cory crawford, tim, thank you very much. Bloomberg west will be right back. Cory this is bloomberg west. Loretta lynch has been sworn in today by Vice President joe biden. The harvard law graduate becomes the nations 83rd attorney general and the first black woman to hold the office. Loretta lynch if a little girl from North Carolina who used to tell her grandfather to lift her up on the back of his mule so she could see way up high could grow up to be the chief Law Enforcement officer of the United States of america, we can do anything. [applause] cory lynch takes over for eric holder. She called for restoring fairness, strength, and trust in the criminal justice system. Applied materials has dropped a bid to take over rival tokyo electron. This comes after the Justice Department expressed opposition to the deal, which would combine them into the number one and number two makers of chips. Teva will be meeting with mylan shareholders. They rejected the deal today calling it too low. We want to bring you the latest on violence in baltimore. Right now, hundreds of people are clashing with police after thousands gathered this morning following the death of freddie gray, mourning the death of a young black man who died of an unexplained spine injury while in Police Custody. Julie at this point, we are still seeing some looting in the city of baltimore. Earlier, we saw pictures of protesters, rioters, whatever you want to call them at this point, throwing bricks, rocks, other projectiles. That is video of what appeared to be an abandoned police car, which was attacked by the protesters. We saw Police Vehicles set on fire. The Baltimore PoliceDepartment Says seven officers have been injured. Various broken bones. One of them is unconscious, or was when we got the last update. Various places have been closed in baltimore. Various metro stops, the university of maryland at baltimore, as well as the Maryland Institute college of art, there have been closures there. All of this is occurring in the wake of the memorial for freddie gray, which occurred pretty close to where these protests began. Baltimore police are saying to parents, find your kids and take them home, because they are saying there is a large juvenile presence among the protesters. Cory lest anyone think this is all about what happened last sunday, theres a long history of problems the Baltimore Police department has had with the community. Two people have had similar spinal injuries two people in the last 11 years have been in custody of police and came away with spinal injuries, and got multimillion dollar awards from the city. The city itself has paid over 7 million over the last couple years for actions taken by the police. Julie of course, there is the national backdrop as well. Various incidents of police violence, people being injured while in Police Custody. All of that adding to the tension we are seeing in baltimore. Baltimore, it should be mentioned as well, is a city with a relatively high crime rate versus other large cities. Im also looking at some of the stats, it versus ferguson, missouri, where we saw a similar instance and similar protests that devolved into violence. Just by way of comparison ferguson is a very small city, only about 20,000 folks. Baltimore is a city of more than 600,000, and more than half of the population there is africanamerican. Just to give you an idea of the different demographics and different size of what we are talking about here. Cory also, 127 people have been killed by police in baltimore over the last 20 years. Clearly some tension, to say the least. Julie hyman, thank you for the breaking news. We appreciate it. Bloomberg west will be right back. Cory this is bloomberg west. Target and sony breaches have given big businesses a reason to fear hackers, but Many Companies are learning to trust hackers. Tech giants like facebook, google, pinterest, they pay Security Experts thousands of dollars to break into their systems and find vulnerabilities. They are known as bug bounties, but some companies dont get around to pay them. Bug crowd is trying to help them. Kymberlee has more. People who dont know this world, it is a shocking thing. Explain where it all came from. Kymberlee originally there were security researchers who found vulnerabilities and products and reported them to vendors. There was no remuneration, just advisory credit. But in the brave new world of online services, people are doing a lot of really Good Research work where vendors and Network Admins felt, it is time to start incentivizing. Lets get more vulnerabilities reported, and let attract the best researchers to do that. Cory it takes a certain amount of confidence for them to say, hack us. Im thinking of houdini, who had people punch him in the stomach and then died of a burst appendix. Kymberlee the websites are online every day, so the targets are out there, whether there encouraging the good guys to find phone abilities or not. You would much rather incentivize the white hat hackers to find vulnerabilities and report them than resolve open. Cory i first saw it with google and facebook. I dont know who did it first. Maybe you can tell me. Kymberlee netscape, back in the day cory which was based in googles current headquarters. Whats interesting what has been the problem with the administration of these . Kymberlee managing a Bug Bounty Program is timeincentive. Cory why . Are there so many bugs to report . Kymberlee theres also the issue of managing noise. There are a lot of selftaught researchers who are very enthusiastic, and they dont always submit valid vulnerabilities. So we work with them, both to clean out those invalid reports and make sure the customers only get the valid vulnerability so they can stay focused on the stuff that needs fixes, but we also help those researchers get better. We are investing in them, to increase their skills. Cory how do you get paid . Kymberlee we are a service that our customers pay a fee for. Cory the Companies Pay you, or the bounty hunters pay you . Kymberlee the Companies Pay us for the service of matching them up with our crowd of over 16,000 researchers. Cory i have to think that the companies doing this at a high level are pretty stoked to see the way the hackers work. They did not design the systems with intentional holes, but maybe the hackers work in such a different way, they understand the methodology. Kymberlee one of the things our customers frequently say is that this is a great addition to our defensive program. A lot goes into secure development. From threat modeling to vulnerability discovery. The crowd generally specializes in finding logic errors that a scanning tool and automated analysis is not going to find. These are the vulnerabilities that a malicious hacker would exploit. Cory what is the relationship like between the hackers and the companies . Is it a contentious one . Are the hackers trying to get jobs at the company . Whats going on . Kymberlee it can be both. It depends very much on the customer and the researcher. Thats one of bugcrowds other skills, managing that relationship and helping customers understand the researcher mindset, but also helping researchers understand what the realities of developing Enterprise Software really entail. Cory why is it contentious . Kymberlee typically it comes down to timeliness and responsiveness. If a customer takes too long to patch something, researchers dont necessarily understand what is involved in patching what thirdparty dependencies there might be, and they see it as a sign they are not interested in fixing, when that may not be the truth. Cory interesting stuff. Thank you for coming down from seattle. Kymberlee thank you. Cory coming up, the challenge of getting an entire nation back online after catastrophic events like saturdays earthquake in nepal. We will focus on that countrys infrastructure when the west continues. Cory this is bloomberg west, where we focus on innovation technology, and the future of im cory johnson, lets check some Bloomberg Top headlines the United States and japan have bolstered their Strategic Alliance in almost two decades. New guidelines expand cooperation around the globe. The goal, countering chinas growing influence. The japanese Prime Minister visits the white house tomorrow. British Prime MinisterDavid Cameron tells Small Businesses not to give up the fight even as conservative party poll numbers are stuck. Prime minister cameron when i hold receptions, and i get people who got startup loans telling me what they have done giving up a wellpaying career taking a risk, having a go, that pumps me up. That is changing our country. There is an entrepreneurial revolution taking place in britain. Cory ed miliband promised to promote british Property Ownership by raising taxes on foreign buyers. Corinthian colleges has shut down its remaining 28 schools. They are looking to other colleges to place the 16,000 students at the forprofit institution. Corinthian is accused of falsifying grades, attendance, and job placement rates. Google will have a patent shopping spree to see if it can cut down on lawsuits. They are accepting applications from patent owners willing to sell intellectual property. The program is designed to keep patents out of the hands of patent trolls, who then use them to sue corporations like google. In the wake of the devastating earthquake in nepal, tech giants like google and facebook sprang into action. Google opened its person finder tool, and facebook activated its safety check which allows people to call families and let them know they are alive. They said, if you are in one of the areas affected by the earthquake, you will get a notification asking if you are safe and if you want to check in on your friends. Joining us right now is sarah, who covers facebook for google news. Sarah, a lot of friends, connections of people are trying to climb everest, and a lot of them expressed their love of facebook, finding out that their loved ones are ok. Sarah thats how i found out about the earthquake. I had a notification that my friend jenny was safe to it she was on a hike in kathmandu. This is how facebook is trying this was released after the earthquake and tsunami in japan. Facebook has been releasing it after big disasters. Cory how does it work . Sarah if facebook sees you are in the radius of the disaster, they will send you something saying, are you ok . Click on this if you are. It will let your friends know. There is a counter that shows you, here are the friends who say they are safe. Here are the people who have not responded yet. Cory there is also fundraising happening, on facebook and elsewhere. Talk about facebook first. Sarah facebook is agreeing to match donations up to 2 million. They will have notifications to users saying, if you donate, we will match it. Google, it is a little different. It will tell you if other people have heard information. It cant always be the person who is in the situation who can say something. Cory thank you very much. I want to stick w