Oil giants appear to be weathering the slump. Exxon mobil had a nearly 5 billion dollar profit, their biggest earnings surprise in over a decade. Conoco phillips posted a profit as its strategy to focus more on shale production paid off. Hillary clinton has a challenger in the race for the democratic president ial nomination. Forvermont senator Bernie Sanders has announced his candidacy. Senator sanders i believe president ial elections are about serious debates over serious issues. This is not the red sox versus the yankees. This is about debating real issues that face the american people. Emily sanders considers himself a socialist and caucuses with the democrats. Viacom is dealing with a persistent slump in u. S. Ad sales, but the ceo sees improvement ahead. The market looks to be strong. We are very confident going into the upfront season with the strength of the marketplace. With some of the shows we have rolling out, we are quite hopeful that we will see improvement as the year progresses in our ad sales performance. Emily viacom posted a 53 million loss in the quarter due to layoffs and writedowns on underperforming shows. Bitcoin startup Circle Internet financial has just raised capital from investors including goldman sachs. That brings the total funding to 76 million. The ceo says he hopes to work with goldman on a commercial basis as the bitcoin business grows. To our lead, salesforce, the cloud giant built from the ground up, may be on the block. May. Who is big and bold enough to buy salesforce and will they sell . If it happens, it will likely be the Largest Technology takeover in history. The company was approached by a potential acquirer who has not been identified. The list of companies who can afford to buy a company with a 48 billion market cap is small. Oracle and microsoft good. Joining me is cory johnson, who broke the story. Ok, i have been thinking about this and i am skeptical. Corey you first. You helped break the story. Cory there is an offer on the table. Would any off sell the company . It is not up to him would the ceo sell the company . It is not up to him. The board has to make the decision and there response their responsibility is to evaluate the decision. It is a business that shows tremendous topline growth, but slowing dramatically. It is also a business with his village for profits or cash flow zilch for profits or cash flow. They have been spending a boatload on marketing. That is why there are no profits or cash flow. Somebody is going to want topline growth at the expense of a lot of earnings and a lot of money. Emily you have covered salesforce for a long time and you share my skepticism. I think this is going to be tough to pull off. We know that large tech doesnt work. We know mark has done a great job of running the company organically and that culture is a very important thing to him. We know oracle has said no. We think microsoft could be there. There are only a couple that could consume something this large. The historical precedent of this happening it hasnt happened. Emily you said large tech doesnt work. Oracle, microsoft, hp compaq. Would this work if it happened . Everyone is running to the cloud. People who are behind might think this is an easy way to get ahead. Its going to be very tough for a large, legacy tech company to explain this to their shareholders how the synergies are going to work or how the market will not get impacted by this. Emily lets walk through some of the possibilities and discuss. Corey i looked at it analysis of the growth rate of these companies. If you look at what a genius analyst predicts salesforce is going to do next year, looking at the numbers for example oracle is supposed to grow at 1 next year. No one is going to buy salesforce for the earnings because there are no earnings. Oracle is expected to grow at 1 . Salesforce is supposed to grow at 20 . Earnings per share would fall. Oracle would have to delude itself by nearly a quarter to earn less money to sustain a topline increase. Emily in any case, oracle is not we dont think they are there. Oracle has enough cash, but they wouldnt have enough cash for anything else. Emily what about microsoft . The notion of how the deal would work is, is someone going to raise debt to do this . Would it be some combination . What price . My calculations are based on the current market capitals of salesforce. It would surely be higher than that. Emily lets talk about microsoft because to me microsoft makes the most sense. Cory what kind of company would want this . They would want press releases that say cloud a lot even though they dont have a Cloud Business. Right now, microsoft is projected to grow at 8 . If they added salesforce revenues, again, growing at a slower rate 15 sales growth is what the combined Company Might show but again, earnings per share would take a big hit. They would be down 16 for microsoft, and it would dilute the company by at least 12 if they did and all equity deal. Brent microsoft makes the most sense. They have the cash. Culturally, it makes sense. A lot of ceos share the same view that he is doing the right thing. I dont think margaret show up if he didnt believe they were doing the right thing mark would show up if he didnt believe they were doing the right thing. Emily ibm, hp. Corey two companies, similar business, slinging hardware, selling services, and selling a chunk of software. Both want to be more in the software world. Hp is going for a split of the company. There is no way they can do a split of the company and do an acquisition. They probably cant afford the acquisition anyway. Unless it is a marriage of equals or Something Like that that is hard to imagine happening, but it would help them grow topline or not shrink topline. Ibm is interesting. When you look at ibm, this is a company that talks endlessly about cloud. They like to make the argument in press releases that their Cloud Business is huge and bigger than salesforces, bigger than anyones. Their sales growth would only decline by 3 . Its projected to decline by 10 . But it would take about one third of ibm to buy salesforce. Emily it seems a bit too ambitious or bold. Brent i dont think hp or ibm are in the mix. Corey ibms Balance Sheet is so bad, they cant borrow money to do this. Emily by process of elimination, microsoft is the only real contender. Is that what we have decided . Cory i havent decided that for a second. Hpcompaq look. We saw time warner by aol. Emily . Emily that did not work out too well. Corey but it happened. Emily we will continue to follow this story, i assure you. Coming up, reports on how apple found a defect in the apple watch. Could it setback deliveries that are already slow . Thats next. Emily this is bloomberg west, im emily chang. A check of your headlines. Programming and contact cost climbed. Warners Earnings Report comes just a week after comcast pulled the plug on a deal to buy the company. George soros says the rich should pay more taxes. He may face a monster tax bill himself. He could be looking paying as much as 6. 7 billion after Congress Closes a loophole that allowed Fund Managers to defer taxes on client fees by immediately reinvesting them. The bill could come due by 2017. The consortium will pay 1. 9 billion for omni vision. Omni vision was founded by a chinese immigrant. Apple found a defect in a key part of its watch, according to the wall street journal. The problem was in the engine of the watch. The defect caused some of the supply crunch we are seeing. It is not good news for consumers but what about developers . Joining me is the former head of facebook for android. First, lets talk about what the engine is. Its the sensor that creates a tapping sensation on the apple watch, which you have. Mine is bright green. Its an new form of user interface feedback. It helps get your attention without creating an audio sound. Emily how big does this defect seem to you . I dont think it is a huge deal. This is a product that was already going to be bite constrained. The demand is incredible. It may be a slower uptick, but of all companies in the world apple has the supply chain know how to make this work. Emily you said should you actually develop for this . Then you said it is a given, a nobrainer. Whenever a Large Company like apple ships you have to make an individual decision as a developer. I want it to think about how i would advise them if i was part of their companies, or if i wasnt. Emily ultimately now that you have one, you say yes, you should make this a priority. Why . You want to look at what you can do now that you could never do before. Smartphones changed everything because you could do the because you have the internet in your pocket. Second, you want to look at what kind of distribution opportunities there are. Are you advertising supported, supported through application payments, or anything else . Finally, does the platform provider have a Business Model that means they are going to stay in business and not eat your lunch over time. I think that is the most subtle and important one to make sure you really understand. Emily we have been talking to a lot of people about the watch. Do you think this is a Game Changing product . I do. The way i relate that is, right now, we spent hours a day on our smartphones. If the apple watch just takes one hour a week away of the time we spend on our smartphones, we are talking about tens of millions of hours of attention that is now being diverted to a new screen. We are on television, which makes money on attention through advertising. Emily you are on facebook for a really long time. How might the facebook experience be different on an apple watch . Can it be Game Changing for a company like facebook . I think it can be totally Game Changing. I think it will take some study. The apps that are out right now are testing the waters. Living with the watch for a week now, i know if i was back at facebook running a product team i would be 100 focused on how do i make the watch communicate to the closest people to me, my wife, my son or my mom. Those are the things that make sense to come into an intimate space that is directly connected to your skin like the apple watch for communication. Emily you have been wearing it for a week. How has it changed your life . My wife hears from a lot more throughout the day. I hear i think she likes it. She would text me and i would plan to get to her after the meeting, and oftentimes i would forget. Now, because i am a meeting and can subtly look down and reply with canned responses that are almost always right. That is an improvement over having to pull out a phone. The other thing i didnt expect to matter, if my phone does ring during a meeting, i can just go like this and it silences it. In fact, my phone was just ringing. I think my friends were trying to pull a prank on me while i was in this interview. Emily well, it worked. We will check back with you in a few months. Awesome. Emily and if being able to talk to your wife every single second is necessarily a good thing. Emily welcome back. Secret, the anonymous messaging app and one of the busiest Services Last year, is shutting down. The company hit a 100 million valuation, but it has then losing users for months. The ceo announced the decision in a medium post, saying this has been the hardest decision of my life and one that saddens me deeply. Unfortunately, secret does not represent the vision i had when starting the company, so i believe its the right decision for myself, our investors, and our team. Last year, investors were clamoring to get into this company. It was huge. It was the opportunity of a lifetime. But the thing is, it was emblematic of the height hype. 35 Million Dollars is a lot especially in three months. Most people dont get acquired for that kind of money. Emily is it because of what the product was or is it because they were the third least used of these services . I think it came down to the kind of content that ended up on secret. Its the same kind of thing that ends up on jack gak. Whisper is more of a share your secrets. It ended up as a lot of gossipy things. Emily kind of a cesspool. There was a lot of unsavory content. How much time do you really want to spend on an app that makes you feel bad . Emily i wonder what this goes to say about other things out there, this whole flash in the pan nature of silicon valley. As you know we have more than 50 companies valued at more than a billion dollars. We have an incredible amount of Venture Capital going into these companies, but secret is really ace them bowl of all of the is really a symbol of all of this may be grinding to a halt. This is what some founders are deciding, that they cannot grow it to the potential there investors want there investors once thought. Emily we had the ceo on. Take a listen. Here in the valley people like to predict the future, and it is very hard to predict with social projects products where they are going to go. Emily he actually left secret sometime ago, but he was speaking about the innovations of social networking. You never know where its going to go, so why not try . Makes it was an experiment and they gave up it was an experiment, and they gave up. Emily when we come back, tesla and its battery plan. Emily this is bloomberg west. I am emily chang. Lets get a look at some top headlines. Greece and its creditors are getting serious about reaching a deal on a bailout. Talks have intensified with a goal of getting a preliminary agreement on a sunday. One factor, the emergence of the greek Prime Minister in negotiations, signaling that greece is serious about working this out. Inflation is slowing and the ruble gaining, so Russias Central Bank just cut Interest Rates for the third time this year. The benchmark rate was cut to 12. 5 from 14 . There are hints that more rates are coming to try to counter a looming recession. Gm will spend more than 5 billion to upgrade its plants as it prepares to roll out new models. The automaker is also investing outside the u. S. The gm joint venture in china will than 16 billion over five years to expand. Gnocchi a shares are falling today no kia nokia shares are falling today. They agreed to by a French Company for 16. 6 billion earlier this month. The ultra luxury Housing Market is scaling new heights. A record nties around the world now command prices above 100 million according to a report by christies. Five homes sold for more than 100 million last year, with at least 20 more on the market with nine figure asking prices. Tesla is expected to unveil the first noncar product today. The company is introducing a home battery and largescale utility battery, according to an email sent to investors and analysts. These batteries will be used to store energy to supplement what consumers get from the electric grid. We have oh power president the we have the president of o power with us along with cory johnson and nancy fund. She was on the board of tesla and is now on the board of the sister company, solar city. Nancy, i feel it you have the best idea of what tesla is going to unveil today. Nancy it is important for people to understand that this has been in teslas dna from the beginning. Of battery that could propel a car but also be used as a stationary power source, especially when coupled with renewables like solar. Emily are you expecting a home battery and battery for businesses . Nancy there is all kinds of speculation. We do see that walmart and solar city have already been working on a test battery with tesla. We see with california regulators that there have been home installations on a pilot aces with pilot basis with tesla batteries. Those are certainly clues that we will see something along that continuum. Emily would having one of these batteries kind of be like having a generator . Alex yes, but a lot cleaner. Consumers are going to want these batteries. Cory california has a self generation incentive program. How important is that in terms of subsidies to get this business going for tesla . Nancy california has led in creating early subsidies that allow new entrance to come in and compete even though they havent brought down the cost curve. Cory like the batteries in my house the solar panels in my house were subsidized i the government. By the government. A lot of tesla cars are subsidized by the government. Nancy it is going to be ephemeral. It is going to be important as a step, but the real answer lies in nevada where they have a huge factory that can drive economies of scale. Emily a factory that has yet to be completed. Nancy of course, but looking at the longterm, you are going to see that there are government incentives that pave the way and then go away and you get the economies of scale that really kick in to drive costs down. Emily how much are we expecting these batteries to cost . I have read 13,000 for a home battery. How to second compare to the cost of electricity . Especially because you can use these batteries during peak times and take the load off the grid. Alex i understand these are going to be expensive batteries, but over the course of time, the operating cost should be justified. Your question points to a serious consideration. Utilities are going to have to play a role cooperating with and partnering with tesla in order to really drive market share. There are few homeowners who have 13,000 lying around to pay for this battery. The good news is it is in the utilitys interest to be a partner and in teslas interest to partner with utilities. They are in a tremendous generational transformation to a world in which demand for the commodity is declining, people are interested in new options, and they are looking to their utilities to be customer facing and provide new services. Emily corey, youre nodding your head vigorously. Cory i am very positive especially when it comes to tesla. It is expensive to move power around, but the last mile is enormously expensive. Nancy, i wonder if as far as consumer uses go if the variability of rates, which they dont really have in california where you pay more at 5 00 when everyone is running their airconditioner. Right now, you say the same amount in the middle of the night. If there was variability, that would make more sense on a consumer level. Nancy absolutely. Its really trying to maximize the use of distributed power and storage. Where is the grid strengthened by drawing power from it . Is it from your battery, is it from your solar array, is it from your grade .