Transcripts For BLOOMBERG Bloomberg West 20160115 : vimarsan

It may move to 6 billion. Is been trying to buy a stake in lcd business but talks are stalled on the prices. Asian stocks are facing more losses. Composite is facing a third week of declines. Japan is clinging to gains but only just. Hong kong and china currently closed for lunch for heres how they were trading. Time for bloomberg west emily im emily chang and this is bloomberg west. Coming up, intel shares sliding after hours. The company is warning about firstquarter sales. Plus, back to the future. Qualcomm ships returning to Samsung Smartphones just a year after the south korean phone giant asked them. And riding on a cloud. We sat down with a man who runs one of indias largest conglomerates to talk about their electric scooter. And i take it for a spin. First, to our lead. Intel shares sliding more than 4 . The Company Reported betterthanexpected fourthquarter earnings, but it is worried about sales and margins in the current quarter. Joining me now, our editor at large, cory johnson. Also joining us, the editor of bloomberg intelligence. They just reported the worst levels since 2007. How is that reflected in the intel numbers . Cory intel is only down 1 in pcs. If they are the biggest supplier to the market, and it is the biggest part of their business, and they are only down 1 when the market is down 10 , im going to call that success. Its like hitting 40 home runs for a lastplace team. They are in the pc business, yes. It is also a big improvement over the last two quarters. They are gaining market share and doing the best they can in a crummy industry. I will call that a success. Emily would you agree . Guest absolutely. One of the things they have been able to do is upsell the chips that going to pcs. If you look at their pc divisions average selling price, it has been steadily ticking up. Despite poor value in desktops and notebooks, they have been able to sell the higher end chip versus the lower end. They are also pivoting hard into the data center away from pcs. Data center chips account for 50 plus percent of their operating income, even though they account for 25 or so of sales. That is a big transformation underway at intel. One thing that is remarkable is that 10 pcs and they can still stagger the growth of their topline . That is pretty substantial. Emily and at the same time, the Cloud Business in general is undergoing a huge change. Cory, you talked to the ceo earlier. Cory they see this as change. I think the slowdown of pcs is even more aggressive than they expected. They positioned themselves to benefit as the changes happened, but also to go forward with the data center. Listen to what stacy smith had to say about the big changes they went through this year. It was a strong finish to the year. When you get under the hood, you can really see the transformation. We offset some weakness in the pc segment of the market. That is transformative for us. Emily but what about the warning about next quarter . Cory i think it is more about setting expectations in a certain place. They are going through big transitions in terms of new plants, new facilities. There was a lot of talk on the Conference Call about in the changes are going to happen and what they will mean. That has an effect on Gross Margins. Expectations got ahead of the analysts. These guys are talking Gross Margins of about 63 for the year, which would be good for these guys historically. They are sometimes below 60 . If they are guiding towards 63 , that is pretty good news. Emily intels ceo just addressed this on the call, highlighting china in particular. Outlook in the First Quarter reflects some caution about overall demand, particularly in china. We continue to expect solid growth in the business in 2016. Cory and when you listen to that, are you hearing that they are talking about new markets, or is what he is really talking about is keeping where they are in staying steady where pcs are being made . Guest one of the things they talked about on the call was that 2016 is similar to 2015. If you looked at 2015, q2, q3, and q4 were significantly off. And when you look at the pcs, the exact thing happened in q1 of last year as well. Lets not get ahead of ourselves. This is a great structural change underway. Make sure to keep your eye on the big picture, which is the data center shift. Hopefully they will be able to hit sales growth with decent margins. Emily lastly, i want to transition into them making chips for devices. How is that going so far . Cory the numbers are good. They throw a lot of things into the internet. The numbers look good for this quarter and the year. Brian has this vision of a world full of chips. With actual processing happening on lots of devices. They think theyre manufacturing capacity will let them make cheaper, powerful, smarter chips that other competitors cant make. They want to slow the market with the chips that will take up this data and the computation behind it in the cloud and data center that will begin to understand this data. I spoke with the head of america for general motors. The gm guy said, imagine if we had windshield wipers that would tell the cloud unintentional pun when they are being used, we would have more Realtime Data of when customers turn on when children first. That takes a lot of data on the backend. Brian has the same dream. He is trying to build both ins of that barbell, the computation power on the end to pick that up, and the massive competition on the backend to understand that. Emily thank you both so much. A new direction for foursquare. The startup is announcing a new ceo and a 45 million funding round as it looks to kickstart growth. Founder Dennis Crowley is checking out as ceo, becoming executive chairman, while former coo jeff gleick replaces him. That is according to crowley, who revealed the move in an energy today. Reshuffling did not stop there. Steve rosenblatt becomes the new Company President and will act as gleicks copilot. Coming up, who is crazy enough to buy gopro . The whole company, not just one camera. Apple, we will get three reasons why. Also, the latest push to give voters access to president ial candidates. Emily now to the nosedive we have seen in gopro stocks since wednesday. There are new to investor concerns that gopro is a one trick pony. But you know what they say about one mans trash. That might be a little extreme. Still, in december, gopro was put on my list of potential acquisitions for apple. The analyst behind that note is daniel lives. He is with us from new york to explain. Daniel, you are an apple analyst, not a gopro analyst. I have been asking people what they think about your suggestion, and everybody is telling me apple would never buy gopro. What do you think has happened. It is about then going from a content perspective and really from an actionbased camera. Gopro has not been able to monetize it at the level that investors expected, but when you put it in apples ecosystem, it has a potential fit. This is definitely more of a far reach, but you have to put it in the spectrum of potential apple releases. Emily you dont just think apple would buy gopro, you also suggest potentially netflix, fitbit, box, tesla. Really . Guest yeah, cory and i have talked about it before. This is not within apples typical playbook. The biggest thing they have bought is 3 billion. But now it is, chop your waters. They will have to navigate outside of the smartphone. On the consumer side, there is building pressure for them to use 200 billion plus to expand the market. You look at netflix, its not typically in the playbook, but 2016 will be a year of a lot of changes for apple. The most important thing is with m a. They will have to navigate where they have not previously gone before. Emily apple has never made an acquisition more than 3 billion, and that was beats, their biggest by far. Time warner cable, you are looking at 78 billion. Do you think that is possible . Guest i think if you look at potentially what is going on there, i think that is where everything is on the table for apple right now. Emily lets dig in to gopro specifically. What does gopro have that apple would want . Why couldnt apple just make its own camera . Guest i think part of it, if you think about smartphone markets and what the differentiation is, it has been around the cameras, enhancements. It is from the camera from an actionbased perspective, from the content, from the intellectual property, as well as from some of the Virtual Reality in terms of where they are going. Gopro is a one trick pony, we saw that last night, and thats not really the issue. The issue is, is their technology here that apple could acquire, put it into its ecosystem, which would be a step in the right direction . Daniel, i appreciate you being bold with some of these productions. Daniel ives, fdr managing director. Always great to have you. Turning to europe, the eus executive arm is trying to solve the conflict between regulators and sharing economies like uber and airbnb, all in the name of boosting gdp. Bloombergs Caroline Hyde reports. Reporter it is likely to be music to the sharing economies ears. They may be looking to ease the conflicts between companies such as airbnb and uber and regulators, with them offering hindering growth and banning software entirely. The u. N. Commission is planning to have discussions with its 28 Member States to explore how the National Rules may not only be going against eu law, but crucially slowing the regions growth potential. Bloomberg was told today that it is the cheapest way to strengthen the economy. The commissions own Research Suggests that removing such barriers could used the economy by 1. 8 , which is a lot. So this would not only help uber. It would also help accelerate the growth in some of the local startups, like hassle. Com. In fact, the eu thinks it could help many businesses start accessing customers in other countries, and help 17 million europeans make crossborder purchases. This is part of the use broad market strategies, part of a long todo list. As one key tech investor a spoke to told me, it looks to him like an impossible task, given that each country has its own legislative body. And it is impossible to get the separate states in the u. S. To harmonize laws with these companies, let alone independent nations in europe. But the fact that discussions may soon be happening means that many in the sharing economy may be sharing optimism today. Emily bloombergs Caroline Hyde in london. Coming up, with the president ial race kicking in high gear, what if you could get all of your questions answered by the candidates themselves . I am talking about a new platform from change. Org that lets you do just that. Emily samsung is returning to its former chip supplier. They will once again use qualcomms most powerful chips in its new highend phone, the next galaxy s. This is after samsung walked away from qualcomm. Winning back some of its business is an indication. The processor was not chosen for the galaxy models last year. It is time now for some politeching, where politics and technology emerge. Have you ever wanted to ask a candidate a question, but cannot make it to a town hall . Now you can. Change. Org submitted a new platform where users can submit questions and easily find endorsements from the people and organizations they trust, creating a ballot guide to use at the polls. Joining me is change. Orgs founder and ceo. Great to have you back on the show. Pretty much all the president ial candidates with the exception of donald trump have signed up to answer questions on change politics. But what is the motivation . How did you come up with this idea . Guest the underlying realization is that we now have an incredibly broken User Experience in voting. People are subjected to an incredible amount of information about the horse race, about holes, and paid ads and do not get the information they need, and they walk into the ballot booth, they look at their ballot, it has dozens of offices. Most people have no idea who these people are. That is the basis upon which we are basing our votes for democracy, and we think there is a better way. Emily candidates have facebook, twitter, snapchat, town halls, how did you convince them to join . Guest what is most important to individuals is direct communication with voters. What they want to do is identify the information that people in those states care most about. We are partnering with the Des Moines Register to crowd source questions from iowans. We are able to crowd source and identify the things that are most of interest to real voters, and that is what candidates care about most. Emily so why hasnt trump signed on, and what are you doing to convince him . Guest we are seeing more and candidates now come on, so we think we will have almost everyone. But what we do think we are showing is that citizens can now help define the agenda of things that are being talked about, and not just subject to what the Mainstream Media or candidates want to tell them. Emily but trump is trump. How are you going to get him . Guest frankly, somebody like trump, who likes provocative questions and gives provocative answers, will want to adopt this platform as well. Emily one change. Org petition asks for nbc2 end its relationship with trump about his controversial remarks about immigrants. How much influence do you think change is going to have on this president ial election . Guest what we have seen over the past few years is this map mobilization in the u. S. More than 30 Million People using change. Org to influence policy between elections. That represents a significant percentage of the population for elections themselves. Most elections are defined by 1 or 2 in the most effective campaigns, and we will have far more of that percentage of people using change. Org politics themselves. Emily and i know change is now getting a lot of buzz about a petition asking president obama and the governor of wisconsin to pardon the subjects of a Netflix Documentary series, accused of a murder in wisconsin. These petitions have been getting a lot of attention. Where is the momentum here . Guest the things that take off the most on change. Org are rooted in personal stories, things that resonate. We are seeing that as things come up in the media, documentaries, and movies, people will use change. Org to try to change real things in the world, and president obama just responded to the Campaign Last week on change. Org, engaging citizens around this issue of potentially false incarceration. That is something we will certainly be watching. The ceo and founder of change. Org with the launch of change politics today. Thanks, ben. Coming up, the socalled tesla of scooters. Why an indian car manufacturer just unveiled a 3000 electric scooter here in the bay area. I take it out for a test drive. Plus, the latest numbers are out for Venture Capital funding, and the results paint a grim picture. We will discuss why investors are chasing fewer, but larger deals this year. Shares plunged in paris on news that investors had rated run those offices. Nissan says its premises were not searched. It cannot say whether any of its vehicles have been tested. Around 18 million voters head for the polls in taiwan in election that could see the Opposition Party win the presidency and the legislature for the first time. She would be taiwan first female leader if she wins. Bhp billiton is gaining by the most in sydney when saying it expects to have a right on u. S. Shale. The writedown is almost 5 billion. Further investment in u. S. Shale will be subject to review. A check on how the markets have been trading in the asiapacific market. We are back in threeyear lows on the regional benchmark markets. Crude oil is back below that level in asian trade. By chinas market gave back the gains from late day yesterday session. Hong kong is on its lunch break. Leading gains was in the region but it has now turned negative in the last half hour. Down by 4 10 of 1 . Market alsoan coming under civilian pressure. The oil and gas players are being sold off despite a bounce in the Early Morning session. Celko is off by about 2 10 of 1 . Tech stocks are up slightly. We will end a tough week in the red for asian stocks. Now to a new way to beat the traffic blues. Mahendra group has launched an electric bike weighing 230 pounds, lighter and easier to handle than most motorized two wheelers, and the first Cloud Connected scooter. Where was it launch . You might be surprised. As prices skyrocket tech is moving to open where uber is opening new headquarters. We make small airplanes. We make boats and buses. Our core competency is cars. You are launching a scooter for the first time in the bay area. Yes. The two places that we looked and said here is the problem. We have to solve this problem. Emily it is electric, Cloud Connected and sells for 3000. The reduction lines can pump out a new one every 30 minutes. I have never ridden a scooter before or motorcycle. Im slightly terrified but im going to give it a go. It is a neutral mode. We move it to forward. It shows your battery status and range, your speed. You are in safe mode. It is going to be lower acceleration. If something goes terribly wrong should i hit the kill switch . No. I would just use the break. Emily all right. Test run complete. Lets do this for real. Shredding. They are hoping millennials will take notice and will lease the bikes to scooter sharing programs. They are aiming for cool. We expect that. We think this is a tesla scooter. It is like riding a bicycle quite literally. Not sure i would call it the tesla of scooters but i would do it again. Obviously i survived. I sat down with the chairman and managing director of mahendra. We will make a global scooter. You decide where do i do a global scooter russian mark if its going to be cutting edge. There are two reasons we decided to do it here. Whats the best place to design a scooter . California. One of the worlds capitals of good design. When you leverage the ecosystem here in Building Brand here, the rest of the world notices. California is a world stage for technology products. We didnt want this to be something cheap out of india. We are saying we wanted to make something cuttingedge and to make the world sit up and take notice. This is a cool 21st century product. Emily if i am a young millennial wild while a by a scooter . That is true. The point is when you want to have your own discretion of transport but you dont use a scooter because you cant put some personal junk in it, she would not use this. She would need a fleet of suvs. Someone with a reasonable pair of shoes would use this. We are not really saying this is for millennials. We are seeing Senior Citizens may be a bigger market for this. When you go to sharing network, then the millennial sees this and says here is an electric scooter which i can use and rent. Particularly when it comes with a solar charging devise. Emily you are testing an suv in detroit. What is the vision . We have been in manufacturing, utility vehicles since the late 1950s. That is one of our largest businesses. We are the dominant seller of suvs in india. We continue to do well. As you may know by now we like to think differently. We like take think counterintuitively. There was an article in a paper a couple of days ago talking about how they are not outsourcing anymore. That is where we felt we were tapping into a huge pool of knowhow. Who makes minivans the best . When Warren Buffett says that is the best way to be organized, to be multibusiness, then world notices and knows that is right. Or when google turns into alphabet. Emily you compare it to apple that . We have been doing this since 1991. We have been following the structure. So the company acts in the sense like a proactive investor. We have separate units, very focused, all listed to satisfy wall street analysts and the automotive legacy business runs well on its own. This is a new age business. Emily you pioneered the model. Guest you said it, i didnt. Emily we have seen gm partner with lyft and her from the ceo of nissan saying he would never do that. I would he help a company like uber or lyft . Do you think of them as a threat to your business . Guest i was quoted in india and our last lunch, where i said i was talking generally about the industry. The Auto Industry has to recognize Car Sharing Companies are going to transform the industry. Theyre going to reduce the volume. If they succeed the volumes of cars that people have, is that a threat . Not really. It means you have to shift your gears and do one of two things. Build a portfolio which these people would have to buy. Lowcost cars, autonomous cars, and admit we have a portfolio that does that. Then you move to very cars with character. If the millennial buys a car, when they can afford, theyre not wanted by a bland car. Theyre going to buy something with character and style. Where the cars says you have to buy me. I think the car industry is going to get organized. I dont mean bringing cars but cars with great personality and customization, and individualism. You have the bread and butter cars. You dont really ask for which car. You just ask for a new car. What do you think of tesla . Guest i have huge respect. He i shot the breeze with him. He is a disarming man. He was interesting. I told him these batteries have a much greater invaluable application in india. Why dont you look there. He said my problem is not where to sell these. My problem is building the factory. He is quite charming. Somebody was joking that it creates one more problem, one more devise to charge. They have to solve that problem making it easier to do that. The reason i bought it, my wife asked me why you wearing this . It freeze me from the tyranny of having someone judgment by the watch i wear. Emily i didnt realize they were to radical. Guest of course they are. I challenge anyone to define me simply by the watch i wear. I think that is a wonderful act of liberation. Emily he proceeded to judge me based on the watch i was wearing. The chairman of mahindra. Less capital in fewer funds. The recent slowdown in tech funding in our recent segment coming up, and we leave you with a look at one stop we are watching, best buy tumbling the most in a year. Consumers not shopping for electronics over the holidays. More next. Emily lets get a check on Market Action in the united states. All 10 of the s p 500 Main Industries are positive thursday. Abigail doolittle reports from the nasdaq. We had a wild trading session. Stocks were down early in trading holy to pare losses midmorning, climb throughout the day and finished sharply higher. The nasdaq composite finished up 1. 9 . Taking a look at those big tex names including amazon and facebook, perhaps a bit of a relief to all of the selling. Each of these tech stocks are down 4 year to date. Amazon is down 12 year to date on a lack of any substantial news. Perhaps a bit of the big winners from last year mentality. Turning back to positive news, microsoft was upgraded at Morgan Stanley to an over way they like the presence in the cloud and the durable office franchise. Apple, there was positive news coming out on this name. And phone sales may have risen by 33 in the last quarter of 2015, contrary to the negative amounts of the iphone. We will know more when the Company Reports later this month. Emily now to our weekly segment, start them up. We discussed the latest Venture Capital world of startups. There is a slowdown in tech funding. The sea firms raised less money and closed fewer u. S. Funds in 2015. It decreased to 28. 2 billion. Only 235 funds closed last year. Joining me now to discuss, lissette chapman who just joined. It is a first for both of you on the show. Thank you. Work through the numbers a little bit. What are we seeing . Were seeing a come down. It is important as you can see from that chart, it is all over the place. Cycles are long. We have the 2015 numbers that show it is dipping down a little bit. Emily are you feeling these things that revolution . Particularly for funds there is a long lead time. They make their bets and there are a lot of funds. There it they can pull back and in the following year. In terms of backing companies there has been a slowdown. We didnt do much investing because we saw the markets as overheated in deals getting competitive. Emily what do make of the fact that fewer funds even close . There are going to be fewer choices looking for funding. Emily and you have vcs chasing fewer but bigger deals. We are seeing mega rounds like uber. I think that highlights the fact that no matter how work is performing, Great Companies are going to be created and funded. I would like to add, it is not just vcs. It is other companies that we have seen, huge late stage rounds. All of the other atypical vcs stepping up and saying i want in on this. Emily the same time you are announcing your largest investment to date, and Insurance Technology startup, explain what this does and why you thought it was worth putting such a big bet on. 3 we back companies attacking legacy industries, applying technology to disrupt them. We view insurance as a massive opportunity. A lot of work has been done bringing insurance online and auto. We think the longterm disability, it is not online. You have to go through an agent. That is not what consumers want. We have backed a team that has a lot of regulatory knowledge. You need those industry chops to approach it. It helps men form what they are buying and what they dont need so that it is not a spam kind of feel. It helps the apply for insurance and gets them through the sales process and provides them with a monitor to their policies. Emily weve seen a mini explosion in insurance technologies. Why is that . Guest the regulatory landscape isnt as complicated. When you think about insurance, if youre buying into a policy you need to know they are going to be around for a long time. You dont want to buy a Life Insurance policy and ago out of business because it is a startup. That is the reason why the landscape is so tight on insurance. That is taking a longer time to disrupt the market. Emily as you said at the beginning, what happens is cyclical. What are we looking at for this year . What are investors expecting . From the people who back them, it would mean for the startups there is some air coming out of them. This is it news. What we see with the 2015 numbers is confirmation therell be a tougher environment going forward. We are excited about next year. We didnt apply much because of those dynamics. We are excited about the opportunity to come. Emily all right. Thank you for joining us. Our new vc reporter, thank you both. Now, news of david bowies passing, millions of fans mourned by seeking his music videos online. On vevo they set a new record. His clip drew 51 million views in a single day january 11. A dell held the record with her hello video. His streams increased 1800 on that day from his average. On spotify they spiked 2800 . While apple doesnt break out individual numbers he represents six of the top 10 albums selling on itunes. Well be right back. Emily the results of a closely watched competition for resupplying the International Space station. Spacex will split the bid for unmanned missions, hauling cargo to 220 miles above the surface of the earth. The deal covers a sevenyear stretch. Who lost . Boeing and lockheed martin. They have been working to foster commercial missions while Congress Tries to end a u. S. Dependence on imported rocket engines. That does it for this edition of bloomberg west. Tomorrow, our guest host is always entertaining. 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