In the study. Global news 24 hours a day. Corey this is bloomberg west. Growth is slow and here going to take a deep dive into the cloud. Since when is computer code protected as free speech . Are going to analyze apples legal defense. Coming to anternet city that desperately needs it. San francisco will be the next fiber project. Two Big Tech Companies with earnings after the bell. Guidancee boosted its for the Current Quarter again. Sales growing slower than in prior years. Better than the analysts had predicted. Hard in 2016. Spooking investors across the sector. Hp ink the computer and printer business once part of hewlettpackard. Issued its first Quarterly Report as a standalone company. When you look at those hp numbers what you see . They had a really tough quarter. From an overall demand standpoint. Pcs continue to struggle. For the consumer more than commercial. Some real struggle on the printer side. It is really clear that were just not seeing the kind of and not seeings that market recover as we go forward. As you get back into pcs, we are not seeing necessarily a stimulation and demand associated with windows 10. Even though microsoft has lit up hundreds of millions of desktops. And notebooks. Were seeing a relatively weak demand in both consumer and commercial. Look at those printer numbers you can see the decline in printing getting worse a doubledigit decline in the printing business. Certainly hurt by currency. That helps the japanese competitors where they can sell stuff for less. Hp becomes more expensive around the world. The ceo said to me i expect that to be the new normal. It is the way this environment is going to work for the foreseeable future. In my mind hope is not a strategy. Do you see within this signs of any kind of a turnaround . Crawford they are really defending their business as best they can. Force a tremendous amount of innovation into print. It is not going to go away but it is going to continue to decline for a while. Pc side, they are defending their number one position. They have streamlined their product line. On the commercial side they will continue to fight it out. This businessterm will stabilize. You saw him say was they are taking immediate action. Theyre cutting expenses. They have to in a weak demand environment. The neverending restructuring of hewlettpackard that goes all the way back to 2001 is continuing. He said we will accelerate our restructuring. The restructuring never ends at this company. Crawford youll see this Going Forward until they can find a bottom with respect to demand. Corey at salesforce slowing growth. 26 to deferred revenue. That was a key highlight. This Company Continues to grow at mid 20s. Everything since slowing. But the backlog growth is about 11 . 5 billion. That is a phenomenal number. It was a godzilla quarter. Relative to tableau and linkedin. When you look at mid 20 growth and improving operating margins and subscriptions going lower. When i look at the clouds that they are giving birth to. Some of them are growing bigger. It is still drawing double digits. They signed to nine figure with state farm and another big as i company. Multiples ceo level decisions making platform decisions across the board. Not just to run sales and service for custom applications. This is hitting every employee in the company for salesforce. Not just what oracle can handle. They are heading across the platform. Corey i am alone in my concern about their marketing expenses. Over 50 of sales spent on marketing. Those are huge numbers. I wonder if it is over 3 billion. Sales thereage of is no other company that comes close to spending as much to promote its sales. It is a fair criticism but as long as they keep driving the rate they are able continue to spend. When they see a slowdown they are committed to wall street that they will slow down and that operating margin will decline. Marketingmy mind expenses is how much you want to pedal to the metal. Brent arj can the red bull and it is working. As long as it continues to work they will let it run through a steady out margins. They will at the margin go up. It is not pretty but it is worth. The guardrails here are cios above thei love their approach. It is not the old market i microsoft approach of heres 10 million and some Software Good luck. We think they have the right people. We just raised prices by more than 10 . The first time ever. That is still something investors have to look forward to. As that rolls through these rules. It is tough to pull any big holes in the story right now. Corey always appreciate your thoughts on this company. Up, the battle between apple and the u. S. Government. Should code be protected under the First Amendment . It is a very interesting topic. Plus a look at Virtual Reality. Producing ai content. Corey blackberry building on the consultancy business. Set against hackers to acquire the u. K. Firm. Encryption. They are not say how much they paid for the company. The deal has the potential for a new source of revenue for a company that needs it. Relying on smartphone sales. On to the ongoing encryption debate. Apple fighting a Government Order to unlock an iphone that was used by one of the San Bernardino shooters. Tim cook explains why he believes he is doing the right thing. We know that doing this could expose people to incredible vulnerabilities. This is not something that we would create. This would be bad for america. It would also set a precedent that i believe many people in america would be offended by. Whichou think about those are known, compared to something that might be there, i believe we are making the right choice. Corey the full interview airs on abc world news tonight. Apple expected to argue in federal court that code should be protected as speech. Loretta general lette lynch defended the governments stance. She said if the government needs the assistance of third parties to make sure that a search was parties conducted those must assist if it is reasonably within their powers to do so. The battle between apple and the Justice Department sparks a larger debate with congress. Should they be with access encrypted communications . Jeff smith holds 20 patents in this field. Has the government picked this case is the beginning of many cases . I do think the government was looking for a case. A poster child for an image an issue that has been simmering for the last several months. When paris came along government officials were quickly out the door saying that Technology Companies had blamed the attack. It had been piling on over the last several months. Then San Bernardino came along. Seen this ast has being a case where they have some sympathetic facts on their side. Drag therying to Technology Industry into a public battle over this. Corey how do you look at this. . Jeff it is potentially going to create a big problem. A new weapon for terrorists to use against our country. Rushing to make a decision here seems mercurial to me. I wonder if they should take a step back and allow all of us to assess what is going on. Perhaps revisit some of the assumptions they are making that corey even as were talking right now. The ceo of verizon sent out a jumping into the fray saying they support strong encryption with no backdoors. Case with apple involves some unique issues. It should not be addressed in an ad hoc basis. Supporting apples convention that congress should look into what the rules of the road are. I wonder if the framers didnt decide this when they made this a First Amendment issue. Very interesting to frame this as code as free speech. The mostis one of powerful arguments the Technology Industry can make right now. The government cannot compel the company to write software. A freespeech right in their software. That is an argument that the Tech Industry will have on its side. The government was looking for a case that exactly bring to the forefront. Technologiessay companies are trying to say we need to get this out of the courts right now and lets take it congress. Be careful what you ask for because congress is not always sympathetic to the Tech Companies either. Corey a fair point. Jeff i do think the Tech Industry is on apples side. I developed some of the standards that we used to encrypt email. These are some of the Software Systems my company built. I can tell you what the fbis asking apple to do is a mistake. It is not going to make us safer. It will create a key that we assume is only going to be protected by the government but once we create that key which doesnt exist today. We wont know where it goes. They are offering up a new precedent as it relates to how companies behave or even how we as citizens express ourselves through speech. It is one thing for the government to be prescriptive and tell us what we cant say and what we cant do. It is something altogether different for the government to come in and tell us what we must say. How would bloomberg feel if we came in the government came in and said heres the story we want you to write. Has tried to help the government access this information. Now the government is telling them to build a new version of the software that would unlock 700 million iphones across the world. It is a bad idea. Think they could even build the software . Jeff i suspect they can. Down thet taking garden is preventing a group force attack. It does not exist today and theres a reason they havent built it. Corey thank you very much. Siri may finally be coming to the mac. Across all of the product lines. It made its they at the developer conference. Of all the cities that might need an internet upgrade San Francisco could be next in line for the ultrafast google fiber. Everything else is a little different in San Francisco, so why not . Corey the nike cofounder is giving 400 million to stanford. It is one of the biggest gift ever given to any diversity. It will be modeled on the road scholarships. On thursday the eu has been google forng monopolistic practices. It claims that it diverted traffic away from its rivals to google. Google could face billions of dollars in fines if it is found to have violated the european antitrust rules. The ultrafast Fiber Service will valley in the silicon area, some parts of San Francisco. A lot of San Francisco is weird. It would be built on existing fiber that already exist. Was in provo about a year ago. Fiber iny has unprofitable system that google decided to take over and run. What are they doing here . Taking fiber from a bunch of unnamed providers. That is somewhat different from what theyve done in provo and huntsville alabama. Within a gone to municipal fiber and see if they can tap into that. This is a way to bring that cost down. They dont have to know that infrastructure. They can tap into the one that exists. You dont get everywhere covered. They havent disclosed that. Given how crazy San Francisco rents are, we dont know. I live on the east bay. Were talking about one gigabyte so that is 10 times faster than you will get in most places. 20 to 30 times faster based on the actual speeds based on their traditional provider. They are rolling this out for a slowly. They are starting to ramp it up. Google it first wants to do fiber is way to set an example to places like at t and comcast. Have him reduce prices and up speeds. Are trying to turn it into more of a big business in itself. They do generate revenue from this. Around 400 million in the most recent year. Much of it is making what we dont know yet. When you look at how much comcast earns or at t, there is money to be made from selling the internet. Corey it is a very different kind of Business Model than the jack Business Model renting it from someone else rather than laying down the cable yourself. Corey thank you, jack. Deep mind technologies is pushing into medical technology. Have created a software called streams. It allows doctors to see medical results faster. This is a very different kind of business. Early pilotan project. It will not make money right now. An english person i have been to the nhs a lot. It runs off pen and paper. Theyre just trying to bring some Software Techniques into British Health care. Corey it feels like this is an announcement to kick the shins of ibm. Jack it is a statement of intent. Theyve hired 15 people and a couple of doctors. A lot less than ibm has in its watson division. Google is famous for doing Good Technology very quickly. Relatively few resources compared to traditional Tech Companies. They got fields of computers. Corey coming up, hollywood animated blockbusters coming to the world of Virtual Reality. I will be joined by the director of the madagascar films. He has started a Virtual Reality studio. Loomberg is on the radio more from bloomberg west after this. I am cory johnson. Record find out more about the Japanese Company sharp in a few hours. They are talking about competing rescue plans. Peter is in tokyo. Are we going to get something soon . That is what we are hearing. Meeting started early. N tokyo if decisionmaking is quick, we could get it soon. You think we will get something today. Cory what are they deciding this on . Rewrote a story based on saying in the company the directors are focused on the business liability of the two plans. That sounds pretty straightforward that at one time observers thought that foxconn would not be able to buy sharp and that it would go to the domestic acquire but now they are focused on is this viability. Which plan will have the best chance of succeeding in providing sharp . Cory i can only imagine. Be likely is this going to for a Chinese Company to have a chance . If they use this idea of this miss viability, the foxconn plan is a stronger. They are a major supplier to apple. Sharp makes many things but the one here is lcd displays. The crosscut would be able to make their own and supply apple. There also offering more money. They have a bit of an advantage. Cory more money in my book is a good thing. It is complex. Dder is offering to pay shareholders. More yenill invest which will go to additional shares and then the other offer will go to ¥300 billion. Bloomberg the newsroom, i am cory johnson. Cory Virtual Reality is taking center stage in barcelona this week. Mark zuckerberg promoting technology for tourism, education and the workplace. Vr eventin veer vr, there have been many hours of 360 video being watched. That will be one part of the content ecosystem for Virtual Reality. Cory content ecosystem. Eric darnell know some thing about that. He has been making animation specifically designed for the immersive experience. Tell us what you are doing. It is so fascinating. Our approach is to do entertainment content. It is not games. We think there will be a great opportunity for storytelling. That movie work is to sit the viewer down and have them have an experience. Things rush toward them and see things happen. But you have a captive viewer. Virtual reality is the opposite where the viewer guides things. How do you tell a narrative when you cannot control the viewer . They can look anywhere. That is one of the beauties of the art. Cory or reallife. Exactly. You can explore. Ora director i encourage inspire the viewer to compose certain shots. You can do that with sound or a character going, what is that . And you want to see what they are seeing. There are a lot of ways to see the pace could have the viewer look at clouds roll by. Cory i was thinking of the example where youre in a Movie Theater and you see something crash toward you or role in your direction. Youre sitting in her seat and cannot get out of the way. In vr, you would get out of the way. Maybe . Youre right. It is such an immersive experience that even though you know it is not real, something in your reptile brain in the back says get out of there. Cory is that what is back there . Reptile brain . It is. Cory that explain a lot in my life. Say thats brain can not real that is fake. Cory some are saying people cannot take too much vr. It is too much stimulation and exhausting. What do you think the right duration is for this immersive storytelling . I think that the duration depends on two things. What is the content . If youre doing a pointandshoot game you could get physically nauseous because your inner ear and eyes are giving a brain different information. There are those challenges that make it difficult. Benign situation, you can last longer. More about the language, we can eliminate more of those strains. Cory we just showed three major platforms. Oculus rift, cardboard. Then the Sony Playstation vr. A lot of people are waiting to see what that will be. Some of the highend equipment is amazing. I am most excited about the userfriendly market. Cory you like cardboard . That for me is the way to get the most eyeballs. To turn the world on to what vr has to offer. You can have a really cool experience. Cory can you tell me about the story . Invasion is about aliens that come from another planet with advanced technology. Cory this is fiction . It is inspired by a true story with things happening today in the world. They come to the earth and the earthlings rise up. In our story, the main character is this cute bunny who is responsible for sending them packing. Cory the bunnys name . Bunny. Cory thats clever. When you look down, you are a bunny too. You and your bunny friends take on these aliens and save the planet. Cory that is interesting. How long is it . Five minutes when it is all said and done. Cory how expensive is it to develop Something Like this . Thi