Tax returns because he is under audit has been disproved repeatedly. Nina hurricane newton slammed on the southern tip of california. Tourists huddled in hotels. There are no reports of any fatalities. Emily i am emily chang. This is bloomberg west. Coming up, apple playing the waiting game with investors. Will the companys new Product Launch be enough to boost sales . We will break it down. We will catch up on the ongoing war for the cloud. And . 10 is now officially chinas most valuable company. We will take a look at the bigger forces in play. Apple is breaking its own habit. Typically, even number of years differentmatically iphone model. But the new iphone will not he a major departure from recent models. From a major departure recent models. For apple fans looking for a well product, our columnist says they will have to wait another year. Product, our columnist says they will have to wait another year. It has been an awful year for apple, at least by the companys high standards, and i have an uninspiring message for fans and investors. Wait until next year. Apple revenue has declined for the last two quarters, and probably will continue to fall for the next six months. The last time apple sales straightor 12 months was 2000 one. Mark zuckerberg was still in high school. The companys wizards are keeping busy, but the next year wont be a blockbuster. The newly updated iphone will be shown at an event on wednesday. No matter what they are called, they will be more like a tweaked version of the iphone 6 us. Also coming are fresh models of Mac Computers and a Second Generation apple watch. None of these products will bring surprises, but they should help apple sales grow again. With big hopes for a major sales in 2017. Expectations are apple will pull out a dramatically different iphone year from now with a new type of screen that could spark a wave of sales. It has been five years since tim apples ceo,er as and the company has become more financially successful, but it does not have a breakout new category under his watch. Ait until next year isnt great rallying cry, but it is the best apple can do. Emily and now, while be theays event may not most groundbreaking showcase apple has ever held, it is arguably apples most crucial event in years. Thehe three months since 75one 6 release, apple sold million phones. Many had twoyear contracts, which means many people will be looking to upgrade. Plus, samsung has had to recall its new phones due to exploding batteries. Joining me in the studio are a Bloomberg News reporter who has had a steady supply of scoops over the last few weeks, and reported what he expects will be in the phone. One, a new camera. A rebooted button for home. And know jack. We will talk about that in a moment. Who are they targeting . Can buy an who iphone is an important customer for apple, but we should look at iphone 6 users. It came out in 2014. The reach of that lunch was extraordinarily significant. This was the first time apple really embraced the large phone market. The screen is over 4. 5 inches. Said, the twoyear contracts are expiring on carriers around the world. We are going to see a lot of people upgrading solely because of that. The samsung thing you mentioned, all the bad pr, bad marketing samsung is getting because of the battery issue, batteries reportedly exploding, a lot of reconsidert want to getting a samsung phone, and the alternative to that would probably be an iphone for many people. Note sevengalaxy recall could cost them 1 billion. Talk to us about the timing of this given that samsung is not going to be able to get new notes into stores until after new iphones are in stores. Well, emily, samsung has a practice of trying to get out ahead of apple on some of these key announcements. Clearly, that is what they tried to do with the note seven. A ran into problems. This is less than ideal timing for them. They have to recall the note sevens that are on the markets because of the exploding battery problem you talked about. They are going to try to get new ones back on the shelves, but as you say, it is going to cost them a lot of money. One of the executives called it a heartbreaking event. Emily it is a critical time for apple because this is the First Time Ever they are unveiling new iphones when iphone sales are declining. This is oneree that of the most crucial and this is arguably the most watched tech event of the year is this the most crucial . For i think it is crucial two reasons. One, you mentioned the quarterly yearoveryear drops in sales. Apple wants to show it will avoid a q1 yearoveryear drop. This hasnt happened in nearly 15 years. I think investors might be a little worried if the quarterly drop happens for the Holiday Quarter, which is apples most important quarter. They now put all of their aches in that Holiday Quarter basket. Gs in that eg Holiday Quarter basket. At the same time, even though itsung has the bad pr, ups the ante for apple. If they dont leverage the opportunity, that could be bad news. Now they have a very clear runway, and they should take advantage of that. Suns peter what are sam samsungs projects in the pipeline that will compete with apple this quarter . And is are any indication the battery issue could extend beyond the note seven . Peter there is not an indication it will extend beyond. Samsungs approach is different than apples. They tend to have a broad lineup of products because they want to compete. Mark referred to apples move into big screen phones. Of course, samsung got there first. I think one of the challenges for apple with this Product Introduction is that into kooky markets, it is going to be a challenge for them to pen it , it is goingrkets to be a challenge for them to penetrate. Now the, which is Fastest GrowingSmartphone Market in the world, they are really struggling because their phones are priced so high compared to competitors. The numberamsung is one competitor. They have work to do in these key markets. Emily , you told us there may be no headphone jack on the new iphone. This may be one of the most controversial moves apple has made. What are consumers saying about this . Is the rest of the industry ready to catch up . Mark the iphone seven being introduced tomorrow will not have a headphone jack. Type ofll ship a new inner pot head phones that can plug into the charger, so that od headphonesr p that can plug into the charger, so the charger will be doing double duty. Mark and everyone will have to buy new headphones. Mark people do not want to carry around an extra cord to get the headphones they already have to work. That could be a bit of an issue. Emily thank you so much. I know you will be covering the event tomorrow, as will we. A special hour of coverage starting at 10 00 a. M. In san francisco, 1 00 p. M. In new york, in addition to our regular hour of bloomberg west. Tencent has become chinas most valuable company, breaking into the worlds 10 largest public companies, including apple and alphabet. Encent as ano t example of an economy leaving the government behind. Peter, tell us what is behind this shift . Has come onnt strong. They have two instant messaging platforms. They also own Games Companies and a bunch of other companies. Their market has come on strong, as has alibaba, the secondmost valuable Internet Company in china this point. For a long time in china, state backed companies were the most in thee companies sector. Petro china and others. You are seeing a shift driven by innovation in china. Tencent is a good example of that. State owned companies no longer dominate the economy the way they once did. Emily is this something you expect to keep up . You mentioned alibaba. There is by do. How do you expect this to evolve. Ver the next 5 baidu had you expect these companies to evolve over how do you expect these companies to evolve over the next 510 years. Has been building on its success. It recently bought a game company from finland. Alibaba has made very ambitious plans not just for ecommerce in china, but to move beyond china to Southeast Asia in particular, and probably other regions as well. They want to build on that success, but nothing is guaranteed, of course. Emily our managing editor for asia tech, in new york today. Thanks so much, peter, for weighing in. Coming up, we will hear from aaron levie. Is going after businesses, and more businesses. It is aimed at being a onestop that need toanies deal with heavy loads. We caught up with ceo aaron levie, who thinks his software is better than anything currently on the market. Take a look. The idea was simple. We wanted to make it easy for people to share, access, and collaborate around their information and files from anywhere. We have 60 of the fortune 500 companies. The same time, even though we have been able to accomplish quite a bit, everything in business and work is still changing pretty dramatically. When we look at how Enterprises Work today, there is still a hodgepodge of solutions around storage, collaboration, workflow, and we dont think companies are going to be able to operate in a modern way of that is the set of tools they are left with. What we have been doing for the last couple of years is reimagining what work will look like in the future, and how we can be at the center of that, not only as an application to use, but ultimately, where all will come together. Our new application helps you streamline the teamwork you are doing. We have not had a Simple Software or things like processing invoices, sales contracts, employee invoicing, all of these things that people do thousands of times a month. We want to dramatically simplify that. Boxnnounced boxx relay relay, which was jointly developed with ibm. Emily how long have you been working on this with ibm and what was their role . About a year. We announced the partnership last year. The separate roles are it is so iton the box platform, uses the same data, security, islaboration box has and built on our user experience. But it uses a lot of ibm has workflow and technology. As ais what comes together very simple solution. Emily what do you see as the competitor for box relay . Arent there already workflow management tools out there . Our core focus is around content. It has to have a document at the center of what you are trying to do, whether that is an invoice, contract, hr process. Task management or customized workflow. This will live among those solutions, but what it is really replacing is a lot of the legacy content management and Collaboration Technology companies have had to invest in that dont pay off once they have these tools. They we have reported dropbox is potentially going public. In 2015, dropbox boosted its share of the market, giving it a box in file sharing. Also growing 80 in that part of the market. Box grew 40 . Does that concern you . It is comparing apples to oranges. We focus on the large markets. They focus on Small Businesses and and users. The products people are buying are pretty different when you break down the numbers. Grew ourst quarter, we large deal segment alone customers over 100,000 dollars that signed up in q2 over 50 yearoveryear. Still growing significantly and key segments of the large enterprise market. The figures dont break down the numbers accurately. Emily going public, does that change the Competitive Landscape for you . I think it will make the financial comparison more transparent, so that will be easier to answer these kinds of questions in the future. We have a lot of respect for dropbox and what they have been able to build. It will be interesting to see how they do publicly. Emily what about microsoft . They have been increasing their work in the cloud. They have a larger share of the boxness segment than does. How do you take them on . They are becoming a significant partner with us. We will be talking to them at the Conference Tomorrow about strategy. There will be things with microsoft office, outlook, azure, using our services. I like to think of them as a partner. In general, what we are all trying to do is we think the way Enterprises Work today is way too slow, way to call located, and spending way too much money on way to come hated and spending way too much ,oney on way too complicated and spending way too much money on i. T. We want to move all of that to the cloud and i think there is an opportunity for all of us. Ceo aaron levie. Coming, is elon musk feeling the heat from wall street . We will put his letter to employees under the microscope. Emily elon musk pleading with employees to show investors the numbers they want to see. In a letter obtained by bloomberg, he wrote added that pushing results into positive territory would wall street is notoriously split on tesla stock. Analysts currently have seven buys, seven holds, five cell sellgs on the stock ratings on the stock. Talk to us about the schism between fundamental and true believer investors. People are so polarized on either side. It is fascinating. When you listen to the tesla earnings calls, you have analyst dig into the financials. Others think big vision, what snacks. A big part of the investor thesis is you either believe in elon musk or you dont. . What next a big part of the investor thesis is you either believe in dont. Sk or you do emily obviously, merging with solar city, trying to get us to mars. Says they are on the razors edge of a good q3. What is actually possible . Its all about thirdquarter sales. Not out yet. Ee is the question is, is anticipation of the model three cannibalizing sales of the model x and model less . . E has model s what is the number they have to meet in order to show profitability . Emily how close are they to being cash flow positive . That i dont know offhand quarter by quarter, it is a race to show profitability. Once they start ramping up production, it is going to be difficult. This is like the First Quarter of 2013 all over again, which is the only quarter tesla has had profitability so far. Hady the solar city merger some people saying this is the best idea ever, this is the future, and other people saying this is a horrible idea, both of these companies are having trouble. If the sec approves the merger, both boards have to vote on it on a special date. That could come as early as october. People are split on it. Itcks took a deep dive when was announced. Then they recovered. There is a question about bandwidth than being able to add on while they build a gig of factory and tried to launch a new car and build out their sales reserves network. Watching forl be more rallying emails between now and then. Thank you. Oning up, snapchat is track for explosive growth, projected to hit 1 billion in ad revenue next year. We will hear from the analyst the wrote that report. You can listen to us on the radio, at bloomberg. Com, and on serious xm. Nina lets get a check of your first word news. The Un Security Council has strongly condemned north koreas most recent Ballistic Missile launches. The Council Agreed to further significant measures hours after a closeddoor emergency meeting. The meeting was called by the u. S. And south korea in response to the missiles. Sectarian rivalry between iran and saudi arabia continues to escalate. Iran through the first barbed yesterday with the ayatollah accusing the saudis of deliberately killing pilgrims last year. He called for a review of holy sites. A review of control of holy sites. A german court has dismissed appeals by 84 russian athletes looking to compete in the paralympics. The entire Russian Paralympic Team is barred from the games as punishment for doping. S begin tomorrow in rio. The president of the philippines is apologizing for his tirade against president obama after obama canceled a oneonone meeting in laos. Of the philippines has also insulted the pope and ban kimoon. A pennsylvania judge says bill cosby blind and might need special accommodations at his upcoming Sexual Assault trial. Dayal news 24 hours a powered by more than 2600 journalists and analysts in more than 120 countries. Inis just after 6 30 p. M. New york. Im joined by paul allen with a look at the markets. Good morning. Looking asarkets flat as sydney behind me. Check out trading in new zealand. It is flat, off about two points at the moment. Nikkei futures looking flat. Locally in australia, we are expecting to be down about 10 points at the open despite u. S. Markets doing very well overnight. The window oned the chances of a fed rate hike in september. Currencies are where the action is in this part of the world. The aussie dollar climbing. The new Zealand Dollar up. We are waiting for gdp data for the Second Quarter that is expected to show a gain of. 6 . If it does better than that, we might see improvement in the aussie dollar as well. Gdp growth is pretty healthy. I am paul allen in sydney, australia. Emily this is bloomberg west. I am emily chang. Snapchat is said to have explosive growth in ad revenue. It generated 370 million in 2016, a projected figure of 1 billion in 2017. Here with us now are the Bloomberg News reporter who covers snapchat and in new york, kathy boyle, the market analyst who wrote the report. How do you expect snapchat to rake in almost a billion dollars of ad revenue next year . They have several products. They have snapped ads in multiple forms. They have sponsored geofilters and sponsored lenses. There are multiple versions of those as well. There are quite a few products in quite a few places. There are multiple channels for snapchat to draw in ad dollars. Snapchat getw does over the fact that the content disappears and there is not a way to make it go viral . I think its the appeal to the millennial audience and knowing you will get 100 of their attention when the ad is served. It may not go viral, but it is impactful. Emily snapchat may be the next something. But people continued to talk about the drawback that the content is ephemeral. And they are not getting a lot of data on it. There is not a lot of specific demographic targeting. But to her point, what is also interesting about snapchat ads is that sometimes they are integrated with the