Eligible forey are reduced punishment from crimes. Global news 24 hours a day, powered by more than 2600 journalists in more than 120 countries. Im Mark Crumpton in new york. Bloomberg west is next. , and this isgiles bloomberg west. Coming up, our tech ipos roaring back . Down nutanixs firstday search. We will take a look at whether there is cause to be feeling bearish. And intel dips its toe into the wearables withs a pair of smart sunglasses developed by oakley. What people wear them . We will give them a try. But first to our lead. , sharesy of trading skyrocketed more than 130 , theng it the best debut of year. Tech ipos have been few and far between. Nutanix, new chantix filed to go public earlier this year. Alex barinka said down with the ceo. I was ready in january, but the oil prices havent. Happened. Riope, the is scale is there. People want to see open books, and being public is the way of doing that. Alex so you priced above the range you preached in the course of the roadshow. The stock today is trading up. How do you feel about it on your debut day . To me, what matters is the next six to 12 months and the longterm guidance. Like a baby was born, im not interested in the height and the weight, but more importantly if it is healthy. Alex we have seen some of these offerings that preceded you. Trade more than 200 higher than the listing price. Is there some kind of embedded concern about living up to your valuation post ipo day after post ipo day . The market in the shortterm is a working machine, but in the longer term it is a waiting machine. What happens in the shortterm [indiscernible] time actually takes care of that area takes care of that. Of theou guys were one early movers in this hyper converged space. You saw sales increase in 2014, 90 in 2015, 80 4 and your last fiscal year 84 in your last fiscal year. What will you continue to do to boost that number . Investors were liking that growth. Thisthink the key to all is repeat business from existing customers. [indiscernible] depth of thehe relationship and the customer really comes. Just keep doing the basics. To stay healthy, you run, avoid sugar, things like that. You are doing something highly differentiated. It is hard to do, Building Software that. Building software. It is about charming men. The customers charming the,. The cost charming them. The customers love us for what we do. Been you have not yet profitable. You are still posting that losses. How long can investors expect that to take . The certain thing building revenue, that only gets recognized overtime. In terms of operating profitability, it does not show, really. But we grow with enough guardrails in mind. Guardrails like, we could fit ,nternal targets for cash flow and guardrails for operating profitability and so on. You have not been a company that has grown at all costs. We have not been a company that has grown at all costs. You were one of the first in this space. We are seeing the biggest players, even the ciscos of the world, start to creep in. How do we differentiate what you are doing so you continue to gain customers . Stack. Ont have a full storage software, Operations Management software, all of that is required to build what people are calling the enterprise cloud. A lot of companies say, put something in here, but something in there. What we are saying is you have to have the entire stack. Was nut ceoanix nutanix ceo speaking with alex barinka. Chair ofined by the blumberg capital. Thanks for joining us today. Thanks, tom. Tom a big, momentous day today. What did you see in the outset that made you think, this is the right investment for us right now . A classic Silicon Valley story. Three immigrants arrived from india, they get great jobs in google, oracle, and they came to us with literally no customers, no bronco no product, three guys at a business plan. No employees. But they had a vision, and they a look in their eye that said, we are going to achieve something really big. What they outlined to us is a way of bringing web scale architecture, that is using very Smart Software on top of commodity and increasingly lowercost hardware, to the rest of the world. Google, facebook, and other Great Companies have higher near this style, and the cofounders we want to bring that to , small companies, governments, and large enterprises. Tom we did not see a lot of pivoting from the early days to now. When you say pivot, its more of a cornucopia. Their vision started, and it has grown. They grew in a very nice progression. Surged 130 ,tocks great for those of you who are hanging on to the stocks right now. Did the company leave too much money on the table . Are read being too conservative are we being too conservative, given the environment right now . Their strategy was developed by the investment taking team, the management, and the board. What i can say is i am a super happy shareholder. To this greatent valley we lived in, Silicon Valley, the American Dream being realized over and over. It shows how Fast Companies can grow. They can go into 80 countries under seven years and have thousands of customers. It is kind of an astonishing story. I think the difference between now and 2000, when Companies Went public, is that companies emphasizesnutanix this really well, it is real revenue. Hard technology. Tom why now . What is the signal that now is the right time . November and december of 2015 saw a lot of turmoil. There were oil price crises, down to earnings numbers. The volatility of wall street as a negative impact into the world of private companies. Even though nutanix was doing well as a company, the Market Conditions were not favorable. We held on, no one pressure them, and it was a great call. You hearing questions from your lps we would like to see some of these folks come to markets and realized some gains how much of that is happening . The interesting thing in our case is that we were able to self stock in the secondary theet sell stock in secondary market about a year and a half ago. That gave us some breathing room. It is not just marked up on paper, we can actually return some capital to you. Way more than covered our investment costs. All of this is now gravy. Super exciting. I think our investors understand that Venture Capital is a longterm game. The Holding Cycle of about seven years is about average ticket to an ipo. Much concern is there when you do a secondary . Its a bit risky, right . You dont want to send the signal of lost confidence. How do you strike that balance, and how do you avoid the appearance of losing confidence . We did it in conjunction with and clearing with the founders and management before we did so, and it was a small portion of our holding. I think it is very important that people understand that regulatory manners have changed the way wall street works. It is much harder to go public, so Many Companies have to stay private longer. They have cash flow needs for the founders. They want to buy a house in the bay area, pretty pricey. Some of them sold as well, not huge amounts, but enough to get by. We returned enough to make them happy. For 2017,utlooks especially given the uncertainty around the election . Heres the thing. Technology world seems to be more of a constant man a variable. It is growing. We are seeing a credible disrupt incredible disruptive power. People are saying to buy only from startups, rather than the legacies. I think Tech Innovation is more of a standard than a variable. Tom thanks so much for being with us. David blumberg, founder of blumberg capital. Thanks again. Coming up, Wedbush Securities downgrades alphabets, giving the stock its only sell rating on the street. We will speak to james dekes about why he is feeling bearish. Tech giants are dominating the rally with strength not seen since the bull market started in 2009. Oflying 12 since the end june, four times more since the next best group. More of bloomberg west coming up next. Tom turning to output that, which just got its first analyst downgrade to underperform, the only sell rating for the stock. A wedbush analyst says that Google Search analytics could come under pressure as mobile Technology Helps marketers go directly to consumers. He joins us to discuss in more detail, along with Bloomberg News reporter mark bergin. Hey, tom. Tom yeah. All right. James, thank you so much for being with us today. Tell us a little bit about why you have taken this somewhat bold bet and downgraded alphabet. Does it basically has to with three Technology Trends which could lead to what i see as potential risks to the Business Model of paid search. Been, it trend has think, over the past year, a more rapid shift in monetization of paid search, especially on mobile, through addition of ads and changing the mix of the traffic to being more paid traffic as opposed to organic traffic, so to some extent, the business becomes more like an advertising engine as opposed to a Search Engine merely supported by advertising, and one potential risk is that reduces the moat between that type of experience and other advertising engines, which might be better for advertisers and consumers. Consumersrend, the ability to build to control ip delivered ads. The obvious example would be the rise of ad blocking, which was not that substantial in many markets, depending on the data that you look at. It could be a quarter of the user base that has installed some form of ad blocking. This allows consumers and sensitizes them to take control of their ad experience and potentially control the ads they are exposed to. The last trend is the rapid acceleration in payments platforms, and what that digitallly allows is connection between your exposure to an ad, whether you shop for a and pay for all purchase a product, therefore allowing people to pay directly to consumers to engage with ads, regardless of whether they actually buy from that particular appetizer, but simply whether they buy at all. Thats what i call the attention market. That is the risk to the paid services Business Model. Tom james, alphabet has been aggressive in to moving into new markets, trying new things. Arent you at all optimistic about their move into some of these other businesses . James i think some of the moves they have made have more focused they give more clarity as to where they are some ofg in terms of their longerterm initiatives, versus some of their core businesses. Paidact remains that search remains far and away the most important driver of the actual Financial Results of a company that investors depend on. It continues to be a company which is 90 advertising revenue , and the most profitable part of that advertising revenue is paid search. I do not see their current initiatives trading changing dramatically over the next couple of years. I would like to bring mark bergin into the conversation. This is his first appearance on bloomberg west, and you are just now starting to cover google for us at bloomberg. Speaking of new products, next week we are going to see google some new hardware. Tell us a little about what you know coming down the pipe. The nexus launch, which has historically been their reference design brand they are showing Android Phone makers , this is what we want a phone to look like. It is important for google. They are competing with apple, and there has been a lot of pressure on the highend. Theird is key strategy to mobile advertising. James pointed out a lot of their search business depends on having a strong presence with android. Heard moreday, we from diane greene about their cloud initiative. Tell us more about their expectations for what diane greene is doing, and whether they have a chance against amazon and others. On lasthey came november. Its been about a year. The first goal with the sales team is to have all these disparate apps for work. It has taken a long time. There is a sense inside the company that historically it has , a consumerring product company. It has never been an enterprise company. Amazon and microsoft are well ahead. Thank you both for joining us. Coming up, it looks like qualcomm is ready to make a major acquisition, but is in xp the right fit . P we will bring you the latest. This is bloomberg. Tom qualcomm finally looks ready to make a big deal, with bloomberg confirming qualcomm has held several talks with targets, including nxp semiconductors. To shore up a key market in a rapidly consolidating industry. Joining me is bloombergs ian king. Take you for being with us. What is qualcomm looking for . Ian several options, as far as we understand. Behind thisforce is, do they want to make a transformational decision, do they want to use that 30 million theyve got, or do they want to stay the course with what they have been doing until now, which is incremental we need this technology, we need that technology . That is our understanding of what is going on. Tom what does nxp do for qualcomm. It is route one into silicone qualcomm is already trying to do that. It is pretty much the biggers the biggest maker of chips. Tom where is pressure on qualcomm coming from . Is this the rising cost of making the chips . Thats a good question. On the one hand, they have that huge chunk of cash and they want to do something with it. The other hand, its a classic case that we have seen too Many Companies be good at one market and make a brilliant living in that market, in this case the smartphones, and then things slow down, competition comes along. What do you do next . You take money you have gained in the one thing you are good at and make a big bet, or do you stay the course . News today atthe bloomberg about there being multiple potential targets. Something about nxp that makes it attractive is that it has an overseas location. Taxmuch of the burden of plays into why qualcomm might he looking at nxp in particular . Good point. In general, they have a lot of cash overseas that they have never wrote back. They dont want to pay double taxes. If you can effectively use that cash to buy something that didnt bring see revenue, obviously that is expected use. Obviously, if something is going on with the u. S. Tax codes, maybe you reconsider. Tom we have just broken some news saying that nxp is working with catalyst to explore a sale. What does that mean about nxp and its position here . Ia im glad that just happened while we were talkingdn im glad that just happened while they were talking. This confirms nxp is a potential seller. They have somebody in place to deal with. We understand that they have spoken to several potential bidders that averaged out and said, are you interested . Tom bloombergs ian king, thank you. Ian will be joining us later in the show to talk about how intel has joined with oakley to make some classes that make make sunglasses that can talk to you. Next, scott sandel. This is bloomberg. Mark lets begin with a check of your first word news. The United States is considering sanctions against russia over syria. State Department Spokesperson mark toner says that moscow still has not taken steps to end the violence and aleppo. We have not definitively that door. We have not definitively suspended our diplomatic relations regarding syria with russia. , because wee verge have not seen them take the kind of actions we are looking to see them take. Mark russia says for a credible ceasefire to begin, russia should separate the moderate opposition from al qaedas branch. President obama joined leaders around the world in jerusalem for ceremonies for shimon peres, who died this week at 93. The president the next generation of leaders to complete his vision of peace between israel and palestinian. Was buried next to another israeli prime minister, assassinated in 1995. The commission on president ial debates says there were problems with Donald Trumps audio during the first debate. According to a statement on the website, the commission wrote there were issues with Donald Trumps audio that affected the sound level in the debate hall. Trump had said on monday night that his microphone was faulty. Security Department Official tells the Associated Press hackers have targeted the Voter Registration systems of more than 20 states in recent months. Month warned state officials to improve their Election Security after hackers targeted systems in illinois and arizona. U. S. Officials say election systems are generally not connected to the internet, making it harder for hackers to alter election outcomes. A warmancis has received welcome from the leader of the georgian Orthodox Church, who calls him a dear brother. Relations between the church and the vatican have been strained. In 1999, tensions were so high urgedhe Orthodox Church its a full to stay away from a mass of Pope John Paul ii. Hope francis issued a rebuke on friday, insisting that the republic had sovereign rights. The Italian Police have found two van gogh paintings that were stolen from an Amsterdam Museum in 2002. They were hidden in a farmhouse of an organized Crime Syndicate in naples. They are in relatively good condition. The coatings were considered the paintings were considered among the most important artworks in the world. Global news 24 hours a day, powered by more than 2600 journalists around the world. I am mark upton. This is bloomberg Mark Crumpton. This is bloomberg. West. His is bloomberg im tom giles, and for emily chang. Tradingsurged in their debut friday, after the Software Maker raised 230 million in expanded ipo. It joins a numbe