But that has been completely erased. Oliver we are inching up day by day since we broke those records. Speaking of a the drop, i want to start on friday afternoon, looking at the s p futures. Aftermarket, premarkets, that did you see is friday after we coup attempt in turkey. We are raced it by the time we came in this morning. Everything was pretty much back to where we left it off and obviously a pretty big move in the tech stop tech stocks. On the yearlong chart, i pulled this up because tech has not broken the new highs yet as of december 2015, so getting closer. Joe u. S. 10 year yields have been itching higher for a while. Inching higher for a while, moving higher but till not back to where we were earlier this month but the trend is definitely for an increase on those. Scarlet we just got netflix results coming out. Netflix coming out with the stock trading in afterhours, taking a bit of time here 1. 966 billion dollars. Earnings per share of nine cents a share. Not sure if we are comparing like with like because the consensus analyst was for three cents. Stock tumbling and one number that stands out is International Streaming net adds 2 million analysts were looking for 2. 5 million. The International Expansion seen as crucial to the companys strategy. Apears to be a mess miss. Not only did they miss on this quarter and thats especially important for these Companies Looking for projected gains. Scarlet here is some color to that International Streaming growth. As we wouldas fast have liked, so a little bit of a disappointing read from netflix itself. Edition,e domestic net the consensus was for 695,000, so less than half of what analysts were looking for. That outlook for earningspershare was for . 13, so this is a big miss by any measure. Cory johnson is looking at the numbers. We knew coming in that the company would have an outsized reaction in the share price one way or another and in this case, it is a big miss. Big for totala subscriber growth. Theres so much vocus on subscription and i get it and understand why you want to see how big the market could be. But its a direct relation to the product you sell and how much you sell it. Youve got to imagine what a decreasing marketing cost is Going Forward and last order, the paddle is no longer to the metal on marketing. They were not spending 12 or 14 on marketing. That drop down to 10 . So this is crucial. If they slow down on the marketing, whats the result . When they spend less on marketing, fewer people go to four up for netflix netflix. It leads to a disappointing number in terms of subscribers and that is a great concern. It still a growth stock and is priced with great relief that they can expand into every geography. Scarlet and investors are willing to see netflix pay for the growth. Earnings per share was expected to decline somewhere in the neighborhood of two cents or three cents. It did increase, so it looks like netflix is posting a profit increase if you compare it with the same time one year ago. Cory at the end of the day, it is about free cash flow. If they can add the subscribers, lower the marketing costs and keep it manageable, someday they can be profitable enough. Maybe they can squeeze out other competitors along the way. At hbo we are looking and showtime or hulu and amazon prime, the cost of producing this is going up. Dont give us a clear indication of how far they spread that out and how valuable is the first season of house of cards or daredevil when it is four years old . Do they use it over 18 months or change it over time . Theyve got some wiggle room in terms of the cost of content. Rising,nt cost is content is getting more expensive and you can see the result. Ist you dont see commitments and contingencies Going Forward. Not everyone pays attention to that but that was 12 billion in minimum commitment to content they have to pay out in the coming years. They have to grow the Subscriber Base to pay for the content they are contractually obligated to. Its disconcerting to people who worry about things like that. More reactionet to these earnings from the president of created of creative strategies. Skiving in. R what do you see on these net looks earnings . If you look at netflix, this happens every three or four quarters where the numbers are up, down, up, down and its clear at this point that these lees investors. My sense is if you look at the broader sense, they put a lot of money into original programming. At this point, that is partially reflected in these numbers. Looking at the volatility of these netflix reactions, the stock moves on average 13 on investor days. What makes investors so reactive . Is that concerning at all . Guest historically, when the theters happen, think about reaction investors had when they wanted to change from the distribution of cds to just digital. Investors went crazy and did not understand that reality was moving to streaming. Mailing would be history. They saw the future and started moving. They probably started moving too fast and hit her numbers but if you look at this original from puttinghave the cost into it, thats going to impact earnings in some quarters. Scarlet and we have ibm results out as well. Slightly higher than anticipated. Earningspershare of 2. 61. Estimate was 2. 89. We have different parts of the ibm business here with Technology Services and cloud revenue coming in at eight . 9 billion. Secondquarter adjusted gross margin, 49 of what analysts were looking for. Stock picking up a little higher. How do you assess that companies progress, all of these Enterprise Companies being judged by the progress they are making their. Guest they are making significant progress. They are fundamentally in the top two of Cloud Business is at the moment. Watson gaining a tremendous amount of ground. Keep in mind they are very in iot. To what is going on in thats helping them add new numbers to revenue. You really need to do look ate cases the overall vision. At this point, shes really delivering. I want to bring it back to cory johnson. What stands at to you . Cory Revenue Growth. For the first time in 18 quarters and after ilions of dollars spent, we see a tiny bit of Revenue Growth. They want to move people to their Cloud Solutions and get people to use the platform they call watson. Is they are still slinging hardware come in trying to sell big piles of licensed software and that is being replaced by the cloud stuff they are trying to that is something amazon is willing to push on the world and ibm has this fundamental conflict where the new stuff they sell is less expensive. I want to turn back to netflix because theres something here that tim said that is dead on. Much they arehow spending on original content and content they are buying for other places. We know they say it is more expensive, but this is a hit driven business. I would be hardpressed to name more than one or two shows on after house of cards and orange is the new black. The original content is not as big, important and successful as the older stuff, but the cost are higher. They talk about increased turn due to anxiety about higher prices. The letter talks about whether its a result of total Market Penetration to other online video providers. Of that highere churn and how much of a problem is that for the company . That is good and honest. That has been an ongoing question what makes customers come in and what makes them stay and how much control do they have . Have enough hit shows to keep people on season to season . Do they only need a few hit ws to keep that user on or you want to keep the customers youve got because the cost of getting new customers is extraordinarily high. Oliver just to take it back to ibm with a bit of a beat there. How come investors in that stock are not jumping right now . He market is pretty much flat after hours. What is holding them back . The shortnt know is answer. Its inherently in conflict with itself. The tells you about estimates. Improving topline is important but when the top line turns around, operating profits will get a lot wider and we just havent seen that. Weve seen a compression of operating profits. If you sell a stuff, you have to make more money with it and i really dont see a significant improvement in operating earnings. Johnson, stay with us. We are still awaiting yahoo s results. It might be their final Earnings Call today when it does report. That company due to report any moment but we have seen numbers from net looks and ibm and netflix is tumbling in afterhours trading. Mark im mark crumpton. Lets get to first word news. French officials confirmed the attack in nice that left 84 people dead, the assault was called a terrorist act. Ask people are being detained and one of them allegedly received a text am the man police say drove a rented van into a crowd of people. Officials a theres no evidence linking the suspect with islamic state. The turkish president s crackdown on could jeopardize turkeys position in nato and potential membership. Kicked offead purge with a wave of arrests over the weekend. Eu laws bar Capital Punishment in Member States and people in turkey have been demanding the Death Penalty for the coup plotters. The gop has longawaited draft platform is expected to be approved today as the party closes in on nominating donald trump for the presidency. The document is said to have been finalized last week. It calls for more account ability and transparency at the federal reserve. The platform is also suspected to urge no significant trade decisions be made during a lameduck section after the election. Hillary clintons lead over donald trump is slipping. Mrs. Clinton leads mrs. Trump by three points, 43 to 40 . In that same survey last month, clinton had a sixpoint advantage. Governorick of indiana mike pence will not influence votes. 11 say this election makes them more likely to back trump. News 24 hours a day powered by more than 26 hundred journalists and analysts in more than 120 countries. Im mark crumpton, this is bloomberg. Scarlet we are awaiting ibm earnings. Lets recap netflix and ibm subscriber addition growth disappointed investors and ibm up after its revenue beat analyst estimates. I want to bring in our guest joining us by skype and bloombergs cory johnson joining us in san francisco. Netflix is paying for this content, perhaps not getting the kind of laws and reward that it did from the first seasons of house of cards and orange is the new black. When it comes to its content cost, is it worth it to go into these International Markets and create these specific National Market programs when they dont have the scale to spread out the cost . Tim i dont think they have a choice. If they want to continue International Expansion, they cannot guarantee how house of cards is going to play, even played well in china, it might not play well in south america were other parts of the world. They will have to do much more localized content. When they did this original transition from cds to digital, that was a huge, disruptive thing. Theres another stage at the moment where they move from existing content to creating new content and thats going to be turbulent for a while. They not only have two have the hits in u. S. , but some of these International Markets and only time will tell if they are able to pull that off. That, the better the chance to get International Subscribers as a result of that. If this is just becoming a hits driven business, does the stock deserve to trade with a tech multiple if they have these massive growth expectations . If this is about the sort of luck, whether you are hitting them or not you should investors . Hink about the stock tim look at the history of podcast. Abc of the fortunes of cbs, and nbc was based on hit series and those have gone up and down depending on what those series were. In the 80s, it was one network and in the 90s, it was another network. We are starting to see that kind of is this model shift to streaming media and its going to be harder for investors to figure out what to do when you are moving to what happens when hits drive the process. Scarlet cory johnson is with us and waiting as we await yahoo s results which still have not been released. When we come back, we are going to go live to the Republican National convention. Of the floore shot interrupting in protests. A lot of people tweeting there is chaos on the floor. We will get you a live report with an update on it is going on. Joe chaos at the rnc in cleveland. An Extraordinary Development on the floor of the convention. Explain what just happened. Reporter a Data Development happening 11 delegations we are told, 11 state delegations led a protest and called for a vote meant to embarrass trump, meant to cast a symbolic protest against his nomination. They were shut down by the chair and then started and straighten now the convention is at an impasse. They are not sure where to go next. The antitrump voices are not that aside and the protrump voices are chanting we want trump, we want trump lowes quote and trying to shut down the protesters. Joe what was the tactic the antitrumper used. Reporter they tried to force a vote on a rules package that would have been unfavorable to trump and force them to jump through more hoops. It is intricate and little complicated but the thrust is they want to embarrass trump and embarrass the protrump forces. What the rebellion is about. We are told can to jelly, a delegate from virginia is part of the leader of this is the leader of part of this rebellion. Joe so whoever is running the convention, they were not compelled to abide by the signatures . How are they able to ignore that motion . Reporter the chair asked for a duick voice vote, the ayes an nays. The protrump voices yelled latter and yelled louder and they moved on. Dissatisfaction and protests joe what next to watch for . Get the votethey they want and what they do if they dont. That is what to watch for right now. We will be monitoring this story for the rest of the hour as things get a little crazy down there. We will be right back. This is bloomberg. Proud of the very delegates you chose to represent you during our committee proceedings. Intelligent,gh, and they worked with rate stability and common purpose to write a republican platform. Crumpton. Mark lets get to first word news. As we have been reporting, Republican Leaders hastily approved rules that would govern the Republican National convention in cleveland over loud of actions from antidonald trump delegates. The dissident delegates wanted to hold a statebystate roll call vote instead. Congressman steve womack who was cheering the proceedings called for a quick voice vote. Texas senator ted cruz is scheduled to speak wednesday at the convention, but he is telling politico he is not ready to endorse the likely nominee, donald trump. He says there is a lot of despair that trump is the partys standardbearer. He accuses of accuses the media playing a role in his ascension, saying he received three ilion dollars in free media. Hillary clinton is condemning the killing of three Police Officers in baton rouge, louisiana, saying this madness has to stop. She made the comment addressing the Naacp Convention in cincinnati. She said the recent killings of Police Officers in dallas and baton rouge gotten the ability of the nation to make progress. White House Press Secretary josh earnest says president obama has not called the turkish president p. Nce fridays failed cou he says the u. S. Is cooperating with nato to determine accomplices but is urging the regime to show restraint and uphold human rights. Some 6000 suspects were detained over the weekend including hundreds of judges and prosecutors. The Associated Press reports it has obtained a document showing restrictions on iran positive Nuclear Programs will ease in slightly more than a decade. The ap says it is the only secret text link to last years agreement between iran and six four and powers including the united states. In at least 11 years, iran can replace its 5000 inefficient centrifuges with 3500 advanced machines. The ap says the two diplomats that provided the information requested anonymity because they were not authorized to do so. Global news 24 hours a day howard by more than 2600 analyst and analysts in more than 120 countries. Back to you. Lets get a recap of todays market action. Then across the board with tech heavy nasdaq having a good day. Rally continues. Oliver it did continue in a pregood jump in the tech sector. We have earnings that we just ran through, in particular some of the ones that just broke with ibm and netflix. Revenue a little bit of a beat their which seems to be helping the stock in afterhours trading. Adjusted earnings of 2. 95 a share. Solutions group increased. The first time that part of the business has registered gains and the stock is up four dollars from where it closed in trading today. Netflix is getting absolutely destroyed, down 15 after new subscriber additions came in lighter than expected, particularly on the international side. Quarter notfor next expected to be any better. Thats a slight beat at ofes in comparison in terms comparison to subscriber additions. Scarlet microsoft is the next big cap tech name to report. The ceo is trying to transform the company to make it more relevant in a world that prioritizes Cloud Computing and mobile technology. Last order, microsoft boosted capital expenditures, spending more to build data centers and expand cloud services. Take a look at microsofts Revenue Growth. It makes up 28 of the business and includes enterprise services. It has been trending higher but the growth is not happening fast enough to make up for the weaknesses in one time pur