Transcripts For BLOOMBERG Bloomberg Technology 20180129

Another 300,000 more are still damaged. Global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. I am alisa parenti, and this is bloomberg. Emily i am emily chang and is bloomberg technology. Coming up, tax big earnings on what has been record earnings. Under onech empire publicly traded roof, will explain. And taiwan may be positioning itself to be the next door currency hot in asia holland a crackdown on china and south korea. Our coverage from taiwan, straight ahead. But first our lead. A slew of the tech earnings this week. Facebook, microsoft, qualcomm, and out the back, and apple. It was a common theme in the tech reports this week. Shares and alphabet, amazon and others hit records after reports, and analysts are expecting the same. Ning us now from new york Bloomberg Tax julie for hageman. Kathy, i will start with you. Lets start with the earnings that you are watching. What are you most optimistic about . Taking our cues from Companies Like netflix which showed that once you get into the sweet spot you seek exponential, accelerated growth. We see this when market shares get 10, 20 , and we see that firms dreaming media, and mobile advertising is a percent of global advertising, now it is at 17 , right at the sweet spot on the curve. Amazon is entering that space you have facebook at roughly, i think google is at 73 billion last year, facebook roughly 40 billion, amazon roughly below 3 billion is nosing in but it has the most valuable advertisers because there are ready to buy and advertisers want to be or the purchasers are. Emily what are analysts saying . Are optimistic in the sector. Is reporting they are one of the best performers last year. It is important because those names account for a larger number of indices in the dow industrial average. They are still going to see an impact depending on how these companies do when they report numbers later this week. Assume in on apple, there are concerns of the popularity of the iphone x, especially in countries like china. They have three models out. This that concern you question . Know, we always get these jitters, and the stock did extremely well last year. I dont know if they are right or wrong this time, but i know that apple is changing its complexion of the company. We think the killer apps out there are in health care using Artificial Intelligence and integrating into a lot of Health Care Systems in the world, and also augmented reality is a killer app in the industrial space. At those to the other services which are 25 percent of their revenues, and we have the makings of a very different company. A little bit on off the bat and facebook, these are two competitors in that ad revenue market, and both facing controversy over fake news, especially. We think this will play the results this quarter . Markers Mark Zuckerberg doesnt address since the last companys earnings report, and is the chance to ask them following a report what impact this is going to see. It seems like they are optimistic at this point, but i wouldnt be surprised if Something Like mark or someone else says to make that kickback as well. Another thing to consider is the cloud share of the revenues. Likes a reason like firms amazon can offer to day, because they make money from amazon services. Littlevenue takes down a bit, you could see those shares fall a little bit. After a record performance last year, they have done very well. Analysts are optimistic. Amazon also increasingly becoming a bigger player in the market. Advertisers havent had much of a choice when Facebook Changes its policies. That seems to be the same today. Do you think this will impact the amount of revenue they bring in . It cut in the shortterm, but we think that facebook is doing the right thing. It has always done the right wing to keep engagement going, and clearly it was getting a signal from consumers that engagement might be tailing off. We think they are going to offset the value of facebooks advertising we think it is going to go up and be harder to reach consumers. We think the prices are going to go up. Amazon, youg on to talked a little about the cloud and they make changes to prime membership. We know they recently bought whole foods and are launching amazon go. They are investing heavily in the future of the company. Will this impact the bottom line . It could, but jeff bezos has not been afraid to make investments in items that will pay off in the future by at making further strides, it seems like there is no industry that amazon cant enter into at this point, whether it is through a partnership or buying a company. Anything that bezos states is going to pay off he is not afraid to go ahead and make a mark in. With are you most bullish where are you putting the majority of your money . Rep to be focusing in stocks that are in the sweet spot of scurve, and that market share range of a trend, we like all of them, we think most of them are top 10 we are taking profits to invest in other stocks that might be a little beat up by the earnings season. That would be in other areas of those are some appeal nicely. Those are keepers. You can sell in position sizes to limit risks in the long run. Up . Long does the rally keep these scurve scam lost for years. 10 of totalit retail, and we have just started. Mobile advertising is a percent of total global advertising, only 17 . Really lifting off streaming media as a percent of total Media Consumption 10 by some measurements a little higher by others, what we are learning is that the telecom bubble is onto something big. It is just too early. Emily thank you both so much for breaking that all down. Twitter is up by 5 , on speculation the company is shopping itself around. Us that theld company is open to any and all conversation. A techup, will explain empire under one publicly traded roof. Bloomberg technology is livestreaming on twitter. This is bloomberg. Emily microsoft has acquired a company to help build launch and grow cloud gains. Terms of the deal were not hosts some ofyfab the Biggest Companies that use its services. Bring itsis ready to empire under one puppy traded roof, to create a structure to help to companies to manage a massive debt load. Bloombergs alex barinka broke the story and drop joins me now. You have been working the phones all day and you had news that they were interested in a number of different options, explain what is on the table right now. Is toseems the end game bring this company public, and this tech empire into one corporate structure, and you will remember that that is not dell, but there is , emc owns the majority stake in vmware, 80 . The rest of that is publicly traded, so this option to get public will look like a vmware takeover of dell. Still use the stock to take over dow and become a Public Company through that acquisition and become the Parent Company with vmware lance fritz staying in place management staying in place. We dont know exactly what it will be called yet, but he likes to keep his name on thanks, at my sources dont have intel on what it will be called. Situationntriguing that is being laid out by my sources with the endgame of paying downblic debt and simplify and the corporate structure. There is key point to this implication. Figure out how to finance that 67 billion takeover and bought been a lot of debt and raised cash by selling a tracking stock for the state they are taking over in vmware. That stock still trades under nt, and it has a 15 billion market cap, that stock can be some dude either through a stock swap or through cash, to then take over these novel, interesting, strange financial pieces and bring them together. He made this giant transaction, there was a question of how long what the status remain . I asked last year if he had plans to change the structure. Take a listen. I dont have any plans to change the structure. We have to Public Companies in the group, and it is working quite well. So, now it sounds like the tune is changing. Plans have changed and the board will be making a decision at their board meeting. You have to remember that there is an and goal to get everything together and to service this debt. They have more than 40 billion of debt, and vmware throws off a lot of cash. Michael dellice if can get some of that cash and pay that down, and also, if he is a Public Company, as would give them additional ammo down the road and make some more acquisitions. It seems that he is taking the next advanced step to take this complicated structure that yes created and supply it and get it out the door for public investors. Emily what does it mean for vmware . With the current structure, and in fact, even though dell had conflicting relationships with potential partners, it were able to pursue those partnerships. My sources are telling me that he would stay in place, the management would stay in place because he is such a gem. We dont know what the financial vmware is surpassing. Would be part of this business, and based on services that run on top of the core of business, vmware is a technology that brings it all together. Some of those partnerships might have to be snuffed out. They are thinking about doing some kind of combination like this, the strategic applications. Hard,ex working art think you so much. Coming up, cryptocurrencies in asia and what country is looking to be the next big hub for digital access. In the future i would like to bring to your attention, find it on tv. Andcan send our producers play with the charts on the air. This is for bloomberg subscribers only. This is bloomberg. Emily the story well watching, japans corn check is saying they are packed after the lost almost 500 million in tokens. The episode calls for stricter industry oversight. Onsitetry will conduct inspections of changes and cryptocurrencies will become an issue in the next g20 meeting. Polly chen, which invest in blockchain assets, had the talks relate 50 million under and management of september, so crypto has on the act by venture firms. Crypt those, taiwan may be positioning itself to be the next cryptocurrency hub in asia following crackdowns in china and south korea. Half 1 billion from the corn Check Exchange is raising fresh concerns about fraud. Take a listen. The brew company is at the intersection of old versus new, in a micro sort of way it is an establishment that is challenging the establishment. Here can comens if they desire, pay for their micro blue microbrew with bitcoins. We want to help support it bitcoin and give power to the people. Make crackdowns in china, taiwan is trying to figure out where it stands in cryptocurrencies. Should government and regulator suppressed the market or set it free . Broker believes that taiwans state of statelessness works to its advantage. s position that taiwan finds itself is unlike the awkward position bitcoin finds itself in the established deking word banking world. It is the republic of cryptography. Take advantage of this wave and fill the void that is left in this region. Yet, led by a younger breed of lawmakers, the legislative view passed a regulatory sandbox bill on experimentation. On initial point offerings, that could be tougher given the fraud and Money Laundering fears. Right now the government is passive or choose to avoid talking about it. You cant run away from it, because you would go underground and you would have a lot of implications. Become in ico can trading cut in asia. What happened in the mainland was too much too soon. Things in taiwan a little slower, but safer as well. Taiwan is taking a palatable steps and cryptocurrencies. You will see it in more and more places and people will get into it and think that they can use bitcoin in my everyday life. This is where they can start, having a beer at a local pub. Is stephening us now engle was spent all of last week in taipei. You think the corn check heist situation the rails taiwans hopes of becoming a cryptocurrency hub . It depends on who you ask whether this is good or bad. Orcould enhance regulation oversight, but could also put a damper on the innovation that taiwan is trying to achieve. A younger breed of lawmaker trying to facilitate this revolution through that innovation that they passed in december, this whole story and japan blew up just as i was wrapping up my reporting, and i got a lot of messages. They are wondering how this will play out, because keep in mind, the cautionary tale in taiwan is what has happened in china, with the fraud there. Japan is looked upon as the model for which to build a cryptocurrency hub in asia. Emily taiwan has a lot of advantages. There is a lot of Processing Power on the island. How can we see them exploit these advantages, what about Bitcoin Mining . Mining is a question that was the latest results showed a big pop up in revenue that led to the bottom line for their latest results. From all that processing chips needed for mining, but you need a lot of power. This is a big concern for a lot of the lot makers lawmakers. Once they start stretching that power grid, when the chip factories start cranking up their airconditioning, there is severe power shortages in taiwan, especially in the summertime. When we did live hits with you last week, the whole neighborhood went black because of a power outage, so that will prevent taiwan from being a mining hub. Emily fascinating. Thank you so much stephen. Media up, are you social followers using real media or bots . That is next. And if you like bloomberg news, you can listen on the Bloomberg Radio app. This is bloomberg. Were watching bloomberg technology. Here is a check of first world news spread the white house is distancing itself from fbi Deputy Director Andrew Mccabes decision to step down. We have seen numerous reports as you have, and any specifics i can tell you, that of this decision was made by the white house, i would refer you to the fbi. White House Press Secretary Sarah Sanders says that President Trump stands by his criticism of the Deputy Director who played a central role in the Hillary Clinton emailed probe. Any trade deals negotiated by the u. K. From the brexit to eution will be subject approval. It was made clear today will also having a brexit deal finalized by october. Britain will have no say in that transition. Was in Prime Minister russia today to discuss irans military presence in syria and lebanon. Ofy accused terror on tehraning terror on as a muscle site. Missile site. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Just after 5 30 p. M. In washington. 6 30 a. M. In hong kong. We are joined at a look at a markets, i guess in the states it cant be record breakers every single day. Otherwise, it would just be rweird. Here in asiautine is that when i wake up in the morning i checked the markets, and one of the things i look at, i look at green. Obviously now we are looking at moderate declines when you look at some of these features in asia and the asiapacific. We are coming off of record highs in the region, and we are in the thick of earnings season which may be a bit of a left. Left. As well as Australian Business confidence at the moment, futures pointing lower, and the dollars supported yields on the way up tuesday morning. More from bloomberg technology, next. Emily this is bloomberg technology. Over the weekend, new York Attorney general opened an investigation over a company that follows trade follows on social media platforms. Reporting on the obscure American Company which, according to the New York Times, collected millions of dollars in a shadowy marketplace or social media fraud. Joining us from arlington, virginia, etc. Security company that destroys bot networks. And for data democracy, that has advice congress on disinformation campaigns. Whered congress before twitter, google, and facebook testified. I know you read the New York Times story, did any of the surprise you . That influences spots on twitter has been known for four or five years now. Emily how extensive is it . Does aink the article good job of getting it to one particular instance. Buts of accounts theres response following senate hearings, they were saying that in september they were taking on 4 million fake accounts per week. There were capturing 3 million prior to going on the platform, so that was still a substantial amount that was participating in some way in Public Discourse after the time they were created. You specialize in bot detection and mitigation. What information do you have on the numbers behind this . The extent of the fake accounts. Twitters the High Percentage of users that make up these fake accounts, researchers have come up with higher numbers. What is interesting and important to know is it is not just about the volume of accounts but the activity of those accounts. Accounts, of the fake they are louder, tweeting were often, much higher than being reported or talked about. What we are seeing is the impact that these fake accounts 20 240 or more of social activity. Know of whato you happens on twitter compared to what is happening on facebook . Twitter is much more visible. Havede researchers visibility on twitter, and on facebook it is tougher to attract that because communication happens and private groups. What happens on twitter is amplified more because the media picks it up and a lot of journalists monitor twitter. We talk about information integrity, twitter is an integral piece of that puzzle. How peopleerms of can be easily manipulated, give us examples. There are two general frameworks of the manipulation that was covered in the times article. The first is that we as a aciety the notion that person of influence should be taken more seriously. That type of, buying a large collection of followers can artificially create a metric of importance that we have come to accept, and perhaps we shouldnt. The second, it is the notion that these accounts are taking more often. There is information laundering happening. If i want to spread a particular point of view, i can go out and purchase bots and make it say a particular thing. Emily like vote for donald trump . [laughter] we have seen this thing done by corporates, it is called ing, when Companies Follow a social group like the campaign against ghostbusters. It is a systemic problem, and that needs to be addressed. Emily how do you describe the direction of these companies . It is not partisan, but it is one person and can in some campaign. Having awere onetoone conversation with other peers, but as soon as soon as you have somebody who wants to influence the campaign, they can use money, and not a lot of money, a small sum to influence the conversation and put a thumb on the scale. Conversation in a whole different angle and you saw that the election and the number of different ways. It makes us distrust interaction with social media. When of our producers husbands deactivated his account, and then he suddenly reappeared on facebook. And how many instances are Real Identities being stolen and how many of these are fake people . Andt is very difficult, seen that happen with two friends, and this is happened time and time again, it is hard to take the platform seriously. A Data Scientist put out a tweet of the times she gave a talk, and hundreds and hundreds of all accounts fake accounts in her name were created. It is difficult to be on the receiving end of it. It is hard to get the platforms and action and you have to do the legwork of filing report after report. With the account that we saw released in the senate hearing, i went and looked and noticed a lot of the names that were used in the twitter accounts work camel locates where they do first and last name, and if you google those names see they are coming from data brokers. Placeslike white pages, that harvest user information and sell it to people for whatever reason they might have. Once you name is on those sites, you have to do a lot to take those down. There is a framework that is easy to create and still those identities steal identities. Want tove clients who prevent bots from impacting their sides and they want to identify the difference between bots and real people. We want to identify which are real people and what might be malicious, and we want our clients to filter that out. If you are not one of our customers, then you have to take proactive measures to differentiate between the two and were seeing some Companies Take a more aggressive tone than other Companies Like twitter where we are seeing a more prolific way. Emily what is it going to take to change this . The reality is that this is traffic for social networks. Are fond oforms saying they want to be the arbiters of truth, but it is critical that they be arbiters of integrity. Theirltimately hurts bottom line because it erodes the trust of users. People dont believe that the people they are engaging with our real people. We have seen this corrosion of trust systemically and it is difficult when public fear levels increasingly of this trust rise and online mutations between people. Edison the debt to get ahead of, and Media Coverage like what came out in the times is something that is propelling. Emily you became a target yourself, and i remember it was incredibly overwhelming. Have you seen an actual improvement in the level of Online Harassment . I have to some extent. A lot of protections ruled out rolled out had a broader definition of what a lowquality account is. I think that it depends on what line of work you are in, and if you participate in dialogue of hot topics, my expense might be different than other people. Emily anything controversial, you are going to get jumped on. This is not going to the way, were going to keep talk about it. Thank you both. Surging. Res are cnbc citing people familiar with the matter the stock surged more than 20 , the biggest percentage rice since 1998 re it spokesperson said the company doesnt comment on rumors and speculation. Up, the Trump Administration wants to take the reins from wireless networks, but it isnt likely so standing in the way, unlikely folks standing in the way. This is bloomberg. Emily the fcc is saying not so fast to the Trump Administration. The commission is pushing back on a u. S. Plan to build a five g network that could be subject to government supervision. Sighing, i oppose any proposal from the federal government to build and operate a nation 5g network. Any network will be a costly distraction from the policies we need to help the United States g future. Win the 5 a fascinating statement from the commissioner, in light of the Net Neutrality debate and the stand he took their. What do you make of it . He came to the hard early against this proposal. We are not entirely sure who in the administration backs this, whether this is a trial balloon, it is unclear. What is clear is that the fcc and his colleagues are against it. Emily talk about the concern with china year. The National Security official and they dont talk to the press a whole lot, they have focused on two companies. Theyre both pretty well known to bloomberg viewers equipment makers. There are reports from capitol hill, and coming from the National Security apparatus that these Companies May be relaying or have the means to relay, or have the opportunity to relay information to chinese security. That seems to be the root of this. Recent letter from Intelligence Committee members from both houses of congress to the fcc saying to please look at this, and i got no response when i asked the fcc. There is concern that as 5g networks grow up, that agreement can be harnessed to the Chinese Government rather than u. S. Consumers. News, whenre this are we expecting to see 5g implemented . A big race, sometime this year, but predictions of been slower by it a lot has to go on in terms of putting up antennas and other gear. 5g depends on antennas, and signals dont go far. There are very fast and can be disrupted at times so you have to put up a lot of antennas. Clear the busy to groundwork to clear massive installation. Opposition or skepticism of some towns and cities that want to keep their rules on okaying these installations, the fcc is trying to make the town and city regulations less objectionable from the telecoms point of view. Emily whats the fcc makes a Statement Like this contrary to the administration, what happens . We play on, we dont know. Senator, and the chairman of the Commerce Committee who oversees the fcc they both said they dont like this idea. We have gone said, so far to say we want a secure network, how we do it remains to be seen. Is hard to get to get it done a barely none so far, we dont know, but it is worth keeping an eye on in the upcoming months. Emily todd shields, thank you so much for breaking it down. Coming up, apple is not content wants to and sell, it own all tech inside of them as well. Apples plan to build a process search at empire. This is bloomberg. Emily s tunneling startup elon saidtimely company musk he wants to be clear that a flamethrower is a super terrible idea, and it seems like his quirky promotion on social media is paying off. Overhave taken orders for 10,000 of these flamethrowers worth 5 million. The money will be used to fund mosques project muskss project. Checking on elon musk, it will be a sellout crowd when they will be launching a new rocket. As it has sold out tickets featuring a Champagne Toast and a plaque. The new rocket could be launched. N february 6 double has been known as a powerhouse, but most people think of it in terms of the iphone, imac, ipad, and more. Giants building itself into another powerhouse, a chip maker. Apple is on a mission to make sure it owns its technologies inside of its devices. Joining us now to discuss is bloomberg reporter who wrote an in depth look at apples business. Tell us how the chip business has evolved here. Rockets no rocker business. It has evolved over the past several years that apple has come out with several chips for its devices. And now have an ai chip processors for this place, and other components. Want to compete with qualcomm and intel, two of the biggest chipmakers in the world. Cook, is he putting a stamp on the company, perhaps the realization that this would be the better way to go for apple . All theook deserves credit in the world for coming up with ways to build as many devices that apple sells. Now a several hundred Million Dollar company, but it was steve jobs, tim cooks predecessor who came up with this idea that the company should own the underlying technologies and its devices in order to make better hardware and software for the user to interact with. This is more of a steve jobs decision that has trickled down the last decade or so. Emily walk us through the chips that apple will make in the future. The list is too long and complex to list off. You can see our in depth chart by the number Legislation Team the visualization team. They make the apple watch and air pots to pair over wifi and bluetooth. Engine forhe main components in the apple watch and iphone, the ipad, the home pod, and apple tv. For make the neural engine processing tasks, and they have and why2 mac chips, that is interesting is that intel stockholders will be interested in this because intel has apple as its biggest customer. Apple is trying to knock intel out of its machines in the future. Emily it is highly competitive, and consolidating, how does taking this on impact the rest of the companies that depend on apple as customers . Of the Bigger Companies affected here are intel and qualcomm. There is tons of litigation between coal, and apple qualcomm and apple. Starting with the iphone coming out later this year, we have reported they are looking at providers suggest intel and mediatech to take on modems. Modems allow the phone to connect to the internet, and to make phone calls. So they are clicking qualcomm out of there this year. Longerterm, we have seen the hiring of former qualcomm engineers working on modem chips by apple, so that could indicate that apple is looking at that as well. There were to get them out of the mac computers. Later thise earnings week, what are you looking towards . This is expected to be apples biggest quarter in terms of revenues with them projecting whiches over 80 billion is a rough 10 increase in terms of revenues yearoveryear. Were going to be interested in seeing iphone x numbers as well. Emily mark gurman, thank you so much. That does it for this addition of technology. We are Live Streaming on twitter, check us out on weekdays. That is all for now. This is bloomberg. What the daybreak asia. The top stories this tuesday. Trade headlines today. Modest progress for the u. S. The stage is set for trends in the transatlantic trade spat. Is angered, and brussels says they are ready to fight back. It is just after 6 00 p. M. On monday, and said to follow wall street lower as equity surge grinds to a halt. The