Transcripts For BLOOMBERG In The Loop With Betty Liu 20140326

Trying to strengthen ties with eu allies. Hans nichols is in the belgian capital. What will be the tone in brussels . It started somber when the president visited fields of flanders. On wars inective past centuries and the responsibilities of the current. Eneration all unit given the situation with ukraine. Technically, heres what is happening today. Theyre making technicall assessments on which industries in europe would be affected by another round of sanctions against sectors and companies. Obama mentioned energy, finance, arms industry. They seem to be far away from pulling the trigger on another round of sanctions, there would have to be another incursion. Rom russia into ukraine thank you, hans nichols. In washington, the senate moves closer to adding a two ukraine. The bill advantage the provision the bill abandons the provision that would have boosted the imf and guarantees 1 billion in loans and 100 million in direct aid. Sandy levin of michigan, Ranking Member of the house ways and Means Committee is joining us. Thank you very much. Do you expect do using the u. S. Is doing enough to help ukraine . The imf provision was droppe d, but the senate will act tomorrow and we are moving in the house to provide u. S. Assistance. Tohave to really go extraordinary lengths to make sure that ukraine is supported by us. It is important for ukraine and important for the u. S. It is important for europe and import for freedom. It is important in every respect. What other support what you like to see . You are speaking of supplies and military aid . Lets go back to the imf provision, which was dropped because of republican resistance and the senate. Lets remember john mccain and senator corker, they supported the imf provision. It was dropped to expedite the action. In the house, there was also resistance from many republicans, but not all. I hope we can return to that. Ssue the imf is indispensable in terms of having the changes. Kraine has to make you favorite the u. S. Working with the imf to support ukraine . Both. There has to be u. S. Assistance but some involvement of the imf, it is not either or. What assistance would you like to see from the u. S. Directly to the ukraine . There has to be some military assistance, we have to be careful about that. Is looking for an excuse and i do not think we should give him that. We need to be absolutely firm that there is an important principle here. Ukraine is now struggling to make sure it can maintain its freedom. There have to make sure is no further incursion by russia. We have to make steps to make sure that does not happen. [indiscernible] the principle here. The administration discussing economic sanctions, what would be your bread line to issue them . I am not sure we need to talk about red lines, we have to make not cross thees line. I am in favor of considering further sanctions. Has to mr. Putin understand that there is unity, there is firmness led by our president and the europeans. We need to make very clear what our position is and we were very upset, more than that, in terms of crimea. Cleartin has to receive a message, including additional sanctions. I would like to move onto a debate you are passionate about unemployment insurance. The senate set to that on thursday on a bill to extend. Nemployment insurance it seems like it will pass the senate, House Speaker john boehner has all but kill it. What kind of pressure have you been putting on your fellow congressman . Is 2. 8nse pressure, it Million People who are involved. These are people looking for work, these are people who have not been able to find work. We have not had this percentage of unemployed, unemployed over six months since the last since the great depression. Mete are people i have with them. They are looking for work. People of all ages and backgrounds and professions. From every walk of life in this country. For us to say you are out in the cold, while they are looking for work this is not the answer. When the senate acts, and hope it is very soon, i have some believe the house will step up to the plate. I think john boehner needs to look at what is going on in ohio, for example. As well as the rest of the country. He needs to essentially say look, there are close to 3 Million People involved, plus their families. They work for their unemployment insurance, in a real sense. We need to respond. It does seem like the bill will not even get to the house floor. What is the democratic plan be. Comes to there it floor, we are saying to john boehner, give us a vote. If there is a go, it will pass. We are going to really work together, i hope with republicans, and really make it clear this is a matter of the lifeline for people looking for work. I have talked to people losing their houses. They are being foreclosed. They do not have gas to go to look for work. These are people desperately wanting work. And the notion is they are sitting around on couches. I say talk to the people involved here. Once you hear their stories, the house will have no option but to act. A little more optimistic that it will make it to the floor and pass. I want to end on a light note, are you a fan of candy crush . Again . I am not very good at that. I just downloaded it yesterday, maybe if you join now, you can beat me. Sandy levin of michigan, thank you. Thank you for having me. Moving and shaking this hour, oculus ceo just got a little bit richer after facebook announced it would buy their Virtual Reality Device Company for 2 billion, oculus makes a ski goggle like device that people can wear to play 3d games. Bendan iribe spoke with bloomberg recently. Goggle, a decade from now, our goal is to get closer to sunglasses. Out, ray ban sunglasses that look cool. They are wearable and they are portable. You can throw them in your the competition with google and sony, for more on this deal, David Kirkpatrick joins us from detroit. Ceo and founder of a tech company and author of the facebook effect. Get past the 2 billion valuation. What was your biggest take away . The big take away for me is if you look at whatsapp as facebook s purchase to secure growth and the poor parts of the world by adding inexpensive and free , this is a way of trying to bolster business among the rich part of the world. The people who have money and will do the highend technology experiences. It is stunning that they have made another big acquisition this soon. This company is extremely aggressive, Mark Zuckerberg is extremely optimistic about the ways he can push his company and the future markets. What does this wind up telling you about the company that facebook will he in 10 years . What does it look like . Is a greatat question. I have been watching the question i have been watching the company for eight years or nine years and am amazed at how is is changing. It is becoming more of a portfolio of businesses, that is the key. If you look at what is happening with oculus, it may not be a part of the Facebook Service as we know it today in the longterm. In the shortterm, it will help games. In the long term, it could be a platform on its own. What part of this was defensive to compete with google and apple in 10 years . At it as look defensive, it is longterm defensive, i dont think you can think of this as a shortterm defensive. This company does not even have a commercial product yet, oculus. It is trying to be competitive by visiting by envisioning a computerized future that does not yet exist and trying to position facebook for a strong position there. They are thinking, ok, mobile is the top platform today. Theyre working very hard with whatsapp and instagram. Nextare thinking the platform could be a more virtual sensing true immersion, we are in the same place together even though we are not, kind of tie for. They would like to have the leading position for that. It is a gamble. What you think the conversation was behind closed doors . Was there any one saying it is a lot of money for a technology we do not know is going to work in 10 years . Yeah, a lot of people are saying now. I was onstage with Mark Zuckerberg and barcelona talking about stuff. Somebody asked him the question, you have just spent 16 billion on whatsapp, what is next . Zuckerberg said after you do Something Like that, we are not going to do too much right away. I actually said to him, with you, i never know. Inside his Company People are saying wait, you are doing another big deal . Are you sure . Think heaggressive, i convinced them. Are you a Virtual Reality game player . I think you are. I would if i had an oculus. I think it is very cool. It will be a success, facebook owning it will make it more of a success. People are going to enjoy playing these games. David, thank you so much. David kirkpatrick. Still ahead, how the worlds most successful ceos blog. A new battleground emerges in the fight for stricter gun control. The National Implications of to allow gunsosal in schools, bars, churches, and airports. Coming up next on in the loop. We are focusing on the debate over gun control. These new laws schools, and airports. Not surprisingly, the law is puzzling to antigun violence group. I am joined by Pulitzer Prize winning author and chair of the university of virginias Miller Center forum. Good morning. Is thisstartling to me seems to have broadbased Political Support in georgia. What about businesses and the public . You are seeing in georgia around the legislation has a lot more to do with politics than with gun ownership. There is an epic battle developing in that state. It is one of several in the south trending towards democrats in recent years. President obama polls at about 45 in the last president ial election. An issue around gun control is an effort by strong conservative groups, Tea Party Style groups, who controlled state legislature, to try to stake a flag on a hot button issue at a time there is a big division. Business groups actually view this kind of legislation or the sound trepidation. It is curious to see hardcore conservatives passing laws that forces every church to take a position on gun control. The law wind up changing as we get through politics as usual . Gubernatorial election fits and and the senate seat, they factor in and related ways. In georgia, you have the grandson of jimmy carter, a democrat, now a member of the state legislature, jason carter is running for governor against a republican governor, who will likely sign this legislation. Carter isats, jason the first serious democratic contender for governor of georgia in many years. In the u. S. Senate race, which is open now in georgia, you have the daughter of former u. S. Love can serve a democrat beloved conservative democrat making a bid for the senate seat. Over not that people all georgia are insisting they get to carry guns in the open going to church every sunday. It is not really about that. Fightabout this political where groups are trying to mobilize their core supporters. This is something that has mobilized a lot of hardcore conservatives. Nra playsrt of the into this . How are they doing politics in georgia . The nra has played out what its strategy in georgia, which has been his strategy for some years in many places. Essentially to take the position that every possible expansion of statutory requirements that allow people to carry guns into spaces, eliminating any doubt about where guns might be prohibited, the strategy of the nra has been to push the boundary as far as they can and remove doubts about what the Second Amendment means. Georgia is the headquarters of one of the largest and most influential Tea Party Organizations. Between progun forces and the tea party, even in cases where the Tea Party Organizations to not specifically endorse something. I want your take on what state will come next in this extreme legislation . That is hard to predict. As you know, a lot of states, since the massacre at sandy hook is that more states have made it easier to obtain guns then states who have made it harder. There is not really a Regional Focus to this. It is a mistake to assume this south. Thing about the attitudes among rural georgians are not much different than the attitudes of rural residents of pennsylvania and new york. Thank you so much for joining of university of virginias Miller Center. Coming up, target executives will testify about a data breach affecting millions of customers. When we come back. You are watching in the loop, live on Bloomberg Television and streaming on your phone in bloomberg. Com. I am alix steel. Approaching 26 minutes after the hour, bloomberg is on the markets. Features continuing to claw higher for a second day in a row as investors wait for durable goods orders coming out in a few minutes. On the markets again in 30 minutes. Heres a look at our top headlines. Russia learning the cost of annexing crimea. The country has been subject to sanctions from the u. S. And u k and will need to spend six point 8 billion dollars of emergency budget reserves to subsidize crimea. Putin facing the weakest Economic Outlook since 2009. Blackrocks larry fink taking on activist investors. The head of the Worlds Largest money manager warned Big Companies that dividends and buybacks might create returns at the expense of longterm investment. Janet yellen says rates would rise at the end of qe. When will qe end . We pose that question to Federal Reserve president james bullard. There is ambiguity about when will qe end. Cember, de january . There are different interpretations. The committee has not really talked about that. That is what is getting the timing a little bit off. To stress, this is not a calendarbased policy. , some kind ofsed sketch of a timeline that people have in their head that does not mean that is what the committee is going to do. What were going to do will depend on data. Time for deep ache number the umber, 2 billion dollars. Face but paying to acquire oculus, the company that makes a Virtual Reality gaming headset. 00 million in cash. An additional 300 million is oculus meets performance targets. Facebook intends to use it for communication, media, and other forms of entertainment. Mark zuckerberg said yesterday the Virtual Reality has the potential to be the next great computing evolution. The acquisition follows billiondollar deals. What is unique about this strategy is that it does not involve bankers. Cristina alesci is here with more on that angle. How unusual is that . A couple companies do business without bankers. Such a Young Company likes to advisors around. Mark zuckerberg thanks he has got the right stuff like comes to dealmaking. There are a couple things that work in his favor when it comes to making deals. One is the company has a reasonable amount of cash. Lets not forget most of this you do notstock, necessarily need any financing from bankers. That only do you have stock, you have a very valuable stock. One that he realizes is probably pretty expensively valued. He is going to try to use that currency to make deals. For example, the whatsapp deal, 12 billion of that was in stock, too. The timeline of these deals they are coming together in four or five days. This one was a marathon session at facebook headquarters. Is oculus protected . Outbook is only shelling 400 million in cash, what about oculus . They do not even have a product yet. Getting 400 million in backing for one of the most powerful companies in the world. This is a stellar deal for them. They need development money. You can spend millions of dollars on advisors and that goes into pockets of the bankers. Why not keep that for yourself . Are bankers looking at these deals and getting nervous they are missing out . Tol they be taking steps court popular startups . Bankers always try to get to popular startups. Heres the thing with bankers, i have had conversations with them. Bout these highprofile deals the bottom line is it is great to be on them from a branding perspective. Sometimes you get so checked down on fees it is not worth the. Assle the leverages on the side of the company itself. A lot of Big Companies, especially fortune 500 companies these days will actually start at the beginning of the year with a certain dollar size they know they will pay banks, a wallet. They are not going to move on that. Theres a lot of tense fortiation on fees highprofile deals. A thinker says i can go in the middle of the country and help a Paper Company or Steel Company with a 500 million deal and get paid more than i will trying to work for a High Profile Company like facebook. Thank you so much, we really appreciate it Cristina Alesci. We have some breaking news on durable goods. Michael mckee is at or breaking news desk. Interesting news from the durable goods up 2. 2 . The expectation was for a. 8 gain. Transportation only up. 2 on the month. Capital goods, nondefense, aircraft, the proxy for business spending, it is down 1. 3 . That is the second loss in the last three months. Does not look like businesses are ramping up a lot. Most of the change seems to be in the transportation area. That seems to be a little bit because of additional boeing sales and because Auto Companies were building their inventories, that is a worrisome trend down the road. It does not look like a great report at this point, the headline number is good. Thatents,. 9 gain, suggests the First Quarter might not be as slow as it had been pointing to. Alix . Thank you so much, mike mckee on the breaking news for durable goods. Active facebooks purchase of oculus. Focusing on ceos like Mark Zuckerberg and how they get the message out blogs. Heather is ceo of wpengine, a and Management Company supporting the most sophisticated clients. Google, gap, the discovery channel. A pleasure to have you on the program. We saw Mark Zuckerberg blog about this. Is this what modern ceos are doing . Becoming an essential part of business and communication. Key totely, blogs are bringing out the humanity of why behind and the your product and what you are trying to do in the marketplace. It is a logical thing to do. Is this just for new technology . Facebook . Are we seeing oracle and microsoft, Old Technology taking this approach is to mark taking this approach . Absolutely. Blogs, twitter, and facebook are important in terms of social. Blogs allow longform content for a Product Launch or an event coming up. New technology as well as more established Traditional Companies are leveraging blogs to get their voice out. Im interested in what the next iteration will be. Blogs was 10 years ago, what will be hot in 2020 . See morek you will varied content with the blogs, more video and other types of animation, things that are mixing medias together. I think that will be something you will see more of in the coming years. Have you been changing what you offer . You support upward t you support wordpress but offer more. Is enabling any type of web content you can imagine. Folks are using it for video t ext, blogging, website creation, wordpress is like a box of legos. Anything you want to create you can create with wordpress. We see wordpress as dominating web content management, 20 of is powered by wordpress. We want to evolve our ability to help customers take advantage of those advances. What is next for you . I think for us, as we think behind content being created and how do we think about best practices for that. Launching a new product and. Ocial events not only powering the back end but giving them guidance around how to take advantage of all. Hese you talk about politics and the technology sector, is there one industry that depends on this more than others question mark i do not know that there is one more than others. I think any industry can benefit from it. Humanity. G that any audience, whether it be a constituency or audience of or your partner ecosystem, any industry can benefit from using blogs as a way to get their voice out. At what point do you feel blogs game credit only. Ago, i might not have paid attention to a blog. If you think about wordpress as a technology that originated years ago andg 10 is now transformed into a content Management Platform for blogs have become adopted more and more. As you use a holistic strategy for content, logs complement what you are doing on social media and on your website. I do not know if i can pinpoint a time but i have seen the importance blogs have played over the last five years as more and more businesses are getting more sophisticated content management on websites. We started off talking about oculus. Do you play Virtual Reality games . I do not. It is definitely something i have two young daughters, they do play. I noticed that my craft the founder of minecraft was not very happy. Exactly. My daughters are going to be very disappointed not to have virtual minecraft. Every other nine year old out there. Heather, youre going to stick around to talk about much more. , it is as addictive as chocolate but less fattening. I spent a dollar yesterday, candy crush crushing the competition. Will its ipo be successful . The interview with the ceo behind the game credit. Coming up on Market Makers i wonder what he scores. Target on the hill to talk about why the company ignored warning signs and millions of customers personal information being stolen. We will talk about that, stay in the loop. King Digital Entertainment raised 500 million in its ipo, pricing shares in the middle. Success is thanks to candy crush, the game that pulls emotional triggers and provides instant gratification. It knows how to keep you to keep playing. Rachel crane looks at why so many people are spending time on blinking jelly beans. Sorry. Why is candy crush so addictive . There is 97 million of us playing this game every day. Candy crush is the latest in the long line of games. Previous examples include angry words, tetris, even twister. The idea is that candy crush gives players an immediate sense of a compliment. With 544 levels and a new level weeks, a key is people coming back for more. Up all ofhave used your lives, candy crush can prevent you from playing again for up to 24 hours. That lincolns the games appe al. You cannog bin you cannot binge on it. There are ways around it. Most games require both hands, you cannot do anything else. Candy crush lets you multitask. Talk on the phone, go to meetings and not pay attention. All of this is why king digital, the maker of candy crush, hopes lead tos success will bigger prizes. The Game Industry is full of onehit wonders. Something keying hopes to avoid. You cannot live on candy forever. Can i anchor while i play . Joining me is heather. A quick question on candy crush, i got it yesterday and am on level 8. Do you play . I do not play candy crush, my kids do. What i am addicted to is foreign s, the is farm heroe sister game to candy crush. I am at level 37, you have to pay to keep going. Are you going to pay . I think i am, i am really enjoying it. It is something to have fun with my daughters. My nerd weakness is settlers of catan. Back to the real business, you are ceo of a tech company, we are seeing more women in. Echnology what is it like to be in the space as a woman . There has never been a better time for women to be in technology than right now. The incredible Opportunities Technology companies provide, it is a dynamic space. You do not have to be a Computer Scientist to be in technology. You can be a salesperson, accountant, account manager. People of all types of disciplines build a great company, women should consider ad look at technology as place to build a career. What has been your biggest challenge, as a woman or a ceo of a company . The big challenge for me as a mom is striking the balance between the passion i have for what i do and the demands of building a fastgrowing company with the balance i need to have in terms of being present for my family. A technology perspective, it is how do we stay ahead and begins and do what phase doing, disrupt yourself and anticipate where markets are going. Really focusing not only on running the business but changing the business. Just wentg of, you through another round of financing. What is in your nearterm . Our near term is for us to double down on building out our platform. The secret is our platform. Echnology enabling wordpress sites to perform better and be business ready. Were going to be doubling down efforts on innovation to advance our roadmap and platform. Second, we are going to be focused on advancing our customer services. We are seeing more and more enterprise customers interested in working with us. They demand more attention, they demand help with best practices. They want to have more services and we went to build the right teams to deliver on that. Heather, thank you. It was a real pleasure to have you. Ceo of wpengine. As the house proposes legislation to end nsa spying programs and the senate grill is the target ceo about the data breach. We hear from a company that provides Malware Protection for systems. Stay in the loop. Capitol hill taking another look at the data breach at target that compromise 40 million credit card numbers, including my own. Todays hearing is the first since the company admitted to hearing about suspicious activity after a report found targeted ignored warnings from its hacker detection tools. Bloomberg is in washington with more. What will we hear today . Target on the defensive . Of apologies. John mulligan, the target cfo, plans to admit to lawmakers that yes, target has clues about the attack weeks before responding and is now trying to figure out why it took them so long to react. They are now asking hard we arens, he will say focused on the information we had that could have alerted us to the breach, whether we have the right personnel in the right positions. Ensuring that decisions were sound. Theill testify before Senate Commerce committee alongside a visa executive and chairwoman of the ftc. The hearing comes after the committee released an analysis , that comes from a describes that computer incursion, describing how many times target last opportunities to stop the attackers. There were plenty. We have to do a victory lap at bloomberg businessweek. Quite a few shout outs. Working with a team of reporters to uncover how the hackers got in and all the ways target went wrong. Aboutarings have come thanks to the expose. Introduceds have things to address breaches, there has been a lack of cooperation between the fbi and companies, a reluctance to share information. Is that accurate . I would say yes. Earlier this year, jay rockefeller, chairman of this hearing, along with nine along with Diane Feinstein addressed this issue with a bill. Allowing Security Standards and the bill would empower the ftc and state attorney generals to againstvil penalties companies that fall short of the security requirement. With target as a poster child, we can expect rockefeller to make a strong push. Thank you so much. Lots more coming up on in the loop. We will be right back in a few minutes. 56 is actually our, bloomberg is on the markets. Higher, durable goods coming out stronger for february than estimated. Investment in business equipment fell over that same period. On the markets again in 30 minutes. Coming, kit digital hopes to be moneyxt zynga, raising and its ipo. Will the creators of candy crush live up to the hype . We talked Cyber Security with a man who personally trained over 400 fbi agents in computer crime investigations. Will join us. Youre watching in the loop. By on Bloomberg Television, streaming on your tablet and bloomberg. Com. 30 minutes from the opening bell, you are in the loop. Futures higher this morning. Here is what we are working on. Jim bullard concedes there may be ambiguity in the notion of when qe will end. Americans get more time to enroll in obamacare if they started the process but were unable to completed before march 31. Update on the missing jet, malaysia has satellite images showing potential objects in the southern indian ocean. The images were taken about three days ago. Still uncertain if the objects are from the missing flight 370. Another top story we are following, facebook acquiring virtual device maker oculus for a price tag of 2 billion. If you are not a gamer like me and you are not familiar with the company, we got an inside look at the threedimensional company. Rift,m wearing and oculus Virtual Reality headset. Here i am flying into space. Icy asteroids and i now see my enemy is am firing a machine gun. The maker of the oculus rift headset is making a promise, Virtual Reality will finally feel real. What is Virtual Reality were perfect . We could have ever experie we could have an experience like the matrix. 21yearold Palmer Luckey created the headset and his parents garage in 2012. This was your hobby. Now, you are the cofounder of a company that just raised 75 million and is moving towards a commercial product. It is pretty great. Amazing to work with a lot of people who are a lot smarter. One of the people is gaming entrepreneur brendan iribe. I was skeptical about virtualreality because i grew up in the 1890s in the 1980s and 1990s, technology was not ready. Technology is finally there, all is a few seconds and you realize it has the potential to change the world. Oculus has a technology called positional tracking, when a player leans forward, his character leans forward and sees the Digital World with a new perspective. We are finally able to deliver on the promise of a synthetic 3d environment that is nearly photorealistic. Seamless. I am not feeling any nausea right now, it is almost like i am there. The buzz around oculus has brought out competition, sony announced a headset prototype for the playstation 4. Executives at oculus are not worried. People will jump in because we have proven there is a market. I am a huge sony fan and i hope they take it seriously and deliver something that makes this a much bigger industry. Both companies have many hurdles ahead. Not clear whether the Software Developers will ever embrace the technology. No release date. When can consumers by an oculus rift . When it is ready. And 2014 . We will see. Andor more on oculus facebooks move into Virtual Reality, lets bring in cory johnson. Joining me now from san francisco. Are you a reality gamer . Reality gaming . Seems like they are very separate. For is a really weird thing facebook to do. For them to imagine what the future is going to be in computing and plays a very big bet towards that direction. Fundamentally, facebook has decided that oculus and possibly be the platform of the future. They are betting 2 billion. Talk to me about the money. A 2 billion valuation but 400 , how do youash arrive at that valuation when they do not sell anything . This is not a company like whatsapp, 22 million 22 billion with a product for no revenue. Use a discounted cash flow model when you do not know what they may . There is probably relation behind this. As ridiculous as what you just said is, only 400 million in cash, this is a smaller bet. This is after Mark Zuckerberg said they were not going to make any big purchases after whatsapp this year. I do see this as a placeholder for the future, not as a determination of the future. It is a really unusual decision for a company to try to imagine what the future of computing will be very far out. And to put that down there. The model in some ways is what they see, that competitor up the street doing, google. Theyre looking at google class and saying what have we got . We can acquire oculus. Knows what is going on in the background. It looks like they were trying to have something competitive in this area, made even one of google with all their efforts going towards google glass. Zuckerberg already came out and say he does not expect the device is to actually be profitable. It does not see my face but cares that much about the actual goggles, they care more about the ad platform behind it. I think one of the interesting things going on with facebook and their Acquisition Strategy is twofold. They are looking at places where there might be different businesses that exist alongside facebook. Instagram has some integration with facebook but it is fundamentally its own platform. Whatsapp, they have said they will not have advertising. There might be data exchanged in certain ways that facebook could benefit from. To the second point really what facebook is doing, it seems that they are worried about a world that facebook is not the center of. Coupleopernicus with a billion dollars making sure the sun was the center of the universe. They really want to make sure facebook is the center of the universe. If an alternative universe arises, instagram or whatsapp or a future of Virtual Reality, they want to make sure that world the university does not get away. The universe does not get away. Oculus need to game developers. Some companies are getting scared off by the facebook effect, minecraft. What does facebook do . This asook does not see a Gaming Platform, they see this as a platform for social easier, for example. That is what Mark Zuckerberg talked about in the press release last night and the blog post he put up. Eventually, on the conference call. This is not just a Gaming Platform but a whole lot more. Whether a minecraft or candy crush or whatever the hit of the year decides to go with, that is not the point. Socory johnson, thank you much. Stay with us, we will talk about candy crush. Do you play . No. Not so much. You are addicted. I know. I just started and i am semiaddicted. Ng will be trading this morning, will it be a sweet or sour investment . Targeta spying to the hack attack, Cyber Security is taking center stage in d. C. We hear from people who have worked with the government. Stay in the loop. One of the biggest ipos this year, king Digital Entertainment gearing up for the trading debut a few minutes away. Will investors be sweet on the candy crush maker . York, and cory johnson is with us from san francisco. Cory does not play, i downloaded it yesterday. Do you guys play . I have not. I do not. I havene plays it that talked to on the show. It was interesting to me because king is priced at the midpoint of its range, what is the significant time that . At aey were already discount relative to their peers. They are showing investors you can get a decent deal on this thing. We are making it relatively cheap to buy. , all theseis concerns about onehit wonder with candy crush, we are hoping you will buy shares and let us go into that valuation. Not as strong the interest was not as strong . Not necessarily. James, you rate company is, how do you rate candy crush . Points care, we look at the efficiencies with how companies are run. Theres a difference from headnies like zynga and a of Companies Like giant. Not that much of a it does not make that much of a profit. Kingake a look at gamers, has been cash flow positive since 2005 and they have no debt. Why do they need to go public . This is the problem with technology and games. How do you become a hit maker. A machine that cranks out lots of creative and interesting games. As it has been the problem with szynga. From thisave seen company, for example, they want to tell you through the ipo , they went to convince you they have a great game making company. In the ipo statement, they say ips,ave a 180 intellectual property. Not games or patents, intellectual properties. They want to convince you they have more than one great game. Millionwent from 167 in 2012 to 1. 9 billion in 2013, that is evidence of the fact this is about one game over 70 of the revenues coming from one game. That is why they are trying to sell stock on the heels of that one great success, there might not be another one. That is what the market is discounting. Recognizing there may never be another success. James, do you agree . We have to distinguish between a company that has positioned itself to have a one hit wonder and one that has accidentally blundered into it. With king, this company has been doing well on a much smaller level prior to candy crush, it has been profitable for four out of the last five years. It has a history of returning capital to shareholders. These are the trademarks of a company that should be invested and for the long term. It has invested in it has demonstrated it knows how to grow. You cannot expect a company to grow at 1000 year on year. There will be a draw coming off of candy crush until they have more properties out there that are supporting the next wave of development. Kingslie, how long does have two really turned the next product . Candy crush reminds me of bejeweled. 15 years ago, i left it. How long do they have . Isnext year, an analyst projecting a 40 increase in , revenue growth. The thing about being a Public Company is that they have quarters and analysts estimates they have to keep meeting. There is little sympathy for a company is very0 groswth different from 1000 in 2013. Hitting the law of large numbers. There is little patience for companies that cannot keep innovating like this and cannot keep sustaining the growth momentum. Stick around, we will talk candy and crushing. What king needs to do. The battle between broadcasters and Internet Television upstart reaches a fever pitch as the company prepares to go before the supreme court. Stay in the loop. We are talking king digital and ahead of its public debut. With me is james, leslie, and cory johnson joining us from san francisco. Cory, lets talk about valuations. About 2. 7 times projected sales. You have been skeptical of the iconic, what is the proper valuation for king . Referencing i was was zynga before their ipo, they had the appearance of profit and when it was when you had to really read through the documents. You do not see that with king digital. I think the longterm question is how do they take the success of this one game and capture those users, to have a continual process of development . Is valued at half of what zynga is at. It seems like maybe that is a good valuation . It is kind of shocking with a company that has all those great things james is talking about. It has a cash, a history of. Rofitability and yet we are still talking about price of sales, which is a silly metric. You can always sell and it does not mean you have a great business. You have confidence about efficiency and management, is there any kind of risk to put on the evaluation due to the fact that he gets 70 of its revenue from candy crush . Anytime you have a disproportionate revenue, you have to be concerned about their ability to maintain or replace that. It is different from zynga, s assete 1 3 of zynga size revenue. You have to look at what is making candy crush, a salad company. A solid company. Wondering if the ipo market is frothing. You hear Different Things on the west coast versus the east coast. In the east coast, there is sector diversification in the ipo market. Bankers and investors are looking at financials and sponsor backed ipos, those tend to have a more mature business , less frothy. On the west coast, they are all about growth. Incredible topline these companies have very high valuations. I really appreciate the roundtable on this. Thank you so much. We will be right back in two minutes. Stay with us, do not miss the ceo of king digital at 10 00 a. M. Top 10 traits the you do not want to miss coming up. A quick check on the mar kets. Were going to go to julie hyman at the new york stock exchange. Hey there, alix. A higher open. E we have that durable goods report showing an increase of 2. 2 last month, better than estimated. If stocks and a rising today, it would be the second straight day of gains. One other data point traders are watching at 9 45, a measure of the services sector. That could be important today. Right now, indications of the higher open. You so much, julie hyman on the floor of the new york stock exchange. Lets count down to the open with the top 10 traits, the only ones you need to know about today. Olivia sterns and Cristina Alesci join us. Occidental petroleum saying it will sell a stake in its middle east business, complicated by tensions in the region. Occidental was seeking to raise as much as 8 billion and needed to sell assets to individual countries. Nine is especially grosser and seller of organic foods. Firstquarter Sales Numbers topped estimates. 12. 5 s has he used samestore sales growth. Sap, largest maker of Business Management software plans to announce an acquisition as early as today. Acquisitionsaps will be at least 1 million. Corp, owner of Tommy Hilfiger and calvin klein reported contributing is cautious outlook outlook were misinterpreted, the deal had already been disclosed on march 13, posting biggest gain since january, surging 49 . This started the year off at two and is now above eight. The luxury watchmakers fourthquarter results fell. Hort, shares rose after apparel shares plunging after the retailer announced plans to sell stocks to pour money into its attempted turnaround. American apparel has not made any money since 2009 and is in danger of being delisted as a result of impaired finances. I shopped there like five years ago. Lex never three is five below. A 31 jump in fourthquarter profits as sales were lifted by new store openings. Open sase to more stores this year. A bright spot in retail. Facebook making a bet on Virtual Reality with oculus. This follows its 19 billion deal to buy whatsapp and marks its First Venture into wearable devices. Our number one stock, king Digital Entertainment, the maker up fory crush gearing its trading [opening bell] and look, they are bringing ringing the opening bell. His call isup to split 5050. Michael, thanks for joining us. A little bit of europe and the u. S. Things arecouple of working in favor of the market in general. They are definitely improving, most particularly in europe. Valuations are not anywhere as cheap as they were. What about actual earnings . We have seen them so by vector then. So buyback driven. We think the number we are seeing from some sources is relatively solid. In thek if you add dividend yield, and hopefully about a one percent buyback yield, you still have returned to the high Single Digits for the year. We talked about 10 pullback. We did not get that. Now we are talking about a five percent pullback. Much. Anding for updates on aereo the supreme court. We want to focus on Cyber Security. Yesterday, a House Committee that would end of the nsas book on Internet Data collection program. Our next guest, one of his many responsibilities in washington was to develop cyber investigation classes for the fbi. Senior Vice President and ceo of , kevin mandia joins us. Before we get into the changes of the Data Collection, i want to touch on target. What kind of questions do you think they are going to face . When you have been a victim of intrusion, its kind of a lonely planet. Theyre going to ask what happened, what did you do about it . You have to come back to understanding the incident and understanding what target did. And if target knew about it, ask the device did not quickly enough. I can tell you in general, when a company is testing new software, it takes time for them to understand. It does take time to sort those out. Again to the changes that weve seen, essential changes to the Data Collection program by the nsa, what did you make of it . Is it enough to have the data stored at phone companies . I will step back from this a little bit and tell you that weve always had stage gathering intelligence. Now that we have the internet, they are in collection so they can secure their nationstate. Are getting to the space of being able to monitor communication inside their borders and often outside their borders. Whatever they do there, this is a challenge that will be a lot. And how do we secure it . What is the security there . You have to think about that right away when you are harboring a connection. When you have all of this information you do your best to safeguard it. You can feel a shift in the environment now. Changinghole of it is to technologies that are less. Mpactful and speaking of being in the business for so long, you develop a specialized class for the fbi. What was their main concern . X it was brandnew. The general laypeople, they are like, i want to know what happened and i want to know now. And it often takes days and weeks. Evidence can be deleted. The bad guys can cover their tracks. It is different than any other kind of crime. Lot about target and worrying about personalize credit cards. What is the biggest risk when it comes to hacking . Of the day, what everyone is worried about is it is not that much risk to consumers. In general, you are probably going to get a credit card reading a couple of times of year. Break, we have had more risk at a nationstate level. Littleink we do have a bit of time to do that. What are the big nation state risks that im not aware of . There have always been rules of engagement. If you break into a consulate or another government organization, in my experience, people follow rules. They did not change things, delete things. What everyone is worried about right now is a rogue state. The cybererge on playing field, will there be rules of the road . Sticking with me and we will be talking much more about this. Thank you so much. We will be right back. It is time for todays global outlook. The Vice President and chief operating officer. Howere just talking about Cyber Security is of huge importance. 20 years of intrusions, the have hadnd russians operations. There are very few repercussions in cyberspace if you hack from 6000 or 7000 miles away. About the you think ukraine and russia . Im not an expert on the socioeconomics over there. But starting in 1996 or 1997, some of the best actors hackers in the world work in russia. Part of it could be that they have the infrastructure, the smart people that know how to write the Software Combined with economic stability. Maybe it is a Good Business for them to do it. It goes back to there are not really good relief customers. It is an asymmetrical battlefield, as i call it. It is different in the United States a little bit more so than other countries. Everybody thrives on being on the internet. In other countries, you hear they cannot get to facebook readily or gmail as readily because they control the internet access. We have about 45 seconds. What is the number one risk you are worried about in the next the number one risk i have is the same as other professionals. You know there are cyber criminals out there. It is the road nationstate activity. There is no question that the with anflict will be cyber component. The rules of engagement change. What will those rogue states do in cyberspace if they go on the offense . Great to have you. I wish we had an hour to talk about this. You onant to update opening trading of king digital at 20. 50 per share. We look see how it performs throughout the day. Have a great show for you. Stay tuned. We are coming up on 56 past the hour. Bloomberg tv is on the markets. Im julie hyman on the floor of the stock exchange. Of ae seeing a little bit in increase on the back of the durable goods report we got earlier this morning, showing a bigger than estimated increase in orders of 2. 2 . Up for acking a market second straight day. Not a big rally, but a rally nonetheless. It is the first day of trading of candydigital, crush. A very popular digital video game. Racing about 500 million in its ipo, pricing the shares at 22. 50. Shares all for are faltering just a little bit. We are talking about the sustainability of the companys popularity in terms of what it is going to be able to pick. Ipohe same time, another comparatively, zynga, it is possible for an ipo to do well. We will be talking to the ceo in 30 minutes. Software update. Cristina alesci has more details on that. What is the deal all about . This fits in very nicely with sap. What it does is it helps companies basically higher on project specific time management. Companies sign up to control cost. They want to be able to hire the best and the brightest when they need them. But they do not want to pick them up fulltime and deal with the Health Concerns and benefits that come along with fulltime work. Sap providing yet another service for their Big Companies. What very emblematic of Tech Companies have been doing. They have been adapting to these deals and actually announcing them. We have seen dramatic you making, especially when it comes to technology. Dramatic dealmaking, especially when it comes to technology. When we look at facebook, we see it doing nicely. It is going out and making deals and that is giving confidence to other Tech Companies as well. One thing i would say, the numbers are skewed when you look at yearoveryear comparisons. The one purchases a pretty big one off, so that is making yearoveryear comparisons a bit trickier. Did well in the First Quarter last year, too, and then kind of fizzled out in the second, third, and fourth quarters. They are talking about that as well, trying to carry that through the rest of the year. Cristina alesci, thank you so much. Sap fighting buying fieldglass. To the ceo shortly. Stay tuned. Makers starts in just a couple of minutes. Live from bloomberg headquarters in new york, this is Market Makers with Erik Schatzker and stephanie ruhle. Facebook goes virtual. Why is Mark Zuckerberg bending spending 2 billion on Virtual Technology . We will tell you what it says about the future of the social network. And the maker of candy crush is lower in its debut, this after the company is hoping to raise half 1 billion in its ipo. Borderlands, landlocked and facing a method trout an epic drought. Talk about the issue of the Mexican Border and immigration reform