Where thee at a Forum Library will be unveiled. They will donate 2 million to summer job efforts. Im Alisa Parenti, and this is bloomberg. Emily im emily chang and this is bloomberg technology. Coming up, face the 2 million monthly active users, but couldnt add slow down be looming . We hear from the coo Sheryl Sandberg on their earnings report. Plus, tesla bulls can breathe easy for another quarter as the company confirmed its anticipated model three massmarket is on track to begin production on time. And our extended interview with ,ilicon valley veteran chamath taking on everything from President Trump, to advise for travised goober ceo kalanick. First, facebook shares are down after a quarter that missed earnings. The Biggest Tech Companies keep getting bigger, though, and facebook is no exception. They are at 1. 9 4 billion users, and at this rate, they could hit head 2 billion total users by next quarter. Another contributor is mobile advertising. Thanks in part to instagram. The Company Warns revenue could slow down this year. Revenue growth could slow down because they are running out of space to put ads in the core app. I spoke to coo Sheryl Sandberg who had this to say. We carefully track the impact of ads on the User Experience and we have been doing that for the past several years. We have been able to include the improve quality and relevance of ads. We are focused in continuing to improve ad quality and relevance. Emily joining us from seattle, the marketer principle analyst Deborah Williams who specializes in social Media Marketing and demographics. Your first take on the numbers, especially whats going on with ads. Tells our incredible numbers. Every quarter, it seems like facebook has another great quarter, and its kind of hard to see where they might be problems. The revenue number looks great, the user number looks great. As a lot of momentum at facebook. By the same token, Sheryl Sandbergs comment about ad load, weve heard about this for some time. I think it is starting to show that facebook is looking for act two when it comes to revenue. The newsfeed has been the main source of revenue for five years and now it is looking for other things. Instagram, video. Emily the next act might be instagram, which some people call facebooks next facebook. 700 million users. Take a listen to what Sheryl Sandberg had to say about instagram in particular, and how much it is contributing to the overall high. Instagram is a very important along withlatform facebook. We are seeing strong growth across both. The increasing visualization on ads as part of why they are so appealing, and the fact that you can buy ads through the facebook apps system on facebook, instagram, and audience network, its the same infrastructure and targeting. I think it gives the platform a lot of ability to deliver results for marketers. We are its early, but also seeing advertisers excited about stories, which has heavy visualization and the ability to reach people. Emily that said, they still dont breakout instagram revenue , which makes you wonder, why not . At what point does instagram meaningfully contribute to this to the point where they are willing to show us the numbers . I think it is already meaningfully contributing to facebooks revenue. Our forecast this year is that instagram will have 4 billion in ad revenue, and that is going to be over 1 10 of facebooks total revenue. We have a number of 36 billion for facebook ad revenue this year. Its already a big contributor, so thats probably not the reason why they are not sharing the numbers, but i think instagram is a really interesting platform for marketers. They are still really intrigued by it, and they still want to learn more about how to reach that audience that is so prominent on instagram. Emily Something Else they are experimenting with is different forms of video advertising. Take a listen to what she had to say about that. Right now, the air in the testing phases of the ad breaks. We are excited to be testing them. It is going well so far, but it is early days. We will see. Emily Mark Zuckerberg has famously been against preroll ads, but middle ads, like a commercial on television, how optimistic are you about that as a future source of revenue . Midroll ads and preroll ads, for that matter, have been successful for other platforms like youtube. It makes a lot of sense for facebook to get involved in midroles. I agree the role is maybe not facebook,format for but i feel as they start to roll out more video program, including advertising, i think advertisers will be intrigued that. Video advertising is growing enormously, and advertisers want to find new places to spend those dollars. I think facebook will benefit. Emily theres been concerned about graphic violence and facebook live, about the rise in fake news. Facebook has announced a number of things to combat these issues. Sheryl sandberg told me they have not seen meaningful impact on revenue from these problems. How big a risk factor do you think those two things are . I think they can be a risk factor. The advertisers that we talked to in the past couple of months about issues like this, they havent reported any change in the way that their ads are being responded to or their engagement, or return on investment for advertising. So far, these things have not had an impact on the revenue on the advertisers ability to use facebook. Wonder over time if peoples attitudes change, if they are happy using facebook, if they are worried. If it causes them to be less engages facebook. All these things they are watching, but right now we are not seeing evidence on the revenue side. Emily we will be watching to see if they had the 2 billion user mark. Principal analyst debra williamson, thank you for joining us. An update following Apple Earnings results on tuesday. Apple shares fell from record sales. N flat iphone revenue out of china dropped 14 in the quarter. Earlier on bloomberg tv, we spoke about the challenges apple is facing in china. China in particular is a challenging one. It is tough because not only do you have higher awareness, as we do in the u. S. As well, of the new iphone, but you also have significant localized competition with Companies Like devicesreating great that can compete from a features perspective. Emily coming up, we are continuing our earnings coverage with tesla reporting its firstquarter results. The Company Reported a bigger loss than expected, but investors are encouraged about model three production. Shares are dipping after hours. If you like Bloomberg News, check us out on the radio. Check us out on the bloomberg app, bloomberg radio, and weary sex and. Sirius. This is bloomberg. Watching. Tory we are Hedge Fund ManagerDavid Einhorn is putting a target on tesla, saying the markets are too optimistic about their prospects for expanding electric car sales. He says stockholders put the rational faith in ceo elon musk. For the time being, investors remain hypnotized by the tesla ceo. They are comfortable with the company being able to massmarket cars and justify the current valuation. And dizzy has him for tesla and other bubble basket stocks is reminiscent of the march 2000. Com bubble. Many stable it. Tesla says initial production of the model three is on track for tonight july. They still reported a bigger loss than expected in the First Quarter. We are joined by our reporter covering tesla for Bloomberg News. What is the Biggest Surprise . Anything to do with the model three . Reporter i think the bulls, the levers of tesla and fans of elon musk, lovers of tesla and fans of elon musk, have a lot to be happy about. This is a company that has no often delayed project launches, and now they are two months away track. Theyand is on are going to get to 5000 illegal this year, 10,000 a week by next year. Suppliers are ready. A lot for them to be happy about and be excited about. But of course, its not the most explicit sort of earnings report. The bears are kind of winning now. Theres fake news on the guidance of the s and the x, and wondering whether spending is not as heavy as anticipated. A lot emily to chew on. The model three will be the car, mark massmarket and you wonder if the owners will be as forgiving as owners of the model s or the model x. In terms of quality expectations for the model three, how optimistic are you . Reporter it is paradoxical. Productct 100,000 vehicle or any other product to be much better than one that sells for half or third that amount. But there is an issue that when somebody buys a model three, it might be there only car. Model s withg a ludicrous mode, they have other cars, so they can hire someone easily enough. Whereas a 30yearold was barely able to buy a model three, and its in the shop, they are left out. I dont know if they will be that much more judgmental, but they are going to be in deeper trouble if there are breakdowns the way with other tesla models. Emily lets talk about tesla compared to the other automakers. It is now the most valuable automaker by market cap. Are investors to optimistic about tesla, just like what einhorn said . Reporter you know, thats the beauty of the marketplace. They get to debate and they do dollars. We still get to see about 20 of teslas flow is shorting. There are a lot of people who agree with mr. Einhorn. Based on the fundamentals, it shouldnt be worth more than gm or ford. But it is all about the possibility, what it could bring with model three, and as it builds beyond that, and if it can do so profitably. The Profit Margins are pretty darn good, but can you do that when selling 50000 and 30,000 other cars . That is the big test 50,000 and 30,000 cars . That is the big test. And worldwide, with china in the mix, is there going to be enough demand year after year, decade after decade . That is the real test. Those who believe it is like henry ford in 1915, if you can get with him 30 years before the ipo, you would. Thats the way they see it with elon musk. Emily lets talk about cash burn. Is that a concern . Always. this corridor wasnt bad. They consumed about 600 million in cash, they raised 1. 2 billion dollars. It was better than it was three months earlier, but elon musk said they need to spend about 2 billion to launch the model three, or before they started making the model three in full production, they only spent about half 1 billion. That might be some of the overhangs causing anxiety and pushing the stock price down after market. Emily looking outward, tesla has a lot to prove, but are the times changing too fast for ford and gm . Can they catch up . Reporter if you ask dm, they will tell you tesla has to catch up to them, because they already have a 30,000 electric vehicle out. But on image, they cant touch tesla. Implodes,a completely or unless they implode, it is hard. Therespired to be, and images, they are an electric porsche. They are superfast and they dont pollute. There is an aura about them that is an f150 or a corvette just cannot touch. Jamie from the heart of motor city, our Bloomberg News auto reporter. Thank you. In addition to facebook earnings, the social network is stepping up review of controversial videos involving suicide. Bess after recent murders in cleveland and thailand were both posted on the site. Ceo Mark Zuckerberg says the company will hire an additional 3000 workers, on top of 4500 reviewers already employed. Facebook has been criticized for not doing enough to prevent these videos from spreading. I spoke to coo Sheryl Sandberg, this as the social network does not take fake news lately or violence. This is bloomberg. We havent seen any impact on revenue, but we take all of these issues really seriously. We know people want accurate news on facebook. We have announced a number of steps, including disrupting economic incentives and building new products to stop the spread of falseness. We take it seriously. Emily there is a serious bidding battle going on four Straight Path communications. Verizon is said to have offered a 2. 3 billion takeover proposal, giving at t three days to match the offer. Losing Straight Path to verizon would be a big blow to at t, which agreed to acquire the Country Company for 1. 6 billion last month. They are one of the largest older of spectrum approved for fifthgeneration use. At t is eager to use those airways to build the five g network. Continuing coverage from the global conference in beverly hills, our bloomberg editor at large Erik Schatzker caught up with reddit founder Alexis Ohanian and, ask what is at stake given trumps policy actions. We are in an industry that and thats ald, powerful thing. There are not a lot of industries in the world that america is dominant in. The reason we do that is in part because weve always had an industry and a country that has wanted to get the best and the brightest and give them chances from anywhere. Have had ase we level Playing Field for upstarts their dormt idea in room, to sit and make something without waiting for permission, putting it out to the world, and making Something Better. Reporter i dont think anybody believes the administration is trying to stop anybody from doing anything. The other issue you raised implicitly is immigration. I would say not neutrality speaks to that second issue, where it is imperative we have a level Playing Field. The upstart needs to be a will to win. If she makes Something Better and the market users chooses the bigger winner and not Cable Companies. Reporter lets look at the issue separately, even though i can tell from your point of view, they are part of the same problem. Lets begin with immigration. Andes an effort underway talk of restricting the number of h1b visas issued to companies in silicon valley. How would it affect reddit, and how would it affect tech . Frankly, the h1b issue wouldnt affect us tremendously. We have over 200 employees, but h1b visas are not a primary concern for us. More broadly, what is so important is that we have amazing people who we want to bring here to help contribute to d it, to create value read, cleco you, provide for their families. Now they are wondering, is this a country i can stay in longterm . We have our neighbors to the north, canada, taking advantage of the opportunity and the fact that you have talented, proud americans, or people who aspire to be that, who are thinking twice about whether or not america can be the place for them to find their american dream. Reporter you are worried about canada stealing the march on the u. S. When it comes to innovation technological development, . Yes. Frankly, one of the reasons weve been so dominant as an industry globally is because people have known this was the place you could go and create something amazing. Whether it is starting a company or joining one. Reporter for you as a matter of principle, not practical. It is primarily a matter of principle. I published an open letter on reddit. Read it would not exist if it wasnt for the fact that, my fathers side of the family were all refugees. My mother was undocumented for a couple of years and was able to remain in the country. Its a personal issue for me. Reddit fx read it a lot of people, so i feel the need to speak up. Underlinesle here the biggest issue, which is structurally, the country has always thrived because it has taken the best and brightest in. Reporter lets talk about Net Neutrality. Why are you so concerned about it . Pai, hesajit blocking the sec shot. We have got into a place allowing for a level Playing Field. All americans Want Companies to succeed because the market says they should. Now,we are talking about what the fcc chairman is talking about, is going to let Cable Companies pick winners and losers. Thats against the founding principles of how the open internetworks, and its going to mean a worse outcome for consumers. I want better things, and i think most americans do. Reporter what about other arenas late search like search, for example, were google picks winners and losers in its search algorithm . Is, at is so interesting the end of the day, i can load up any Search Engine i want. There are upstarts that get funded all the time to compete with google. There isnt any difference between getting to a google website today with Net Neutrality and getting to some upstart. What i dont want, and what will happen if we lose Net Neutrality rules, is for one of our Cable Companies to decide that the default search package for your internet involves some competitive deal. If you want Google Search or other search options, you have to pay more per month. I dont want my internet to look like my cable bill. Emily reddit cofounder Alexis Ohanian with bloomberg ellet editor at large Erik Schatzker. Coming up, President Trump and the innerworkings with chamath palihapitiya. Facebook cfo dave wehner says hes expecting Revenue Growth to slow down meaningfully. We will continue to bring you the highlights. This is bloomberg. Alisa im Alisa Parenti and you are watching bloomberg technology. Lets start with a check of your first word news. And Marine Le Pen are squaring off right now, hoping for a knockoff in the french press or low president ial election and the only debate the runoff is. Sunday. President Vladimir Putin and erdogan held talks of the situation in syria and the restoration of economic ties between turkey and russia. The meeting at the black the residence coincides with ceasefire talks in kazakhstan nations. Ed by the venezuelas president has officially presented the decree for rewriting the constitution. He says the new charter will be decided by the workers and not politicians. The move comes as thousands of antigovernment protesters continue to clash with police. Germanys Angela Merkel today blasted protectionism ahead of the g20 gathering, arguing countries only weaken themselves by withdrawing from international competition. She said only shortterm advantages hurts the ability to innovate in the long run. U. K. s theresa may struck back at European Commission president today, accusing his team of leaking details of the brexit discussion to sabotage the upcoming u. K. Election. She says that major task of the june 8 election winner will be to get the best deal for the u. K. Global news 24 hours a day, powered by more than 2600 journalists in 120 countries. Im Alisa Parenti, this is bloomberg. It is after 5 30 p. M. Wednesday here in washington. Already sunday morning thursday morning in sydney. We are joined by paul allen with a look at markets. Paul the nikkei is closed again in japan for a holiday. Asx futures slightly weakening for a third day in a row. We are waiting from National Australian bank. Thats after results of 3. 2 billion australian dollars expected there. Reserve Bank Governor philip lowe will be giving a speech in brisbane on Household Debt and prices, topics which he perceives to be the biggest risks to the australian economy. We will also have the trade balance for australia out in march. Another surplus expected, thanks prices. G iron or also, watching thirdquarter trading up from qantas. South Korea Foreign reserves and current account as well. Im paul allen in sydney. More from bloomberg technology, next. Emily this is bloomberg technology. Im emily chang. Lets get back to our top story. Earnings season rolls through with facebook and tesla reporting results. The automaker confirming the highly anticipated model three is on track to begin production on time. Ceo elon musk says the company is on time to support the ramp 5000 vehicles a week at some point in 2017, and 10,000 vehicles per week next year. Yet, tesla shares are down after hours. They report a bigger loss than expected in the First Quarter. Now to facebook. Shares continue to fall after reporting earnings that missed expectations, but revenue topped estimates. Mark zuckerberg gave a new number on the call, 175 Million People using Whatsapp Status on a daily basis. It is the same idea as Snapchat Stories feature, which facebook also important to instagram, echo r, and the main app. Social Network Founder and venture capitalist chamath of silicona is one valleys most candid tech leaders. We spoke with him to get his take on some of the top tech headlines. I asked him about concerns about President Trumps policies. Its really not the policies, but the unintended consequences, and specifically what i think is scary if what the longterm impact to Human Capital are in the u. S. If i had to use a sports analysis analogy, if your job is to win a championship, you try to draft and recruit from free agency the best players in every position you can, put them on the field or the court to win. Similarly, the u. S. , up until recently, has been that equipment for Human Capital. If you were very good or really good at anything, you wanted to come here. The early data is starting to show signals that is changing. I think that is bad. That is irrespective of any ideology. We want the smartest and best people here working on behalf of americans and america. Anything that impacts that has longterm negative consequences to gdp and value creation. Emily how is he impacting far . Recapital so on that Human Capital so far, we are seeing businesses having a terrible difficulty recruiting people. That means wage inflation, which doesnt meaning really add anything, because you are burning money without incremental productivity. To seeu are starting competitive business is be creative in increasing velocity outside the u. S. , in canada, and india. And that is generally bad if you think about businesses that could theoretically be built here, where the value is then captured within the u. S. Emily do you think the u. S. Could lose i think it is losing it. We saw a report today that said seen theams, they have most market decline in applications from foreign applicants. In the short term, that might be good, but in the long term, the reality is there are some free agents we should be poaching from other countries and putting them on our team. You spent a lot of time with Mark Zuckerberg in the early years navigating rough times that facebook. As the company matured, do you see parallels with whats going on with uber and Travis Kalanick . Its hard to know because im not in the situation at uber. But heres what i will tell you that facebook. In those moments where we pushed certain boundaries and the way we build and design certain products, or how we were exploring the consequences and hadh of privacy, and we hands slapped or we learned things, we internalized the cost benefits and the tradeoff of the potential of what we wanted to build, and the impact of that to humanity versus taking a methodical approach. Since then, i have to say facebook has been basically flawless. I think the opportunity for them to realize that their ego is not as important as the impact. The minute you make that transition, theres just a different caliber of individual, particularly at senior ranks, that you will attract and will. Ant to work with you on those problemsit seems from the outside, there are early signals that transition is happening. I hope its working. The Human Potential impact of uber is undeniable. Emily what are your recommendations to travis specifically . As an observer. That when you are in a company that is that iconic and unique, the biggest thing you have to do is become a lot more introspective, and inside out validated. When stars and famous people and rich people and ceos call you and want to spend time with you, and take you out to invite you to things, all this external validation that makes you feel important, you have to ignore it. In fact, you have to run away from it. You have to spend time with engineers in the boiler room every day. When you strip yourself of the outside validation, you learn to validate yourself inside out. Im not saying he hasnt done that, but what i will tell you is if you can make that transition, you can become an extremely powerful ceo. I think mark is an example. Emily my colleague compared uber to airbnb. My question, uber or airbnb . If you had to pick a more natural monopoly with Pricing Power and scale, i think i airbnb. Uber is a fundamental consumer surplus business where there is still risk that the entire Business Model is above cost of capital. In the world of autonomy, what you have is the ability for new entrants with huge balance ,heets, google, apple, Facebook Companies you never would have imagined competing with you, could because its a function of having enough money to buy another Autonomous Cars because you already have customers. You can model the demand. In a market like that, there is potentially value erosion overtime, because you have more players. Airbnb, what they have to navigate is costeffective customer scale. Instead of having many problems and many potential competitors, airbnb has to solve internal capability issues. If they solve that, it is probably the next Massive Company to come out of silicon valley. Emily you are bullish on amazon, and you spend a lot of time at facebook here at amazon or face the . Facebook . You have to find eventually be in the largest most unconstrained market possible. When you look at the world where dollars are spent, advertising is a 200 billion plus market. It has created 1. 1 trillion value between facebook and google. Its incredible. Emily but facebook is running out of space to put its ads. Day,t at the end of the what is unconstrained is consumption by consumers. Wherever there are people making more money than they spend, they will find a way to allocate left over to buying things. Buying things is the most important part of gdp in america, and usually in most nations, so the company that dominates selling you think you want to buy will probably be the largest thing want to have in the world the largest in a while. I would have to pick amazon. Emily you have historically been pessimistic about apple. Where are you today . We dont hold it. I look at it as a really interesting value stock. I dont view it as a company that represents for me what i want to own, which is basically innovating on the future in ways that represent change. At the end of the day, i also think a Balance Sheet that distributes cash back to investors, saying we believed you know what to do better than we know what to do. I think it speaks for itself. Emily that was social capital founder and ceo chamath palihapitiya. The feud between qualcomm and highs. S hitting new qualcomm plans to retaliate by asking the u. S. Trade agency to ban imports of iphones. Qualcomm is preparing to ask the International Trade commission iphone, built in asia, from entering the country. It is threatening to block the iconic rotted from the american rocket in advance of the anticipated new model in the fall. Apple argues that the system is unfair and stopped paying licensing fees to qualcomm last month. Coming up, another courtroom showdown between alphabets waymo, the self driving car unit, and goober. The latest and goober. The driverless car ambitions hanging in the balance. We continue to monitor earnings. Facebook continuing to decline in afterhours trading. Anything in that magnitude would be the biggest slide of facebook share since november. Tesla ceo elon musk says their electric truck will defy expectations of what a truck can do. Both calls. This is bloomberg. Fory court is in session alphabets car unit waymo, and uber. At stake is ubers Driverless Cars ambitions. A judge will weigh in until injury issues a verdict. Its the latest phase of a courtroom that all over trade secrets that threatens to topple a central pillar of ubers growth strategy. Joining me is Eric Newcomer who covers uber. What do we know that was happening . Says he hasnt found the smoking gun in the case, but alphabet and waymo, their case is very strong. He seems to be convinced that the head of the former head of ubers self driving car program took these 14,000 files. What hes not clear on is ubergoober ever uber ever use them in a meaningful way. Emily why wouldnt it matter . This suit is against uber. T is not a criminal question he is not the subject of the suit. It is about whether uber benefited from that set. Emily if uber is forced to freeze its self driving car efforts, how crippling would that be . . Really bad for recruiting. Bad for the forwardlooking vision. Then theres also a timeline first to market the percentage perception of advantage. The is still trying to make human driver business work. I think that will be what powers over in the eventual uber in the eventual ipo. It is fighting for the future identity , not really the next couple years. Emily do we know anything about how the lawsuit has impacted ubers self driving car unit so far . We know anthony 11 desk he was wely demented, but it know he was slightly demoted, but is it impacting employees . Within advanced technologies groups, people were asking why he is still here, so i think people were asking questions and watching it, but whether it is resulting in that turnover, i dont think we see yet. Emily to be clear, he cofounded the self driving truck start of which uber thought. Talk to me about the history of this judge. He has weighed in on other cases involving google and oracle. Hes the guy in deciding companychnical, big versus big tech company, known for studying up and getting in the weeds. He requested all this information about how it works, and he really tries to understand what the different technologies are, to figure out whether uber did take anything meaningful from waymos technology. Emily uber is trying to keep it from getting to a jury. We still have the question of arbitration. Everything would be kept quiet, if so. We are already hearing it is closed to the press. Theres a question from the judge, if you want to hide everything, why do you want to air this in public . Result in arbitration. That decision needs to be made. Emily uber has had a lot of things going on while i have been on maternity leave. Have you found that all of these things, one after another, whether it is sexual harassment, how is this impacting the companys brand . The brand has taken a serious hit. I think delete uber, the reaction to trump was the biggest in terms of user\. Employees have been very upset over this case. We are waiting for the former u. S. Attorney general eric holder to come out with this report. I think uber has been able to saying thattics, they have a report coming, they will address all the big issues, and at the same time they are looking for a coo. If they fail on either front to deliver meaningful change, i think we are going to see this open up again. Right now we are waiting for the court case, waiting for the coo, waiting for holder. We are waiting to see how bloomberg can recover. How uber can recover. Emily thank you. We will continue coverage of tech earnings. Square and fitbit jumping afterhours. Facebook Earnings Call is still underway. The company has been underscored the about facebook live, after a number of highprofile suicides, murders, and shootings were broadcast live. Zuckerberg was asked what the social network would do. He replied that the holy grail it be having ai to stop violent video, but the tech is nowhere able to do that, so they are hiring thousands of new people to personally that these videos vet these videos. This is bloomberg. Emily the New York Times says the First Quarter was the best ever for subscriber growth. They added a net 300 8000 digital subscriptions, continuing momentum. The Time Strategy focuses partly on reaching younger readers three new partnerships with Online Services like spotify. Square, meantime, is on a roll. The company run by twitters jack dorsey is proving it is not just a niche player. Forecasting. Past joining us for more from new york, selina wang. First of all, what do you have to say about square blowing it out of the water . Reporter this was a hugely important quarter for them. They blew earnings and revenue out of the water. A lot of this has to do with question,the investor is this a lowmargin ditch payment processor . I think the past few quarters have emphatically answered, no, it is just it not just a payment processor. It provides a full slate of Business Services for small and business. Ed these newer products like loans, inventory, invoices, food delivery, have proven to be fastgrowing, higher profitability and highermargin. Square is showing it can continue to invest in growth while growing at scale, and continuing to improve profitability. Emily you just had a call with the square cfo. I will be speaking to her tomorrow on television. What did she say . Reporter she gave interesting color on how they are able to beat competition and go upmarket. One of the Big Questions is what value add do they bring to larger merchants . They show they are not only able to maintain the take and get larger merchants, but cross sell products. The larger merchants also care about having the new technology and being able to quickly get invoices, and be able to analyze sales. They appreciate the full suite of products they offer. Emily shares are soaring after hours. What about the turnaround seems to be working . Reporter i would say the turnaround is working at, because its very volatile stock. They beat earnings on very low expectations. Sales dropped a whopping 41 . That is a very large amount, it just happened to be less than it expected. They faced structural headwinds like a shrinking fitness tracker market, as well as competition. The apple watch continues to get better with more fitness features, and we also dont see any competition from cheaper makers in china letting up anytime soon. This is better than expected, better emily than bad expectations. Apple ceo tim cook talked about how the wearable market is such a challenging market. It is no surprise we have seen players drop out. Talk to us about the longterm trajectory for fitbit. Reporter you are right. Even the leader in hardware saying wearables is a difficult space to be in. Said hisf fitbit has goal is to make wearables a musthave, not nice to have. We have seen them start to move into that direction with newest upgrades. They started to adding in better analytics and sleep tracking. They want to roll out a smart watch later this year as well as other products. There is reports they may come out with bluetooth headphones. Do thing is although they have growth, they still have a Massive Installed base of users. A big proportion of them are loyal. They will probably be likely to move on to the smart watch and purchase the upgraded products. Emily bloomberg tech reporter selina wang, thank you for joining us. That does it for this edition of bloomberg technology. Live streaminge on twitter. Check us out at bloomberg tech tv, weekdays, five yen in new york, 2 p. M. In san francisco. That is it for now. This is bloomberg. Announcer from our studios in new york city, this is charlie rose. Nicole is here. He is one of this countrys bestknown historians. He has won two Pulitzer Prizes and a president ial medal of freedom. His new book is a collection of speeches. It is called the american spirit who we are and what we stand for. I am pleased to have david back at the table. Welcome. See you. To before we talk about the book, you have been outspoken about President Trump. David i have