Fbi. Now, the vote has to the senate. If approved, he will replace james comey. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. I am Alisa Parenti. This is bloomberg. Emily imo emily chang. This is bloomberg technology. Coming up, microsoft focus on the cloud pays off as revenue soared past the highest estimates. We will break down there Fourth Quarter scorecard. Elon musk says he got the green light for his underground tunnel project. We will dig into the hyperloop that can get you from new york to d. C. In under half an hour. Hulu steps up to the plate in the streaming battle against amazon and netflix. A guest joins us on the race to rule content in the golden age of television. First to our lead. Microsoft shares are rising in extended trading, up as much as 2. 7 after reporting sales that rose. For the current service. It points to the companys turnaround plan working. Lately to reshape microsoft as a Cloud Computing powerhouse with new Services Related to office 365, a shift that led to a massive sales restructuring. Rose. Activity software increased 43 . Joining us now to break it down is cory johnson. We have to talk about the cloud first. Cory it is amazing growth. Only Amazon Web Services is bigger. Emily how much bigger is amazon . Cory we dont really know but probably five times bigger. Nonetheless, it is a big business and growing. You mentioned the growth rate is really terrific for them. It shows you they have used these strengths that they have, particularly Microsoft Office to move corporate customers from just office to office and the cloud. That how business, a lot of their dedicated Office Customers were already storing stuff is in office 365 and other things. They have some comfort with as it. They are benefiting from the industry trend. Emily i am curious how much microsoft is actually a threat to amazon in this business because obviously microsoft Cloud Business is going, but so is the Cloud Business overall. Cory when you look at the big offerings for this industry, it will be amazon, microsoft, google, ibm, and oracle. Those are the Big Companies out there. What is amazing is prices keep coming down. Amazon has been aggressive about cutting prices, and i that is probably the biggest worry they have. Can amazon continue to cut prices and have the big offerings . The other thing amazon is doing is adding more and more services and more and more types of Software Offerings and more and more types of compute solutions to make for some very competitive business and stay in the lead. Emily microsoft is spending a lot to expand its business, spending a lot of money on data centers. How much is it costing them . Cory the collapsing margins is what you see as the most. Traditionally, microsoft had a high margin business. Minimum compared with the revenues were like. Now, microsoft is having just been a lot more money on r d jakarta keep up with microsoft and google and others. Emily last quarter, they have rolled out some new devices. How is the hardware line doing . Cory the hardware businesscory is not big for them. It was a way for them to lead and show by example. The computing business, the pc business, they call it more personal computing, which is ridiculous. More personal. Intelligent cloud. If they had a stupid Cloud Business, i would allow them the adjective. Soapbox, i am to. Am done. 1 . Usiness down only that is a home in victory in this environment were only apple is seeing growth in pcs. Emily speaking of personal, pc shipments continued to fall. What does that mean for microsoft overall given the windows news . Cory this could have been a lot worse. We talked about over the course of doing it is growing. Emily seven years and counting. Cory again, down 1 . They would happily take that while they grow this business. I have always liked this comparison of looking at wall street estimates, but with this move in the cloud and the rapid growth of cloud means, the quarters are less critical than they used to be for microsoft. Even at microsoft, they do not know how they will do because they have this tiger by the tail of the cloud, and the results can be surprising. We saw that when we have had two of the last exporters having fails below the estimates, which shows how unpredictable the business is. Emily cory johnson, our editor at large, thank you for making it down for breaking it down. More earnings we are watching out of europe. It raised its revenue outlook and Sales Forecast and said it would buy back up to half a billion euros in stock. The higher guidance and buy back may balance disappointing margins. Sap ceo Bill Mcdermott spoke to bloomberg earlier today. We have invested very heavily in two areas in the first half of the year. When his hiring the very best acceleratedreal clip because we want to get the leverage from those hires in the back end of the year. You will see us slowly down because we went fast. The second thing is we invested in the cloud. Emily coming up, elon musks hyperloop project may have cleared a major hurdle. We will explain next. Bloomberg technology is Live Streaming on twitter. Check us out weekdays at a copy of in new york, 2 00 p. M. In san francisco. This is bloomberg. Emily shares of qualcomm fell the most in six months. The stock slid 5 in friday session. Thforecasting steep declines in licensing sales and profit, underscoring its dependence on the royalties that apple has stopped paying. Elon musk sent the tech and transportation world into a tizzy earlier when he tweeted just received verbal of government approval to build the hyperloop. New york 2d see in 29 minutes to d. C. In 29 minutes. Joining us now is max, who has covered Elon Musks Boring Company for Bloomberg Businessweek. Elon took you into the tunnel. What do you make of the idea that regulators would actually give elon musk approval at all for this . Saying verbal approval can mean any number of things. If i am reading the tea leaves here, it could have been some kind of a positive signal from the federal government. Wwe know he has had some conversation with the white house about the idea of digging tunnels, assumedly as part of some infrastructure project. It would also have to do with the government of d. C. These projects would involve a tangle of different regulations, local, state, federal. Verbal seems very small. What it really sounds like is musk is serious or getting more serious about digging these tunnels and trying to build , both politicallitica support and thinking about how to raise money for this. Emily as you have been speaking, i got a statement from a Company Spokesperson saying the Boring Company has had a number of promising conversations with government officials. With the exceptions, feedback has been positive, and we received verbal support from key government decisionmakers for tunneling plans, including a hyperloop from new york to d. C. We look forward to future conversations along this route and expect to secure the formal approvals necessary to break ground later this year. What is your reaction to that . Max i mean, it sounds like they are basically fleshing it out. The key thing here is that, you know, first of all, it is very early. There is a lot of steps, especially when you are talking about the actual hyperloop, a superfast train. A lot of stuff, technical hurdles they would have to cross that have nothing to do with regulation. That said, what elon musk is being into here is, number one, a lot of these big megaprojects have gone very poorly. Obviously, the 2nd avenue subway in new york took Something Like 100 years. The subways in los angeles have cost billions of dollars. Problematica fiel project called big bertha. I think elon musk things i will be able to use some of my know how, some of the same playbook i used to make rocket travel a little bit cheaper. He has managed to cut the cost of a launch by quite a bit at a time when it recently a lot of enthusiasm on both sides of the aisle for some kind of infrastructure spending. Emily any chance elon musk is trying to drum up enthusiasm by tweeting right away that he got verbal approval . Max yes. I think he almost sort of came out and said it afterwards. If you care about this, you should talk to your legislators, your local governments, federal government, state government. I think that is 100 what he is doing. If you remember back to when he was doing spacex, it started with no special expertise, and i think he had this initial plan when he was going to build a greenhouse on mars and use that as kind of like a way to attract attention. This kind of attention grabbing move is not something that is totally new as far as the musk playbook. He is a guy who has a track record for doing this sort of thing. Some of these projects that he undertakes do not end up coming to fruition. They do not really go anywhere. He has said as much, saying you thinks a lot of people are acting as if this is going to fail. On the other hand, in his where his expertise is. He seems to be most of vrable what he has as many balls in the air as possible so i guess that is what he is doing. Emily i want to ask you about a story you have in Bloomberg Businessweek. More news coming out of washington residents have rebuking his attorney general in an interview with the new york times. The scoop that bob muellers investigation is moving to cover President Trumps business. Trump is taking Silicon Valleys butt. How so . Max there was a meme in february that Silicon Valley is going to be this key source of protest. What happened last week while no one was paying attention, the Trump Administration kill this International Entrepreneur rule. It was a modest bit of Immigration Reform that would have allowed an onto party were to stay in the u. S. Visa free, something that people in the valley have been pushing for since 2009. It is one of these inoffensive measures, noncontroversial, had bipartisan support. Barely a whimper, it was killed. It is possible that the Silicon Valley was able to move somewhere on Immigration Reform, but right now, it seems like a lot of these efforts that they have put forward, there is a new thing for mark pincus and reid hoffman. Have not got much traction. That is the point i was trying to make. Twitterhe former ceo of was on the show a couple weeks trump mayaid, look, ru be meeting with tech leaders, but he is not listening. Would you agree . Max at a certain point, why are you going to these meetings if it is just resulting in a bunch of humiliating photos and not much else . If this thing that elon musk were happening, you have to look at that as well where engagement has paid off, but so far, it seems like Silicon Valley has come to the Trump Administration wanted to talk about immigration wanting to talk about immigration, and they have gone nowhere. Trump has gone the exact opposite direction. Emily thank you so much, max, as always for stopping by. You can read his story in this weeks edition of the Bloomberg Businessweek on newsstands now. Coming up, hulu is taking a victory lap after its original 13w handmade tales snagged emmy nominations. Will hear about how the company is getting noticed in the clouded streaming space crowded streaming space. This is bloomberg. Emily and medianews, negotiations to acquire Media Companies networks are grabbing that a deal could be announced as soon as this month. This according to people familiar with the matter. Via, and another are vying to buy the company. Hulu with a big push into topnotch talent. We talked with the ceo about how the company is going directly up against amazon and netflix thanks to its latest success with the handmaidens tail, which just received 13 emmy nominations. You know, we started original programming at hulu five years batchnd our most recent started a yearandahalf ago. We have been in business with some of the best out there. But this one is really special. It has broken through an a way that nothing ever has for us, and so we are really excited about it. Emily how do you get people outside of los angeles and new york to watch it . They do. A large chunk of our viewership is in the bill of the country. We do a lot of marketing all over the country. It is a story that resonates not only in new york and los angeles, but all over the world. Emily what is a mix of originals versus lik license content . Mike from a number of titles that point, it is very small. We have 3500 series of tv across the whole platform and about 20 originals. Consumption is a different matter. They over perform licensed content as a general matter. Emily net worth is spending billions on original content. What is your programming budget like . Mike we spent an awful lot of money. Obviously, we are not spending as much as netflix is this year, but we are aggressively investing. I think it is important we are selective and thought whole about our content strategy. Emily you seem to be licensing a lot of reruns. I am curious what the strategy is there. Mike we are trying to have your favorite show. When we look at licensing content, were focused on certain john must and certain content types as we much of our customerss wants. Emily given how aggressively netflix and amazon are in the market now, i wonder, how hard is it to get a pension for these shows . More is not always better, right . Mike when you look at the competition, there are 300 to 500 scripted shows on tv every year so we are looking to break through the clutter of those shows. When we saw the handmaids tale, with a great script, cast, and we started seeing the episodes come in and thought we have to put our way behind this. We started the campaign out with to add two ads in the super bowl. Emily are you only as good as your last hit . Is all about finding the next hit . Mike it is important. You cannot launch one and have not more in the future. For us, we believe this is the first of many. We are excited what we have in development and are in production on this year. We are doing another show called castle rock that is coming out next year. We are doing a show called looming tower. A lot of interesting shows coming. We hope this is not the last. Emily you do not know what makes a good show. You just have to give it a try, but there has to be more to it than that. You guys must be doing some sort of expectation and research into what works and what people want to watch, right . Mike we certainly do. There is a lot you can learn, but ultimately , it is about story, characters, and world. If the show does not have two of those three or three of those three, it makes it tough to break through. Emily will you ever release a movie in theaters like its an amazon . Mike we have not gone into the original theatrical business. Never say never, but that is not part of our strategy today. Emily you will come a live tv service. Curious about early results. Mike it is going really well. We launched it two months ago. We are updating the service. We have 145 affiliates on board across the country. The demand has been really high. We are going to push hard in the fall as we get the rest of our devices rolled out. I think you will be hearing a lot about it in the fall. Emily with networks have been the most popular . Mike you know, it is interesting. When live sporting events are on, though seem to be the most popular, same as on regular television. Interested to see lifestyle programming is doing really well. Of course, big scripted shows. We lost a 302 weeks ago we launched hbo two weeks ago. Emily any network you had to leave out that you regret . Mike well, for us, what we looked at as we try to put together a package that starts with force. We started out making sure we had a compelling and competitive sports offering. We started there and have added script networks, amd, so we are a e, so we are accountable with what we had today. Emily was a like running a Media Company with 4 of the biggest media businesses and bosses . Mike you get a lot of benefits. We receive a lot. Not only are they funding us in our ambitions, but they are great partners, very smart people that we rea leon. It is a great organization. They are powerful and helpful. Emily do they ever disagree, and is that a problem . How do you handle it . Mike i would not say everyone agrees all the time, but i knew when i came in that they were aligned. I was on the board of hulu as a member of the fox contingent, and when we reinvested, everyone was largely on the case for the last four years. Emily you said you are interested in international expansion. When and where . Mike we have not settled on that just yet. We are looking at a lot of different ideas. When you look at us, we can scream for free str for free, we have a variety of things we can do internationally. I would not be surprised if within a couple of years we are talking about a few more markets. Emily people say we are in the golden age of tv. Do you agree . What is next . Mike it is interesting. If you go back 30 years and look at what existed 30 years ago, three or four broadcast networks. Over the last 30 years, you have gone from that to 500 cable channels, and all of this stuff is happening digitally. I think we are in the golden eggs, but i think choice and john was is going to be the genres is going to be the future. You can find everything you want, every show that has ever been made on your phone right now, and i think that continues over time. You will be able to see what everyone wherever you want it, and that is exciting. Emily my conversation with the ceo of hulu. Coming up, swedish respond carrier reported strong earnings this week. What is behind their growth, next. This is bloomberg. Alisa i am Alisa Parenti in washington and you are watching bloomberg technology. Paroledpson will be after serving nearly nine years in prison for Armed Robbery and assault with a weapon. The nevada parole board decided the 70yearold former football and movie star will be released in october after serving his minimum term. Frances president macron has announced an increase in the budget of armed forces for 2018 in an effort to limit criticism over his decision to cut funding this year. Frances military chief step down because of the cuts. Today macron informed soldiers and air force officials the ministry will receive an additional 2 billion. E. U. President is urging meet andpresident to discuss changes the ruling party is making to the nations judiciary. They approved the law to give the president , not judges, the appoint Supreme Court judges. Investigators are trying to identify victims of the grant tower fire. Grenfell metropolitann police say the extraordinary ite of the blaze made possible. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am Alisa Parenti. This is bloomberg, just after 5 30 p. M. Thursday here in washington. Already 7 30 friday morning and the knee. We are joined by paul allen for a look at the markets. It looks like a pretty quiet and to the week around the asiapacific area nikkei futures looking next and here on the asx, futures are up 2 10 of 1 after a couple days of decent gains. The big story locally is the Australian Dollar which seems to keep on gathering strength. Cents. St touched 80 u. S. What is driving this along is u. S. Dollar weakness and suggestion that the neutral cash rate will be 3. 5 . The actual cash rate is 1. 5 . A couple important speeches in that regard. The Deputy Governor will be speaking and the assisting governor, michele bullock. They will have an opportunity to reinforce or push back on this idea that we could be heading into a tightening cycle here in australia. Elsewhere we are looking at the south korea 20 day importexports for july. Capital trust will be out with earnings in singapore. Morepaul allen in sydney, is coming up next. Emily this is bloomberg technology, i am emily chang. Microsoft topped estimates. Adjusted sales rose 9 , demand Azure Cloud Services nearly doubling. The efforts to turn the company into a Cloud Computing juggernaut are paying off. The microsoft Earnings Call is underway right now. Offer is your take on the highend results when it comes to the cloud. A very strong results from microsoft. It is tough to find any holes in it at this point. The key would be the call to learn what the future estimates 2018, especially on the expensive side. There has been an area of discussion among investors that as we look at next year, what can be seen. Emily data centers are really expensive. Microsoft did not worry about legacy products and invested heavily into the Cloud Business. Their Gross Margins were around 80 . Now they are hovering around 60 or so. A large portion is their Product Portfolio to the cloud. In your infancy you need to invest more. Those are not as profitable. As time goes along, the growth margins should improve, which is what we have started to see now. This is very special for microsoft. Emily lets talk about some of those legacy products. Windows is one of them, pc shipments are falling, year after year. What does that mean for windows . The day, the end of when you look at microsoft windowss franchise, it could be a service business. Foundation. T be the it could be the raw computing power. The kick it could be what Computing Service you add on top of it. That is the one thing theyre pushing very strongly, the new hybrid cloud product, azure stock. Emily what about service . Obviously, they have been struggling to manage a small portion of their business. Do you see potential for the service line to be truly reinvigorated . Guest it should improve in sales. Microsoft, it is not that they are going to make billions of dollars in hardware alone, this is one way for them to show their leadership in technology. And what their partners can do with the technology theyre building. It is all about the hardware. How worried should they be . Cloud market is so big there is a place for everybody in it. One of the things i talk about regularly is, if you look at the cloud spending, it hovers around 200 billion. 1. 5pending is 1. 5 trillion dollars. It is still a small portion. Grows, there is a space for a lot of players to be. Emily thank you so much for joining us. Swedish Telecom Operator tele2 reported impressive earnings. Operations from kazakhstan to the netherlands rose the most in three months after raising its guidance and reported accelerating subscriber growth. Caught up with the ceo in london and started by asking what the secret sauce is to their recent success. Secret sauce, focused on productivity. Is to have customers lead a more connected life. It is very much pushing connectivity. For a number of years we saw over to over the top consumption has increased. We had to figure out how we would monetize. Caroline how are we seeing people move on to that . Are you managing to draw them from the competitors . Is there a price for . Guest it is a great example where the consumer has been badly served for many years. We have seen consumption increase in the last year. We think consumers get a much better experience when they are on 4g networks then when they are on wifi. Also from a Security Point of view. We are very much stimulating demand on 4g networks. Once you get them on there, they stay with you longer, become more loyal. That is what we want, satisfied customers that stay with us. Caroline and you want them to trade up and a bigger and bigger packages. How do you do that when you are in an unlimited . Guest in finland, the average consumption is 10 gigabytes per month. Advantage. There will be a technology change. Caroline when you look how other companies have reacted in the netherlands, how have they is a like we saw in the u. S. . Is it something you are seeing, and how do you keep separate of that competition ahead of that competition . Guest the vodafone merger is focused on pushing converged services, the bundle. They are pushing mobile and tv. Great mobileg a product. We are focused on an individual rather than a household. So far, that is working for us. Caroline why not . It seems to have been the golden goose for a lot of the other players in europe. Why does it not make Financial Sense . Guest the consumer does not need it. It only matters if they discount a part of the service. The individual is more connected to the mobile device. Whereas the household is connected to the tv and fixed broadband. Two verythere are different purchasing behaviors. We focus on the individual and pushing mobile technology. We believe we have the best mobile technologies to push. We have not invested in our fixed network in the netherlands and we are just pushing mobile. Caroline you are interested in security, big theme. As to why you would want your customers to use 4g. Is it security prominent in your customer bases minds . Guest we are looking increasingly to help them develop products around securities. Caroline are the regulators getting it, are there the right incentives to help people become more cyberfocused . Guest it is not an area of the regulators are focused on for individuals. Caroline talking of regulators, we have seen in sweden the top Telecom Company starting to investigate the e. U. Commissioner seems to be everywhere. How do you deal with that . Guest we were recently approached under the investigation. The yuan carbonate all of the questions and give the all give them all the information you need. They have fully accommodated all of our questions. Time will tell. Caroline are you worried about it or are investors worried about it . Guest no, there is nothing to say that we have done anything wrong. We have high standards. There is nothing to say it was triggered by anyone allegation. Emily tele2 ceo Allison Kirkby right there. Another story out of europe. The British Government needs a few more weeks to decide if Rupert Murdoch will take over sky. That is according to the culture secretary, karen bradley. There is an investigation of media influence. Coming up, see how chrysler revs up for its electric minivan. Where the auto giant is focusing its push. This is bloomberg. Emily a reassuring sign for retailers who have been battered by ecommerce. Sears has agreed to sell its wellknown kenmore appliances on amazon. They will also integrate with alexa, amazons speechactivated assistant. Air conditioners and other devices will respond to voice commands. Chrysler setting its sights on teslas home turf with a minivan that can run on a rechargeable back that are he. They will rethink marketing strategy. They are calling it a hybrid and leaving out the second part. From butters joins us now michigan. What is your take on their Marketing Campaign . It seems smart. The Research Shows that for most americans and minivan buyers that are not the most gearheaded consumers, to get range anxiety of from the idea of a plug to read it fills him with the idea they will get stuck by the side of the road with a car full of screaming kids and they do not want that. The california market is different. It is much more familiar with electric vehicles, with plugin vehicles, battery hybrids, fuelcell vehicles. They got back from their marketers that this market was different and please let us sell the plug. Specific campaign are they that much more amenable to electric vehicles . Are very common in your neck of the woods. You do not see them in detroit too often, two or three of them. It is a more advanced market. We set about toyota and honda, they first broke into the u. S. Market in california. Very popular there. Worked their way to the middle of the country. We definitely saw some of that. The thinking is within a few years, everyone will become trouble with plugins. You also have apple Tech Companies encouraging their companies to drive electric cars. Absolutely, so many employers, especially in the bay area. But up and down the coast where you see companies that have ev charging parking spots and you get better cart parking. Then you do not have to have a charging unit at home. That is where they are focusing a lot of their initial effort, going to these employers. Of this across California Tour will focus on workplace events where they can have people come down during their lunch, show them what the vehicle is like, let them have a test drive. They talk to us about longterm plan for the pacifica and how it is working more broadly. It is a brandnew vehicle, kind of a breakthrough. The old chrysler for generations ago really invented the minivan. They have done well with it that since been eclipsed by toyota and honda with the Honda Odyssey and toyota sienna. They sell it higher prices than similar to the chrysler minivans. They still have the dodge as the lowerpriced vehicle. The regular one that is gas running can cost 50,000, which blew my mind for a minivan. But it drives nicer, it is better put together. They are winning quality awards over toyota and honda, which you never used to see from a chrysler. It is not their strength. Neither is fuel economy. They are trying to move upscale, go where consumer demand has gone, which is better quality vehicles, interiors, fuel economy, and including electric. Emily jamie butters, our automated of reporter for bloomberg news, thank you, as always. , growth as the competition in food tech heats up. Sitting into the delivery landscape. Lululemone the ceo of giving his outlook on the retailer. Catch that conversation and 5 30 a. M. Eastern. This is bloomberg. Emily facebook will drive more subscriptions to publishers. That is where they are posted directly into the media site instead of sending them to the publishers own website. It could be important for magazines as they improve subscription growth. Theres been no shortage of Tech Companies. I spoke about how the Company Growth is it shaping up. Huge growth two opportunities. One is from global companies. We are better known in englishspeaking parts of the world. The idea we could become the , tokyodining passport that you could have curated experiences and go book is a huge opportunity for us. The opportunity is around having opentable stand for more than just fine dining, occasionbased eating experiences. We want to be known for everyday dining. Are going out to eat in 2015. We believe that we can be part. Having a restaurants that are casual in nature. It means rethinking what the reservation actually is. Thinking about the booking and being part of that everyday dining opportunity. Emily are you getting into startups like reserve, airbnb . , it is arst of all literally scaled program. Just the enormity of that scale is hard to replicate quickly. A lot of our competitors have 1000, some only have 200 restaurants. If i am a diner looking for choice that does not necessarily solve choice. Emily you have longstanding relationships with restaurants, would you ever get into delivery . I know they all do slightly different things. There is some sort of opportunity there. Guest execution is the key here. When i think about the operating system for a restaurant, it makes sense with all the different delivery options to help flow into how the kitchen works. Emily my interview there with opentable ceo christa quarles. That doesnt for this edition of bloomberg technology. All episodes are Live Streaming on twitter. 5 00 us out weekdays at p. M. In new york, 2 00 p. M. In san francisco. This is bloomberg. Mohammed javad sharif is here. He was irans chief negotiator in the Nuclear Deal Reached in 2015. On monday, President Trump certified that ron was in compliance with the agreement but on tuesday the United States announced new sanctions saying that the United States will continue to aggressively target iran including their ongoing support of terrorism, and human rights abuses