Transcripts For BLOOMBERG The Pulse 20140121

Welcome to the pulse. We are live at bloombergs European Headquarters in london. Francine lacqua is setting up in the swiss alps in preparation for the jobless delusion the davos deluge that will be happening. Got for you . We these guys are not exactly driving ferraris. This is a vehicle that maxes out at 12 miles per hour, but it is the most expensive ride you will find in davos. We will get on board with hans nichols. And we will consider the emerging markets, a big theme to run through today. Why couture is still high fashion. Inside the houses that make this business work. To shampooighend and soaps. Unilever is a company that says it has found its winning ways once again. Lets take a look at what exactly the company has said today. Very enthusiastic when he talked to Caroline Hyde a little bit earlier. The emerging markets are back. That is the story. It is. We know the hot up so well. We know the product so well. We are so familiar and in the emerging markets, they are becoming ever more familiar as well. The chief executive, i spoke to him and he is being realistic. He seemed quite pleased with these numbers. They beat analyst expectations. Crucially, the emerging markets rebounded. Sales up in excess of eight percent. America and china, that is where the growth was. Despite all the talk about emergingmarket currencies devaluing, that did hit sales, wiped off some six percent overall, but still front and center is the growth story in the emerging markets. Wesaid, look, at the moment, have about half of our revenues over there. We will make it 75 are sent in the future. Even though growth is easing, we are seeing a slowdown and it is much bigger than we are seeing in europe. He said they will not see it an improvement in the european markets for another five years. The United States has showed slower volumes. There is less appetite out there for their ice cream. It is a new world that they are operating in. Products, they are rolling them out across the whole world. That is helping them bring down costs. They are boosting profitability as well. Very much trying to push forward in my interview with him and he promised more to come. Half a billion euros worth of savings to come. Crucially, he sounded so upbeat about being on track. As a winningk company. Confidence is back. We have a very motivating purpose. We have a plan to double our business and improve the overall social and environmental impact. It is starting to work for us. We have to deal with, a very volatile environment right now. A volatile environment still to come. The economy will not be picking up and consumers will not be spending any more in europe. They say they are winning when it comes to being back on track, especially in emerging markets. Thank you very much indeed. We will bring you more of that interview with the unilever chief executive. That will be coming up in a few minutes time. Lets stay in the emerging markets. Randy cointreau is having a different experience to the one that unilever is having right now. The drinks maker says the upcoming Chinese New Year will offer no relief. Beijing has clamped down on extravagant spending, which is hurting sales of the companys cognac. Remyll take a look at later as well for an inside look at what is happening with that is missed. Lets go to tech now. Down. At sap trading the Worlds Largest maker of Business Management software postponed a target of 35 , pushed it back to 2015. David tweed is in berlin. What is behind this change . The reason that they have done this is because they are really focusing on Cloud Computing. The business model, the Enterprise Business software, they go into a company and are installed on the company server. Now they want to download it all. Id. T is what the coceo sa that is where the growth is coming from too. We intend to grow very fast in the cloud and in the court. When you move to a Cloud Business, you start recognizing some of that revenue radically. There is a threeyear cycle he cycle. One of the reasons they had to put it off is because it costs money to gain market share. Salesfor example, total would be 22 billion euros. Aboutoud revenues will be 3. 5 billion euros. It is still only 16 even though the cloud revenues are expected to grow 41 per year. The fastest growth in that segment of the market. Talk to me about what is going on with stocks this morning. Ery punchy volume ration valuation on this business at the moment. I think it is priced to perfection if you compare it with oracle. 2014ng around 16 times earnings. Compare that with oracle, trading about 13 times 2014 earnings. It is a more expensive stock and there are a couple of reasons for that. Investor, a european you do not have such a big choice of technology companies. That is one of the reasons we might see the stock down at the moment. To see fastult growth from company this size. Thank you very much indeed. David tweed joining us with the of berlin. Out lets stay in a similar space. Ibm is seeking to exit its hardware business. Lenovo is the worlds top pc maker. It is in discussion to buy ibms server business. Donovan pharaoh has more on the ferro hasonathan more on the story. We think of the word synergy. Cryingr a lot of people that the pc market is dead. Every journalist who has ever written that headline wrote it on a pc. Marketare maintaining share. Number one in the market even why the market is shrinking. You wantrporate side, 20,000 computers, we can do a deal with the servers as well. Is other side of the story what is ibm doing and what are they going to do with all of that cash . We will not talk about rumor, but it is interesting. You look at the hardware business. Concentrateocus and on the software and services business. There are a couple of people in that space. If you are playing around with the price, that is a lot of money to spend. Any sense on the timing of this deal . It is just being rumored at the moment. A person with direct knowledge of says it could happen within a matter of weeks. Something that Bloomberg News wrote overnight. Whether it happens in the next two weeks remains to be seen. It is clear that ibm wants to go in one direction and for sure lenovo wants to go in the other. Ferro on the latest from ibm and lenovo. Many of these businesses are listed on the nasdaq. Its ceo is in israel for the opening of a new training form. Elliott gotkine caught up with him earlier. The nasdaq in israel, plenty of Israeli Companies. There unveiling his new Trading Floor by the chairman and the new chief executive, among other people. Up withing to catch him, not just about what is going on here in israel, but globally. Themay recall a company by name of twitter, which had its ipo in 2013. List onided not to nasdaq, where many people expected them to, but instead on the New York Stock Exchange. I asked them if that was a sign that nasdaq is no longer the natural home for u. S. Technology initial Public Offerings. We had a very good 2013. Not perfect, but we are proud of the success we have had. Diversified our listing franchise. Our leading sector in 2013 was biotechnology, where we won about 98 of the listings that came to market. What had been a traditional stronghold of our competitors, consumers and industrial. We are happy with our progress and diversifying our listing many. Menu. Rather than being worried about the New York Stock Exchange eating their lunch, the nasdaq is quite content and it is adding in other sectors that you might have expected to go on to the nyse. In terms of 2013, looking israelibumpy year for ipos on the nasdaq. Did he give you any clues as to what to thousand 14 will look like . Like . 4 will look it was only a prediction. He said there are only about 8 is really initial public two thousand 13 and he expects about the same in 2014. In 2013 and he expects the same thing in 2014. Israel is number three in terms of stocks listed on the nasdaq. He said it is the quality of stocks that you are getting from israel that our listing on nasdaq. Companiesking about potentially for 2014. Of course, we will have to wait and see. We often get report saying this company is going to do this or that and it takes a while for it to happen. Certainly, 2014 looks like another good year for Israeli Companies and especially Tech Companies looking to have an initial Public Offering on the nasdaq. Very much indeed. Interesting conversation, Elliott Gotkine joining us from tel aviv. We will keep talking tech later in the program. A oneofakind interview is coming up later, microsoft founder bill gates will be live. Loop for a in the sitdown with Michael Bloomberg. Hat is at 2 30 p. M. U. K. Time really looking forward to that. What else is on our radar screen this morning . Of powerh maker equipment has cut its forecast for operating margins for the second time in nine months. Because of weaker than expected sales of power equipment. The unrest in ukraine is escalating. Protesters have been hurling flaming molotov cocktails and are continuing to burn vehicles. Is bracing for another snowstorm. The extreme weather will hit washington dc in the morning and new york in the evening. It is expected to cause chaos for commuters and will disrupt their traffic. Is among the Airlines Canceling Flights to the east coast. Still to come on the pulse, headsetowns the premium headphone space. Now he is taking on spotify. Is it any different from where we are already . Why is he going to do it different . Good morning. Welcome back. We are live on bloomberg tv, on the radio, streaming on bloomberg. Com, your tablet, your phone, and any Windows Phone as well. Is one of the biggest gainers on the stoxx 600 today. The shampoo and ice cream giant had fourthquarter sales growth that beat estimates, led by a rebound in emerging markets. Its chief executive says confidence is running high. When you are in many of these emerging markets, there are lots of aspirations and consumers are trading up three trading up. A significant amount of people enter the middle class every year and that fuels our growth in emerging markets. , it is aurope different way. Consumers have to downsize if you want to make changes to their behaviors as well. We have different strategies. To continueou going to trim costs . Is it going to be people . We do this with discipline and continuously. ,n an environment like europe we also have to be sure that we cater to their needs and that means that we take the value of the costs out of the system. With a company like unilever, some costs creep in that the consumer is not going to pay for. We have to take those costs out and we will continue to do that. Moving forward, we expect to step up with another 500 million. You mentioned your share price. Are you worried about your share price . Not that much. If we continue to focus on doing the right thing for society and consumers and do it. Well and do it very well, then ultimately that will be reflected in the share price and that is what we have seen over the next over the last five years and that is what we will see over the next five years. Caroline is in the studio with me now. The warning to be got from unilever was almost the canary in the coal mine. They have suffered, but now they are getting a little bit more positive. The concern was currency headwinds in china and emerging markets, india as well. Rebound, sales up more than eight percent in the emerging markets. He says we are going to pile on it, 75 of sales will be coming from the emerging markets overall. There are are currently just above 50 . They are scaling up, investing. He sounded much more lackluster when it comes to europe. He said he promised five years ago that it would take 10 years to recover, i am still right. It will be five years more of slow growth and pain. He is not expecting a turnaround in europe or the United States. That is why he is dedicated to the emerging markets. Interestingly, he said, i do not look at my share price. He might be looking today because it is the best performance in six months. He said the challenges still remain the same for the next five years. How they get to the emerging markets and cater to themselves, make sure the likes of their products, which are so well known in europe, become well known elsewhere. What is actually working in this business right now . It seems to be male healh, particularly in the emerging markets. Cleaner men. Interesting also, the ice cream. That is where they want to leverage. Cutting costs, he promised another 500 Million Euros of costs. Focusing on brands that work inldwide and innovating magnum, not just in europe, but around the world. Tastes change. Thank you very much indeed. Lets talk about some of the other company news we are watching. Is considering a possible sale of its french phone business. No former no formal offer has been made. Peugeot is planning a Capital Increase of 3 billion euros. They are selling shares to raise funds. May 1 contribute funding through a reserve sale. The french state may also buy shares in both sales. Reported thirdquarter beer volumes that rose at a slower pace than analysts expected. Socalled organic beer volume rose one percent with estimates of eight two percent increase. Still to come, we are going to head to paris to see why fashion houses are not making money from the worlds most expensive clothes. That is coming up. Oneofakind conversation, bill gates will join in the loop for a sitdown with Michael Bloomberg. That is at 2 30 london time. Welcome back. It is time for hotshots. The solar powered spacecraft rosetta has been woken up from its twoyear long hibernation. They are hoping to drop a probe on a comets surface. That is quite an engineering feat, i suspect. And the party is Getting Started on the sandy beaches of goa. Thousands of bikers head to the indian coast and riders will be showcasing some impressive tricks and skills as well. Ok. Wow. That is incredible. Games, your heart out. Lets talk about what is happening in the markets this morning. Caroline hyde has been talking unilever. Now she is taking a look at the market. Those tricksters on their across the we are up stock market. Sixyear highs. Why . China is feeding the frenzy. Stimulus, cutting money market rates, expanding their own facilities, stocks driving higher. Yen is falling against the dollar or the dollar is rising against the yen. Out of favor is gold for the first time off its sixweek high. Industry group is all about consumer goods and unilever. More on that in just a bit. Thank you very much indeed. Still to come, dr. Dre rolled out his Music Streaming Service today. With the headphone market in the back, does he have what it takes to beat out the Competition Online . We will find out when we come back. Good morning. You are watching the polls from bloombergs European Headquarters in london. Francine is preparing for vos. Nos da it looks pretty chilly there. Things, of chilly extreme weather will hit washington dc and is expected to cause chaos. Are canceling flights to. He east coast the spokesperson for the secretarygeneral says that iran went back on promises to support the talks and discussions in switzerland tomorrow. Upcoming Chinese New Year will offer no relief to declining sales in asia and beijing has climbed down. That is hurting sales of cognac. Lets get more on this story. Our reporter joins us now. Focusg picture is whether tapering offoing of sales in china that is continuing to hurt business. They get most of their reverence revenue from cognac. Newchinese buffet and the government cracked down on the extravagant spending and extravagant gifting. People have really been hit. The companyanything can do about this . The cfo says that they will maintain pricing and that is important for bottom lines. Also, they are not going to ship so much and there will be more. The management is yes. Specificis a cognac issue. It is a crackdown on extravagant. Remember dig out saying it is not particularly good. Have cognac and tennessee. Thank you. That is the latest on remi. Lets stay in the luxury space. Fashion is the show that is underway this week. It is a showcase of the most expensive dresses and angus takes a look at this. Welcome to the world of outlandish industry with altra fashion, where losing fashion is vogue. In exquisite materials and unless you have 50,000 to spend, youre out of luck. That is the entry cost. Form a strictly regulated of mayto measure madeto measure dress. ,espite the astronomical costs nobody makes money and designers lose big. Is buying these . They are seeing on the red carpet of the world and celebrities get given their dresses for free. The real buyers are the mega wealthy. Cost andcolossal in tiny in clientele. Is this a dying industry . Left are only 11 houses and that is half the number there was. Personnel and christian dior, this is the height of luxury and they are prepared to pay for it. If you are not in the league , you are probably in davos. Thesands are descending on destination of the Economic Forum and we have been speaking. He says that he is determined to keep hope or interest from dominating the meeting. Is the old tradition and he capitalism today, in principle, should be combined with steep social responsibility and a concern for those who were left out by our capitalist system. Attendees, they are overwhelmed by the agenda and theres an opportunity to de stress there. Goldie hawn will talk about mindfulness and the benefits of meditation. At mentaltch her Health Panels and hear what she has to say. Resorts have a top speed of 12 miles an hour. Do not let them for you. Driving them is dangerous and requires great skill. International correspondents have everything. Hans nichols reports. , after in the mountains the skiers and snowboarders take , they reclaim the mountains. It is worth more than half 1 million each. Snopes slopes until they are smooth again. Night and thel city is partying at the disco. You make it nice for them in the morning. That is right. 3 00. Maybe 2 00 or it can be until 6 00 in the morning. 46 of the monsters prepare 200 miles of snow covered pieces every night and it can be dangerous work. You go with the mountain and down the hill. Down and the plow sometimes it stops. Make sure it you does not tip over. 16do you get lonely up here hours a night . And you go out. And there is snow in your face. You keep going. You do that . Yes. Alcohol. Live fromrg will be davos and bringing you the leading voices from the events over 3. 5 days of coverage. Lets stay with the transport theme. They are legendary for having a huge amount of influence over airbus and boeing. Wants the same treatment and he wants more so far, reversion airbus is cool on the idea. I asked if he was comfortable with them having more influence. Tim clark has more power than me. I hope youre watching. Airbus will make an announcement when they will. They are looking and we are a big customer of airbus. We have bought more aircrafts. This is not about an ego. This is about what makes sense. I think this makes complete sense and is a fantastic aircraft. It,y time they talk about they freak out. But, it is a great product. Pound for pound, i do not know if you are a boxer, but Sugar Ray Leonard or Marvin Hagler was the best pound for pound fighter. You will hear more from the ceo later on in the polls. He will make an announcement about his team and we will bring you that news at the top of the hour. We head into the break and it is time for the number of paid subscribers to spotify. It is one quarter of the total loser users worldwide. They will pay customers and we will discuss how the latest venture will target competitions. That story is what we are doing when we come back. Welcome back. Ou are watching the polls dr. Dre dominates the premium. Eadphone market it is a crowded marketplace. Jonathan ferro joins us with more on this. For any guys to want them. 269 is with a retail at. They dominate the market. It is all about what comes out. Memories. Midnight manus cranny, one direct and is what he is listening to. Is what he is listening to. Ction is what he is listening to. This is falling because you are seeing the cannibalization of online streaming. It gives the millennials what they want. It gives them something for free. Get. You music. Hey say they will not thell make you pay people pay how much 269. That is a lot for headphones. Are they going to be prepared music. Eone to curate the will they pay for that, rather than the outer rhythm outer rithm. A algo to not be sent to miley cyrus. That is a big deal. Two other ways is the exclusivity side of things. They have every website talking about it and what could happen down the line. Album, it drops a new is exclusive. They can do it with beets. Something that has been tried and tested in sweden is a phone contract there and you pay 3040 for that. They did you streaming and it goes on to your monthly bill. You can be more likely to keep it there. I would be pretty miserable. You can take that up with manus cranny in a moment. Thank you very much. Will they be able to make a dent in the market . John has his doubts. It could be critical. They are trying to address that issue. The music download portal. Ou are not impressed the model is too similar to spotify. It has good ideas and is going in the right direction. There are questions over functionality and how much data uses inputs. The point is, if you buy headphones at 300 pounds, you like your music. Will this work for that audience . Will that work for the headphones . To have a highly favorable deal for those working they cannot and sell the headphones very well. Questions withes how serious they are about streaming and going that direct and. It just headphones or is it a streaming service . The big question is, will they be prepared to pay for this . They have linked up with at t and your phone bill. That is a little bit of stickiness. Music sites are where it is at for the moment. You think that people would be willing to take the cash to make this work for them . It comes down to convenience and spotify owns beats headphones. To market will likely go feel that there is a large sector that is not catered by either and there are questions around the music and music generation and distribution regarding the artists and what they will get up to. The businessity of model is a factor. Well . Se is doing this who are the people we should be watching for . It is relatively new. Ration ford your anyone to upload and curate music. It is better than qualified curators here. Ou also have band camp that is my personal favorite and it allows independent artists to and it their sales so thatsers to sell buyers can pay what they want. The live music sector takes life into their own hands. We are going to leave it there. Thank you very much. We will be getting more on this coming up. His take it is an initiative that helps people cover their heating bills. Moneyre putting their where their mouth is. We have details of that on the pulse. Welcome back. Energy, the renewable heating expert released a new report and revealed a Widespread Lack of awareness and the United Kingdom about costcutting and the benefits of changing to renewable heating solutions. What modern out europe means in just a moment and taking action. We are joined by a cfo to tell us more. How under invested are we at the moment in the United Kingdom . Opportunityh a huge and it accounts for 38 of co2. Missions in United Kingdom is the single biggest contributor to our admissions. Are investing in other Renewable Energy solutions and it is where the government should be focusing. Why are they not . They do not understand the benefits. Today, theere Renewable Solutions are cheaper and 45 cheaper than fossil fuels. , the way that energy overs have gone up to fuel 170 over 10 years. It has gone up 17 on average per year. We pay massively more than the rest of the year the rest of the world and america. Biomass inensive and my house. Or, is it . Beds a larger upfront cost the renewable heating incentive came in and is being launched in spring. They are repaying the capital is it is up to 50 less. And it could be anywhere between i am a household and i am looking at my options here. Give me a sense of what we could be doing. Itit is a normal boiler and burns wood. It is a big difference. It is as efficient as the modern gas oiler and it uses would. It is automated. I have my windows blown out. They are fed into the system and there is no manual labor involved. No longs. A personal choice. They are available. Not really for the homeowner. Thank you very much. We are going to carry on with the dr. Dre theme. We will see you in a moment. We are back the bill and Melinda Gates Foundation Releases a letter. They will be live on tv later this afternoon. He sits down with Michael Bloomberg in a interview. Dr. Dre launches a Music Service today. They find a success. Good morning to our viewers in europe. Good morning to those in asia and those waking up in the United States. I am guy johnson and francine is off today. We are live in bloombergs european had orders in london. Are weaker than anticipated and we will flash on the screen for you. We begin with ibm. Is the Company Seeking to exit the hardware business . Ibm. O is in talks to buy Jonathan Ferro has more on the story. Bought themarket business from big blue. We saw this business before in 2005. They have done well with it and the pc market is shrinking. That is 18 top dog of the market. What we can offer them is synergy out there. You hope they can do it. A consummate the package with the opportunity. You can see how this complements lenovo going forward. It looks like they will go hard if this bill goes through. We are talking about lenovo going for the hardware side of the business. It could be signed within a matter of weeks. That shiftely to see further and further to focus on the Software Side of the business. Betweend be anywhere at 2. 5 and four point 5 billion. There are questions and what happens with ibm . Do they take a step away from the business . A lot of people suspect that they will put money to work. Aboutave floated around where the money could possibly go. There is potential there. Thank you very much indeed. Lets stay in that world. Sap postpones a profitability target for 2015 two 2017. David tweed has more on this story. What is going on . They are talking about ibm getting out of hardware and getting into software. The story with sap is not getting out of business but, focusing on Business Management software that can be downloaded straight. Im talking about the cloud. We have the ceo of sap later isay and he said that that where they are going to focus. Grow intend to go fast and in the core. When you move to the Cloud Business, they start to recognize some of that radically and there is a threeyear cycle to hypergrowth. He is talking about the cost of getting market share in that business and they build server phones that will migrate businesses to services run by sap. That is going to cost money and they are looking at Revenue Growth of 41 in cloud activity. That is going to be through acquisitions. It is going to be organic. To give you an idea, the size of the Cloud Business in 2017, it is 22 billion euros in total. The cloud should represent andnd 3. 5 billion euros about 16 . Businessesone of the that is unusual because of the coceo. Some businesses have them and deutsche is one that springs to mind. They stepped down in may. How will that change things . Ceo is in the same place. You have them in the United States and they are going to step down. He says that they should not make that much difference in the daytoday operations of the business. If anything, it will make things faster. What i think is interesting is the quintessentially german tech giants becoming more american. Thank you for joining us from berlin. Of the rich and famous are going to a swiss destination of davos for an Economic Forum. We have been speaking to schwab. He is determined to keep corporate interest from dominating the meeting this year. It is a constant fight and it feels that when you go somewhere , on the one hand, you may have davos andhe spirit of the spirit of Global Citizenship and engagement towards a social good. Interestsave personal that are natural and the balance counts. Comments made those with bloomberg. We will have more later on. Saysounder of wikipedia that consumers should be concerned about this. For me, the most important thing that people can do in Daily Services is to use and up security standards. We should be doing encryptions everywhere at all times. Not just as a political gesture. But, also to have affect on the problems and the credit cards. From a digitalus Design Conference in munich. That seems to be a stopover point for the tech heavyweights that are joining the debates. Let us talk about what is on our radar this morning. Is the frenchser maker of cranes. They operate margins for the second time in nine months with weaker than expected sales. Is offering 250 Million Dollars to the New York Times. They earned millions of dollars and the world second. Has extremest Coast Weather that will hit washington dc this morning. It is expected to cause more chaos and once again disrupt air travel throughout the day. Success ands for domination of the premium headphones markets. Towill tell you how he plans take down spotify and pandora in the next hour. Good morning. Welcome back. You are watching the polls. Out and you can see the eurodollar trading at the bottom rage. Range. This is Investor Confidence that we are talking about. We are getting expectations from Central Banks and the expectations are no change. They are under significant pressure and they see the squeeze. There are political problems that this country is now experiencing. The 2. 2 level. Lets move on. The billionaire philanthropist will be live on bloomberg today and sits down with Michael Bloomberg for a conversation on open out in the loop with betty liu. He will not want to miss that. We are going to get breaking news from the foundation. They just released their annual lecture and talked about the myths. Ets we will talk about tackling those. We have the editor of our billionaires team. It is fascinating to see with this foundation does. It has been a pioneer in the way that philanthropists spend their money. We have not seen this since the industrial revolution. It is a tidal wave of change with billionaires. They have the giving pledge. It is something bill gates put together. If you have a lot of money, you pledge to give more than a majority of it away on your death. They are talking about some of the myths out there and foreign aid is a big waste. It leads to overpopulation. They have big and wide themes out there. How much success has he had in dealing with some of these . He has been hard on the vaccine story and has been successful by giving away money to the foundation. Asy are growing with shares microsoft increases in value. They have technology and Maternity Care that reduces the number of childbirths. When there are less children dying and the mature the mortality rates are better, people have less children. It is a population pyramid. Leader and a something of a pioneer in this space. Said, other, as you people pledging. You look at the scale of what we have seen in philanthropy and how much money has been pledged and put forward. From billionaires all around . You look at the fact that there is 120 plus people who our that are allrity signing up, that is a trillion of dollars that will go. It depends on who the people are and what they want to fund. Michael bloomberg funds the arts and environmental causes. Focuses on eradicating poverty and bringing medical services. You have rich people who have tremendous amounts of wealth that can affect change in the way that governments can because of their money. I see the line to between Michael Bloomberg and bill gates fairly easily. There are a lot of comparisons. You look outside of europe and the United States, how much money is coming from other areas of the world . It is pretty small. The United States does not lead in this. We have russian billionaires who are giving back. They have signed onto the giving pledge. A couple of germans have signed on. There is a Movement Towards this. The biggestd that disgrace is a wealthy person dying with money. Thank you very much. Unilever shares are gaining. Magnum ice cream showed a rebound in the markets. We have the details. Caroline ceo said that the market is responding. They are better than anticipated. There are concerns about the appreciation in emerging markets. Particularly, indonesia. They say it does not live up to expectations. China is driving higher and that helped the emerging markets rebound. That helps the Fourth Quarter outperform. They talked about the weakness in emerging markets. To grow in this particular area. Inhave lackluster growth europe and we have to focus on emergingmarket expansion. Bringing up sales from total revenue in emerging markets. They wanted to be more than 75 . They said, we are back on top. They are back and they have a motivating purpose. They want to double their business and reduce environmental impact. It is starting to work for us. The challenges the macroeconomic challenges and the environment right now. The market is being challenged. That he thinks he can drive the share price higher. Next five years are going to drive the share prices higher. Talk to me about what is going on outside the emerging markets. We have optimism. That is exactly at. The economy is turning around in europe. Hitting the consumer pocket. He does not see any improvement for another five years. That innovating is with new products and it is one that you have been purchasing. Seeing anen is increase in sales. In europe, a emerging markets in thailand and indonesia are where men are starting to spend big on personal care. Ice cream is big. Focusing on being more creative with products. In on theocusing products they want to sell around the world. Products that do not count as much. Also, of force, they are trying of anothern terms 500 Million Euros. I think we can all get on board with the idea of men spending more on so. That is a good thing. Thank you Caroline Hyde. He has already earned 100 million. That is just half. We will tell you why the times is paying in this hour on the show. Welcome back to london. The ceo is in israel for the opening of the Trading Floor. Elliotts caught up with him earlier. There is a strong relationship between israel and the nasdaq. So much so that there are more is really companies is raeli companies listed. The bank of poland is not listed in the United States. There are others this morning. And are opening a new bank they came to know about what is going on. In particular, the technology sector. You may remember a Company Called twitter that had its debut on the market. We began by asking if this is a worrying sign that the nasdaq is no longer the natural home for u. S. Companies. We had a good 2013 and not a perfect 2013. Twitter is a good company and we wish them well. It is important to recognize that the franchise is the leading sector and ours was biology. Into traditional strong competitors and consumers. Finee happy with the versa our listing value and our success. The last couple of years, there was a flash crash with facebook. What is the plan . Years, we lived in a monolithic world and in the United States, we have a fragmented world that ties all the players together into a state of maturation. I am happy that we have come along. It takes some work. There is a lot of consolidation and you are confident with 13 exchanges. Surely, we will see more consolidation this year. Respect to equity market consolidation, you will see less of that then you are probably protecting nara. Obviously, is always opportunistic. Isyou look at our record, it about diverse affiant our business model. We are going to focus on that. Nasdaq has like the an intensity of consolidation. Thank you very much. A good conversation with the ceo of nasdaq. He is joining us from tel aviv. Lets talk about some other companies. Vitamins. Are you taking enough . Obviously not. These guys are the biggest vitamin makers and they are just under 10 . It is modest. A beautiful cognac. They opened down five percent at the start of the trading day and managed to turn it around despite the fact that china is making a tough time for them and you are looking at a decline in the guidance. Trains and carmakers are down. Saying that their margins are under pressure for the second time in nine months. The system is evaporating. Guy johnson, back to you. The the New York Times in 2009. He is making money. We go into the deal that he cut with the newspaper next and bill gates will join in the loop p. M. ,etty liu at 2 30 london time. Welcome back to the pulse. These are the Bloomberg Top headlines. U. S. Is bracing for another snowstorm. The weather will hit washington, d. C. This morning in new york this evening and expected to cause more travel chaos for commuters and already the structuring destructing air traffic. In a constant fight to keep corporate interest from, during the annual meeting in davos. We fight the commercialization of the meeting, but if you look at the sessions which deal with the real issues, whatever you take, Climate Change and many other issues i could provide a whole catalog. The sessions are still full. They are oversubscribed. To erikb talking schatzker. The United Nations has withdrawn its invitation to iran to join this weeks peace talks on syria. A spokesman for secretary general and key moon said iran was back on some of its saying it support. Discussions are to take place in switzerland tomorrow. Lets stay with that and get more details on what is going on surrounding these talks and go to tel aviv and rejoin our middle east editor. The latest . This peace conference, began with United States was somewhat taken aback and shocked iran received a lastminute invitation to attend these talks. I ran a very strong backer of the regime of Bashar Alassad in syria. The Syrian Opposition came out and said, hey, look, were not owing to turn up if the iranians turnout. Eventually, ban kimoon withdrew the invitation to the iranians, saying it refused or reneged on promises to abide by the terms of the socalled geneva 1 conference, which called for a new government in syria to be agreed on by mutual consent. The iranians are saying, look, we never agreed to any conditions, but this is somewhat inauspicious start to this peace conference will stop it was almost over before it began. It will go ahead. This will be the first faceto face meeting the between the syrian leader Bashar Alassad and the opposition since this conflict, which is now a full blown civil war erupted in 2011. In that time, we have seen more than 100,000 people lose their lives, more than 2 Million People have fled the country to neighboring countries, be it lebanon or syria. And of course, we see the violence taking place in syria on a daily basis. There are some almost 40 nations taking part in this peace conference. Not many people hold out a lot of hope it will have the desired results. In other words, to try to bring some kind of a peaceful resolution to this conflict in syria and move forward for the country. But certainly, the fact it is going ahead and we will get this first facetoface meeting between alassad and the opposition is at least a step forward, something which we havent had so far and something which is a step in the right direction, as i say. We will have to wait and see where that goes. And youll keep us abreast on the situation. Thank you. Billionaire making huge profits off his 250 million loan to the New York Times. He has is poised to double his money thanks to the steep terms he gave the struggling newspaper five years ago. Our guest rejoins us now. It is interesting, these kind of stories are fairly familiar. When you look at, for instance, goldman sachs. Buffett went to omaha. Huge returns coming back off it. This feels similars. It is similar. Worn buffet at the time saying Corporate America is fire so prices right now and everybody should buy. If you are cashrich at the time, it was a good time to invest. Taught me to the slim deal. Talked to me about the slim deal. It bought the New York Times breathing room. At the time slim bought them, they were losing money and never going to lose money for the next four years, as it turned out. Their options were either to get options i was them is offering or assets they could use the money from to survive. Slims money basically gave them a lifeline there were able to refinance a couple of years later and a much more generous terms, but of course, they gave up a pretty good piece of equity in the company to do so. Buffett did not want to run goldman sachs. The slim want to run a paper . Billionaires who thought about buying the Los Angeles Times and the chicago tribune, some with mixed results. I dont think carlson wants to run the newspaper with back purely financial is it a financial transaction . Thee has bailed out one of worlds most prestigious newspapers and he is battling monopoly threats, accusations of monopolist back at home. He has a friendly ear, let say, at the New York Times editorial board. Rich people owning newspapers is not something that is particularly uncommon. We have seen it throughout history. Pain whene point of this industry is going to such a revolution at the moment, it is kind of what you need. A billionaire . Yes, someone who has the deep to take the chances. Were seeing it in the music business and magazines, these industries torn apart by the digital revolution. If youre treading on the Public Market where you have a quarterly goal becomes very possible to do that. Thank you for joining us from our billionaires team. Lets talk to manus cranny who will walk us through what we need to know about what is happening with the markets today and the companies. A debate onnited twitter. This is crossgenerational. One direction. Managing to sell bonds below five percent . What is going on . They are crashing. That will have the overall Bank Asset Quality review meetings. Curtain raiser, investors, 50 nine percent or so positive. We have not seen that kind of numbers since 2009. U. S. Will take the mantle, equities will be the driver, and of course, it is going to be bonds that will deliver the worst returns. Those are the key take away from the davos poll we took last week. One can always go for a bit of shock and awe. Target midterms round out at about 110. Have a look at gold. The Lunar New Year in china. Theyre not buying cognac. They may pause for breath in terms of purchases of gold. That whole demand side of the story that was driving the gold we had, perhaps, having off the boil. Index has a little disappointed germany, coming off its highs. Most of the retracted move was done through europe. We sell the euro dollar, lower. One direction, new direction, any direction. Thank you very much. 20 minutes to go until surveillance. Scarlet fu at the home today. Tom keene endemols. How are you doing . Wasreported results and it not so great. The stock is tumbling right now. We have no mcdermott joining us. We want to ask about this shift to Cloud Computing and what it means for profitability. Sap has pushed back its profitability target i two years. This is something a lot of the Zoltek Companies are struggling with. Ibm will be reporting earnings later today. It is china make the shift to cloud and facing some difficulty as we had it is trying to ship to this cloud and facing some difficulty as we headed that direction. Bill gates from microsoft will be here at bloomberg headquarters having a conversation with Michael Bloomberg, the founder of bloomberg lp, the owner of bluebird television. They will talk about philanthropy and their efforts to change the world, specifically, bill gates publishes annual letter at which you talked about the myths that thisd block progress in idea that you can improve on the situation has a really taken hold in the philanthropy community, and perhaps it should. This is one of the angles we will be looking out. Really looking forward to the show. Thank you very much. Dr. Dre took two thirds of the headphone market with his 300 a pop headsets. Now he is hoping to clear out competitors like spotify and pandora and the music streaming business. But what is the why is he going to win in this space . We will take that story on when we come back. Welcome back to the pulse. Ceo of air asia due to make an announcement shortly about. Is Formula One Team im watching the twitter feed. Nothing yet. A couple of days ago i sat down with tony fernandez. He is also preparing to announce his Airline Air Asia has finally been granted a license to operate in india. He told me despite the delays the airline has faced, india is very much worth the wait. Is the first time a Foreign Airline has been allowed to operate in india. It will be much easier for the next guy to come along, but its ok. It took me seven years to get singapore as a route, which i was blocked by the singapore and alicia government. Patience is a virtue and the price is big if we get it. Any kind of timing on that . I hope in the next week or so we will hear something in terms of an approval. I hope we kick the airline off by the end of march. How Many Airlines in the sector can india stand . At least a billion people, which is three times the size of europe. Could take a lot of airlines. But youve got to be able to make money, and i think that is a trick. So the market is big enough for many. It is where the market has enough capital and has enough stimulating. E the market will go nowhere if you do not produce fares that will stimulate the market. That is key. I think that is why the industry hasnt been that successful. You look at other airlines i think there is discipline involved in running an airline is immense. It is a business where you can get distracted by plane orders. You can get distracted by, lets put this disc last encore bring in food or fly to different places. You lose the very essence of what you started, which is a lowcost airline. Cost. Hat means, have a low it is a very easy business to get distracted in. I think that is the primary reason that Indian Airlines have failed. Tony is in oxford today. Tomorrow. He says job number one for 2014 is very much driving down cost. That is his main theme. Industry i know tony loved, and that is the music industry. Dr. Dre dominates the premium headphone market with the dre. Ture beatz by dr. The music mogul is turning his attention to the streaming business with beatz music that watches later today. It is a pretty crowded market space already. Spotify and pandora are just a couple. Lets set this up with you before we get on and talk about the wider space. Nice headphones. Thank you. Im not wearing them because they look hip, im wearing them because they cost 269 pounds in the u. K. , and the kids are going out there and buying them. They have smashed this market. Now theyre going to try to do the online streaming is ms. Spotify has done well. Theyre not paying subscribers. Them are paying subscribers. The big question is when it launches in the u. S. Today and when it comes to europe as well, are the kids actually going to go out and pay for music . To somesaw last year reports that Digital Music sales actually shrank and a lot of people will point to the streaming business for that trend. Ok. Cool headphones. Lame idea . Just a basic interpretation of the idea. I dont know if you have seen the app itself, but it is a very basic streaming player. There are some new things in there that allow you it is like a mad lib for music. You put in like, im going to barbecue, i like to listen to old school funk, and it spits out the music at you. That is all fine, but i think the bigger problem there is the have a whole lot of money, i think around 60 million as a last count, and the best they have been able to pop out is sort of human duration with a tiny bit of a group make on the back and then no one talks about. I think a lot of people were hoping for a lot more. A lot of people in Digital Music helping for more. At that is not to say it is not going to end up being the winner in this whole game. That is the thing. Kidsu have loads of running around with these overpriced headphones that are that good. All you to do is tie up a bit of a cheaper market their and it is sold. Plus that at t tie up. Youre talking about it with a family plan. You start to see that begin to penetrate the market. The last i heard, they bought more than one super bowl ad. Theyre dumping cash into advertising and marketing. You can let someone like spotify come in first, get everyone warm isthe idea, make sure no one too stressed out about it, then you can come in and actually deliver the product that takes the majority of the market. I would clarify 50 of the market is the premium and and some out there think they are good and it had strong reviews. You call the idea lame, but you do think this is the spotify killer. Im not sure about that, but i think it is a good chance of taking the majority of market share of the traditional streams catalog, unlike something we do a song drop, which is to pull music in from three sources all across the internet, not just paper catalogs. Buy those like music. If youre going to pay that much at some point have to think they sound ok. Lets start with the premise that you generally are a music fan. Why would i go to the service . If im that much of a music fan, there are Viral Services and other services out there that may offer me more of what i want. Talk to me about what else is happening in the place. I think there are Many Companies that are looking to get into the discovery space, which is a place where we sort of sit as well like scheffler fm and Companies Looking to integrate live into better job of that, like storm creek song kick. There is the kind of sort of genre of people just sort of uploading their own music like band camp. The trends there are that it is more disparate and not necessarily just the game isnt only streaming. Theres much more available out there and many more places to look. Is gamesially, it streaming . No, theres more money to be made. You can buy merchandise through spotify. It is tickets. It is looking at new revenue streams. For us, are interested in app purchasing and the deming model which is a consumables and being able to use that model of payment within music to create written new revenue streams. I want to bring it back to the core issue. What is going to get subscribers to actually pay for this service . Is it going to be exclusive say dr. Dre drops an alum , what isly to, beatz the best strategy . I think tieups will be what it is. I think that what is been a successful model in japan, tying up artist with Different Companies and i think especially if you look at what is happening with Net Neutrality in the u. S. , you can see people will get tied to Certain Services all stop one thing that would be interesting is you allow kids to start using beatz early on a family plan. List,ill build up a play following people, they get bought into a service. They dont want to leave and have to start over. Similar to apple. Definitely. On that note, we will leave it. Song drop. Ounder of were going to take a break. Before we do that, we want to deal with todays number. Average listing price of last night nfl super bowl tickets. Prices have risen around 60 that are expected to fall before the february 2 in between seattle and denver. The average price of a ticket last year is just under 2200. Were back in a couple of minutes. Lets talk about what is happening in the Foreign Exchange space. The dollar trading their sessions low. The turkish lira has been under pressure as of late. Today we will get a centralbank decision. Expectations are we will get no change, despite a drop in the currency. The bank under political pressure at the moment. That pressure may have an effect today. No change seems to be the consensus call at the moment. What else should we be watching . Elliott aree and back with what you need to know for the rest of the trading day. Davos kicks off tomorrow. And we will have some fascinating interviews. We know carlsberg has big exposure in russia with sochi coming up on us. So many avenues you could have with the leader. Look out for those interviews. Just the vibe there. Our people as excited as usual . Is it cold as usual . Francine is attending all the big parties. Lets talk about the middle east. Elliott, peace talks. Today, at some point more than a dozen delegates from syria will be flying by private jet from the searing opposition to attend those peace talks in switzerland. They almost collapsed before they began when the yuan issued a lastminute invitation to iran. That was then rescinded under some pressure and also after the yuan secretarygeneral said iran had reneged on promises to abide by the terms of the socalled geneva 1. Talks will go on. Elliott, thanks. Lets wrap things up. A Big Conversation coming up. Bill gates with bloomberg under the auspices of under betty liu. She will be moderating. It will be quite a chat. It will be phenomenal. His gates and where foundation is moving. It will be great. Tune in. Looking forward to that conversation coming up here on bloomberg. We will see you tomorrow. Ibm in talks to sell a server business to lenovo. Search for growth in the cloud. The season of market predictors. Some of the biggest names are predicting stocks will continue rising. We speak with one who is urging caution. Personal battle, hiring someone to help you. The ceo of one Weightloss Company helps stick to your new years resolution. Good morning, this is bloomberg surveillance. This is tuesday, january 21, im scarlet fu. Joining me as Michael Mckee and adam johnson. Tom keene is in dallas for the world Economic Forum. Davos for the world Economic Forum. In honor of tom being in davos, we will start with europe. Sap, the big software company, shares are falling the most in six months. Theyre basically pushing other profitability target for another two years as companies shift to the cloud. We will have the coceo Bill Mcdermott join us in about half an hour. We have earnings in