A cyberport from Security Company said hackers are using social networks to make friends with u. S. Lawmakers. , defense contractors and therefore struck a fourstar general and extracting data from them. Its not clear if the iranian government is behind this. Google says its not where it needs to be when it comes to Workplace Diversity as it takes a first look into the makeup of its workforce. Google says that only 30 of its employees are women, 91 of workers are either white or asian, two percent are black, three percent are hispanic. Google says there are lots of reasons why they struggle to recruit and retain women and minorities including the fact that blacks and hispanics get fewer than five percent of Computer Science degrees. Apple makes a bold statement about its Product Pipeline with Senior Vice President eddie cue proclaimed great things to come this year. Jimmyiovine. Year, weve got the best Product Pipeline that ive seen at apple in my 25 years. The best in 25 years . Can you tell us about them . I get to see it tomorrow. I have been writing out this guy for two months. Thats a strong statement. You think for the rest of this year, you have the best Product Pipeline u. S. In 25 years. In 25 years, you did the imac, the ipod, the iphone, the ipad, the macbook those are widely recognized as prettied up products. I agree. I believe certainly the products we got coming our great. The appearance came hours after apple struck a deal to buybeats electronics for 3 billion where apple will gain pop gain access to their headphones and the new streaming music service. Tim cook posted this photo of himself sharing a laugh with eddie cue and iovine and dr. Dre. Thank you so much for joining us. Better than the ipod, the iphone, and the ipad . Do you believe him . You dont hear executive saying anything like this. Look, apple is famous for the reality distortion field. Lets discard those comments. We will believe it when we see it. I can see the eyes rolling. Despite the spin coming consummate position of strength for it that got the cash but its a is a weakness. Using his course of the apple franchise target over the past couple of years, the hot services in music are pandora, spotify, and youtube. Apple has squandered that franchise. By buyingbeats they get the credibility of the founders and the hardware and the beats musics of scripts and service. Music is what brought apple back. The ipod is what brought back apple and the ipod on windows is when the growth accelerated. This really shows apple trying to fix a problem theyve got with their old business, not develop a new business. The comments about the Product Pipeline which got everyone they could not invent anything near an ipod or the imac which was the first steve jobs returns product. The ipod, the iphone what could possibly be close to that . Its hard to imagine. Many people were talking about Cloud Services as a way that they screwed this up. As is looking in the rearview mirror. Many people out there criticizing thisbeats deal. They dont think its innovative or the right thing. They think its expensive but beats as an android app. It has a Windows Mobile app and apple has had a limiting orthodoxy of developing just for ios. Having beats and allowing it to have a to develop as a second brand allows them to follow consumers and how they use devices. A lot of skepticism here. Do you agree . I think its easy to be skeptical. There is no question that apple is doing the deal because its a reaction to downloads and the rise of ondemand streaming. Lets not forget that beats is generating 1. 5 billion in revenues. The price tag for the deal came down at 2. 6 billion of cash. It, it is ak at Good Business and its easy to reject it but its a good strong business. Lets not also forget that withbeats, they are getting an established brand that has a cool cachet with the kids. Is importantg that in this world of ondemand streaming is there has been an artist backlash to overall economics of the streaming services. With the beats deal, with jimmy dre coming into the deal, it signifies to the artist minute it a matter. You can make a lot of friends with 3 billion. I agree to that sort of but 1. 2 billion in revenue i wonder what the margins are on the headphones, 10 . I think the margins are actually pretty good. Beats is getting into the automobile market. When you look at the deal, it is extending apples brand into areas where wants to be including wearables. Im not necessarily justifying the price but its easier there is some real logic behind this that is easy to overlook. There is item after item of wyatt does make sense for apple. What about the cultural differences . You can see the difference between the personality of eddie cue and jimmy iovine. At one point he said he did not say anything because he works at apple but he is largerthanlife and outspoken. Hes not your typical buttoned up apple executive. I think apple needed it. Content right now is what is selling hardware. The apple tv the ipod touch you need the content Community Apps and apple has had a limited orthodoxy. Centricad a download model and Consumers Want to get content in different ways. Bneats brings that to apple. You dont think there will be a culture clash . If dr. Dre keeps making those videos, there might be. They are culturally less to similar than you may think. Steve jobs was very much considered to be an artist by manning. Arty many so they approach and a different way. You the marriage of artistry with technology. I think this is an exciting deal to signify this convergence of technology with great content and ultimately content drives take great technology. This deal is seminal for apple in another way. The biggest of before this is when they bought next for formally and dollars. Apple was proud of that. They would never do a deal that was that your than the next deal. Archer from the old orthodoxy and it shows that apple is willing to take bets to complement its product and services in areas where it is weak. It is important step the company. The cash the still costs, it generated from the time the news leaked. The cash creation at apple is massive. Thank you so much to all of you. Google is kicking itself driving car into high gear and we will hear from two of the people in charge of that project next. Bloombergback to west. Google is moving at full speed on its self driving our project. It will build more than 100 prototypes of the cell driving car complete with no breaks, Steering Wheel or gas pedal. Production will begin late this summer. The creators were on with charlie rose to talk about the challenges of getting these cars on the road. We have had our vehicles on the road and we dont about 700,000 miles of driving. We have gathered that data and how we can use that data to have to learn what people look like when they change elaine and learn where the cyclist is about to move in these kind of predictions are what the human brain does constantly and this is what the vehicles have to do. In artificial intelligence, thats a long road. How does it distinguish between what might be person versus an animal . Thats great. We look at the shape of the object. We look at how its moving. There is a lot of these different very complicated feature vectors that the engineers designed and then we throw a whole bunch of data at this machine and it figures out that this collection of features mean thats means thats a personal thats a tree or thats a car. When its wrong, what do you do . It has to be robust to be wrong. It will be conservative. One thing we program it to our vehicles is to be a defensive driver. That means it is living extra space. It is aware of blind spots on the vehicle. So it allows it to have a margin to deal with situations where it might miss classify things. What worries you most . Your experience has been in safety. For me, its making sure that we do everything we can to do the testing necessary to prove to ourselves and there is commitment at google to do that. Just making sure that adequate testing is done google is already tested 700,000 miles autonomously now and all that data has been collected and we are able to use that to simulate scenarios and keep adding to our scenario database. We are in a strong position to make sure we have it right. The former head of the operation was here and he set an interesting thing put too much intelligence in a car and becomes creative. To much that means with information inside, it begins to take chances . Im not sure exactly what he meant by that. We do use a lot of Machine Learning but we do that offline. And we have this amazing system that allows us to review where the car has driven in the past and how it reacted and then how it would react given whatever new thing it has learned. We can predict a lot of the behavior of the vehicle. It still needs to be generalized. You will not see the same cyclist at exactly the same place every time. You learn enough and get enough confidence that will behave the way you would want to. The car cannot detect a driver trying to get into a lame lane or merge. It cannot understand the language of urban traffic, true . Thats fair but whats interesting we learned this early in the project there is a lot of myth around this. That you have to make eye contact. It turns out that you can send a lot of a message with how you position the vehicle. Once your car starts moving forward, that signals to the other people around you that you will go. We have been thinking about how to do that in a safeway that allows other folks to get that the car is moving. How important is what google has done for mapping to this whole process . I think it is vital and distinguishes what it is doing from all the other companies. This map allows a company to know exactly where it is in the world at all times and know what to expect as a nose with on that map help to figure out a lot of the difficult issues and the environment is operating in. But it has to be far more precise than what google maps does today . Yes, its more precise. The features and the geometry and the detail are necessary in order to know all the things youre looking for to drive safely on the road. You can catch that full interview tonight at 8 00 and 10 00 on Bloomberg Television on charlie rose. Over 2000 social media accounts of government officials may have been compromised by an iranian Hacking Network. We will look at the social media Cyber Espionage campaign when we return. Welcome back to bloomberg west. How can tweets and tags and timelines become fodder for Cyber Espionage . Report, ano a iranian Hacking Network has been stalking strategic government targets for the last three years using social media platforms like facebook and linkedin. These hackers created a Fake News Organization on their website, news on air. Org and connected fake journalist to target defense contractors and military officials. Cory johnson is back with me and joining from washington, d. C. Is Michael Riley who wrote the story. How did they do it and how do we know theyre from iran . It is a pretty clever operation. Stood up a virtual Media Organization and created a bunch of journalistic personalities online to go along with it. They would fill the webpage of this Media Organization every day with articles that effectively listed laces like reuters and other mainstream Media Organizations and was put under the name of these fake journalists and then they would have this corps of journalists use their persona to get close to u. S. Lawmakers and military officers and defense contractors and others over a long. Of time until they got to the point where they trusted them enough to click on a link that would download Malicious Software and still credentials and get access to emails. It was a pretty clever operation. We know they are from iran becausethey worked on the iranian were scheduled . There were certain close . Clues . Theres a lot of evidence that points back to iran, the iip addresses are based in iran. They used iranian words as passwords, the hackers and things like if you chart the activity of the hackers, its imprecisely with typical iranian work week even to the weekend were they took off starting thursday afternoon and started again on saturday. Its a very professional organization. Whatmossad would do if they were behind us . You can always make it look like somebody else. You can do it in ways that is hard to detect. In this case, a lot of the targets were israeli and or israeli officials. You can always fake this kind of stuff but it looks like emma from a combination of targets and all the other clues, he gets at it back it gets back to iran. On some level, this has to be hypothetical if you cant tell who was at the keyboard. My friend who wrote mystery novels wrote a book about a cia agent in afghanistan that goes undercover and does this same technique. Is social media the weak link in spy networks . Of the things that this campaign shows is if youve got enough resources and patience and time, the vulnerabilities created by social media are pretty large. One thing they did is by creating a persona, they gave them a lot of interesting back stories and created an owner for this news organization, the journalists interacted with the owner, and they began to friend people around the targets. Over time, it created a trust where it made it easier to get people who would otherwise be trained not to click on these links to click on them. If you get a video from someone who you friended with and have been interacting with on facebook for months or maybe longer, thats a pretty hard thing to avoid. You say this indicates that perhaps the iranians and the government there may be escalating their hacking efforts to the level of china . They would put that much resources behind it . Certainly, the shows that they are really trying to play on some level with the big boys. The u. S. , china, russia put a lot of money and effort into this. Iran has clearly been trying to up its game in terms of ciber as been eisen being able to do more destructive attacks. This may be the biggest piece of evidence we have so far that they are actually getting close to doing the kinds of largescale campaigns that some of the larger countries do. Michael riley, thanks so much. The sale of the l. A. Clippers could fetch 2 billion but are they worth it . We ask the owner of the clippers biggest rival next on bloomberg west. By six percent of the blumer television is on the markets the indexes are up for the fifth and sixth day. Individual movers for you solar city says it will offer solar installation discounts by a coupon site groupon in order to get massmarket adoption. The shares are up 4. 7 . You are watching bloomberg west. The sale of the Los Angeles Clippers is drawing interest from the likes of former microsoft ceo Steve Ballmer and former nba allstar grant hill. With a price tag that could be 2 billion, what do owners have to do due to see a return on their investment . Jon erlichman has more from l. A. Amazing thatty this clippers story has put valuations front and center and San Francisco, the fact that the Golden State Warriors are building a stateoftheart facility, another reminder of how big is businesses. Of Mandalay Entertainment Group a group that acquired the wires back in 2010 for 450 million which many people say would be worth now is with me. Lets start with the building of this facility. What goes into a project like that . What are some of the challenges . A lot of golden a lot of drama and a lot of suspense and a lot of planning and its always a long and arduous and somewhat uncertain journey. You try to create certainty by doing it correctly and you engage with the community and engage with the people who are the architects and the people financing it. There is a lot of constituencies that have to land. Its like having 12 bulgarian jugglers perfectly aligned. No doubt, speaking of the community, its a large tech community, you have talked about building the Madison Square garden of the west. You want this also to be a very tech savvy facility. Have you spoken to Companies Like apple or google about ways their technology can be integrated into the facility . We have to have a click and mortar strategy. We have to be digitally fit. We have to create a venue and the platform that allows people to interact and participate in the experience of the game and the arena and the site. Their participation is what generates the enthusiasm and ultimately the money. Not speaking to the people in Silicon Valley and in San Francisco who are the leaders in this market, who know how to engage audiences and no how to interact and create that environment, would be insane. We will draw upon that heavily and have been drawing upon that. This Los Angeles Clippers story has raised so much attention to team value. There are reports that there could be offers on the table north of 2 billion. Do you think the Los Angeles Clippers are worth it . Things are worth what people are willing to pay for it. The people bidding on that team are all extremely successful, extremely smart, and they did not get there by accident. They will measure of value in what they pay for it and what they think they can add to it. There are valuations of life, locationbased entertainment which is even to an spectacular and thats very valuable in this age. Its something you cannot imitate easily. You cannot just dvr, you have to be with it. That gives a very vital value to that asset. We own the dick clark company. We have a Live Entertainment Company Great we own sports teams. We know that Live Entertainment is critical. When you have a team like the Los Angeles Clippers or the Golden State Warriors that has a great and robust audience, they are very valuable. What about the talent . Makes the argument that salaries go up whether it is players or coaches. How do you measure success on these contracts . Onewin at a time. You have to win on the floor the oldfashioned way. Win in the will minds of your fans and create that mobilization of those ingredients are part of it. Its not just one thing. You got a great script but bad actors, you will have a flop movie. You got great actors of that script, you will have a bad movie. The idea is a combination of influence. Com close of the design, plan command execution and getting the best talent is crucial to that. You have to make them not a collection of players and coaches the team. That alchemy is natural. You talked about not being able to use the dvr. Its clear in the world of television that sports content is king. It raises questions about distribution. As part owner of the dodgers, we saw them teams we up with Time Warner Cable to create a channel where the games can live. Then there were paytv providers as a result of bought the fees to carry that dispute has continued. Do you expect a resolution to that . Everything ends and hopefully well. Recognize that we made a sale to a company, Time Warner Cable and it was their job to get to tradition. They made a deal and it was a multibilliondollar company. Its important for the fans that they get their asset. The idea that we want that to happen is for roche is on our part. We dont control the mix. Thats the part of the story they got wrong. We sold that asset to a provider who then does distribution. I believe they will get it. Time warner cable is being purchased by comcast at least its in the works or it do you think that purchase may speed things along . Yes, but there is a lot of amalgamation going on. Cable beinge warner acquired by comcast and directv with at t so a lot of that is happening and that will change the paradigm on all of this. Theirlks that want to get sports teams in any city will get them. You are a big sports cap we cannot let you go without talking about movies. You got a long history in the movie business. Its the Summer Box Office season. What happens in the United States is important to the International Market is just as important these days. Talk to us about how the industry is positioning itself for that. Its a really simple matter of numbers. 7 billion people, 3 million people. Where would you and if you wanted an increase . That market is expanding and not fully mature. This market is not expanding and is fully mature. They make product that really is gleaned and your and four by the International Market. It outpaces the big pictures two and three to one in the domestic market. When you decide to make a picture, you look at what that International Market can yield from the picture and that market cannot compete with local repertoire. The most recent spiderman was over 300 million. Its half 1 billion opening on friday night around the world. You are aiming international. No doubt, always great insight, thanks as always. Thank you. The boots thatd carry hikers over the Worlds Toughest trail. We have the president of hiking boot rent, merrill. Next. You can also on Bloomberg Television, streaming on your phone, your tablet, and bloomberg. Com and now available on apple tv and amazon fire. Watc i am emily chang. This is bloomberg west, on Bloomberg Television, streaming on your phone, your tablet, and bloomberg. Com and now available on apple tv and amazon fire. We are taking a special look at how technology is changing the way we experience the great outdoors. Uncomfortable hiking boots can make a short walk feel like a long one. How the footwear brands use technology to build the boots for explorers tackling the world rocky is to rent . Cory johnson has more in the newsroom. Merrill has big has been a big name in boots since the 1990s 1980s. The Company Makes its footwear mark with shoes geared toward what these guys are after, that element. The president joins me right now, Gene Mccarthy from new york. Ink to me about the ways which you invent shoes are hiking boots differently than you did a few years back using technology. There are two types of technology. The first is how you get from point a to pioint b . We are obsessed with what happens in between. We dont want technology to play into it. We think the mystery still needs to remain. We think it is also about personal exploration and discovery of yourself. If there is a way that technology can play in there, its how you share the experience so that you can tell people what youd did and posted as a challenge and see if others want to join you. Then or is technology we have in our products, too. Talk to me about that. What is the way you incorporate technology . As soon as we think about technology, we think about electrons moving and sensors in shoes. Us withhing for technology is the greatest technology is the human body. Nobody has been able to replicate it or duplicated ever. Our job is to complement it. Our notion is to make our products absent of san station because where only two try to have you be temperate and we want you to be dry and we also want to help protect you from certain elements whether its rocks or crevices or twigs. We really wanted to be absence of sensation so that its you and the human body doing it and our products, you. There are plenty of technologies in there but it really is to koppelman the human body. As a development change, other ways you use technology to get different kinds of feedback from your users . We have a very elaborate way of testing our products. There is two types of feedback you want. One is the scientific and the other is the emotional. People do that on the products and transform themselves but feel a certain way. How they feel can enhance and improve their performance. It is scientific and emotional. You are referencing technology and suggesting the way that some People Experience Technology suggested it took away from the experience of what happens on a great hike or ride or run. I wonder if technology is a contradiction with the great outdoors. Take a twoyearold right now and they can navigate through a smart phone click on it happen watch a video and pause it and stop it and started. In 10 years, i am worried in our brand is worried whether we will blur the lines between reality and virtual. If you have seen some pictures of the grand canyon or the cascades are the else, do you think you have visited them . We want to make sure we are driving the idea that the outdoors in person and for real is the way to go and technology should be something that enhances it. There is a great piece in the New York Times that suggested the social media compels us to let us think we know something about everything when we probably know next to nothing about everything. Sounds like you are saying the same thing. I am. There is a part where we need to get selfaware again because the technology is useless unless youre selfaware. The one thing about technology how can it complement you or be your life . How can you use it to enhance your life . I believe in 10 years that there is going to be very individualized and Personalized Technology for each every one of us on this planet. I think that boots and garments and other things will be almost the accessory as opposed to now where we are trying to cram the technology into the products. Are you trying to architect your geared toward more individualized stuff that has more specialization like smaller production runs . Thats where we are heading. It is hard to do when you are a large brand like us and the manufacturing process still 20th century. Thats where we are heading. I think that every individual on this planet will be there on brent and it will be on us and other brands and companies to go out there and make sure we are personalizing for you. You have inspired me. I will dust off my boots and go for a hike. Thank you very much. Thank you for having me. My boots of certainty well for many years. Google says it is not where it needs to be when it comes to Workplace Diversity. We will talk to a group that wants to offer a solution and is offering a solution. You can watch us on Bloomberg Television, streaming on your phone, your tablet, and bloomberg. Com and now available on apple tv and amazon fire. Welcome back to bloomberg west. Google is turning the spotlight on itself when it comes to diversity. In a blog post, the company broke in with a workforce look like and 70 of their employs are men and 30 are women. Are white ands 30 are asian and only three percent are hispanic and two percent are black. They said the decision to go public with these numbers was because folks were not where we want to be when it comes to diversity in hopes this will help the company recruit a more diverse workforce. Cory johnson to still with us and also joining us is i risk gardner. Irisrisk gardner gardner. You have a unique perspective because you also work at google helping them bring in engineering and turns . Thats right. How much of these number surprise you . They dont surprise me. In the industry, only nine percent of the tech workforce is like or latino yet they are 18 of students graduating with degrees who are qualified students. At google is lower . Right. Is this their fault . I dont like its their fault for it if you look at the industry and as more Companies Follow suit and reveal those numbers, i think we will be able to see this is a trend that can pinpointed one particular company, its an industrywide issue. At code 24, 24, we were looking to get access more to the 18 and bump that up so students can get into the top tech jobs. You guys have placed students at companies as big as facebook and jawbone and foursquare and upandcoming startups as well . Thats right. Its interesting that google was willing to put the stats out there when they dont look right. When i did a story on code 24 a couple of years ago, it was only intel that gave us access to numbers like this. What is it like at google that they are willing to open this up . I can speech to what is there now. They are doing this because they know there is a problem. They know that by the year 2042, the u. S. Will be black and latino. If they want to hire a workforce, they need to look to who will be the majority. They need help, clearly. They are looking to start a conversation that we have been a part of for a while. What are some concrete things that Companies Like google who want to be more diverse and everyone seems stars for entering talent where should they be looking . Traditionally, they have looked at the top 10 programs the62 but 60 of graduates go to black university so they should also look there. As the straight white guy sitting here, i wonder how googles products might benefit from having a more diverse set of creators . Definitely, when you look at who you want to buy your product or use your product, you have to look into the statistics. If your products can be bought by black and latino and women, obviously, our half of the population, you have to have people building those who come from that experience and can bring that perspective to the products. Was it like for a student on the other side . How hard is it for black or latino students to get their foots debt to get their feet in the door at these companies . I think access and resources is a huge issue. Students are not being told that you should put your work out there or have a great link in a count. They need some guidance in there and thats what we are doing. We will roll out a program in the fall that will reach 3000 students to help them get past the door. Have they done much in terms of job placement . I think this was their second year and they did a Leadership Conference in technology. They are speaking up and saying you need to help us because we can help you. Are there any companies doing this well . Not one that i can think of off the top of my head. I think there are companies that work with us like jawbone who has been with us from the beginning. They had three students last year and they will hire a fulltime student or this year. They are joan xing for this engineering talents and they cannot find him in the places theyre looking for, you would think they would know to look somewhere else. Youre right, i think code 2040 is offering that solution. We will go out and do the searching and vetting and make sure we are bringing you the best talent. What are the latest numbers in terms of how many you have placed . We have placed 23 so far and will be placing 23 possibly more since the Program Starts on june 14 the summer. Thats really interesting stuff. Its going to get worse as we have more deficit in terms of these Companies Growing at the same time. You have been a fantastic organization that has grown over the last couple of years. Congratulations for that. Iris gardner, thanks so much. Bwest byte. Or the about 11 thats how many days it would take apple in terms of revenues to pay for the beat acquisition. It takes 11 days worth of sales to earn 3 billion in revenues. Thats what they spent to acquire beats. Are you saying it is not that much money . Not for apple, its the blink of an eye. John, do you agree . Its true, they can do what they want. Many people will see what the culture fit is like. True, apple has enough money to do all sorts of fun stuff. John, you are pointing out earlier about Jimmy Iovines interesting history. Tell us more about that. Soundcares a lot about and he talked about that on the show. Apple cares about sound. In the marketing department, look for some interesting stuff for them in the months to come. He certainly has a colorful personality. Jon erlichman and cory johnson, thank you so much and thank you for watching. You can get the latest headlines at the top of the hour on your phone, your tablet and bloomberg. Com. We will see you later. From bloomberg World Headquarters in new york, i am mark crumpton. This is bottom line, the intersection of business and economics with a main street perspective. Prorussian rebels she done a Ukrainian Military helicopter. Then a look at local efforts to raise the minimum wage. And we will meet west points first graduating class of hacker officers. To our viewers in the United States and to those of you joining us from around the world, welcome. We have full coverage of the stocks and stories making headlines
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