Massive charge to turn itself around . We will look into hp financial. And the next decade could be the decade of the robot. In 10 years, one third of the Global Workforce is predicted to be replaced by robots. Super machines can do both physical and intellectual jobs. Our leadough, to story. Samsung is still the Worlds Largest smart phone maker, but is starting to show up in samsungs earnings. The company forecasted a sales , its biggest since 2009 when a report orderly earnings next month. This is after about after apple rolled out its iphone. Samsung is also getting pressure from other competition. These Companies Make cheaper phones. Joining me now, editor at large cory johnson, and in washington, senior director of trade at the economic institute. Are samsungs glory days behind it . It may not be behind it, but it is getting squeezed by both apple at the highend side and in the lowend side by a series of newcomers. Star being introduced by firefox throughout south new models are being introduced by firefox throughout southeast asia. We will have to see how it is able to adjust. Cori, read between the lines for us. There is more than just this headline, what it might suggest. But there is certain there are certainly more, because the headlines are sparse. Right after the quarter, and here we are just a week after the end of the quarter, they are required to tell us what happened in the quarter just in the topline and bottomline. What are your revenues, and what are your profits, ballpark . So we dont know where. But we dont know if it could be it could be horrible sales in refrigerators at best buy for all we know. But we have seen declining sales, or increasing sales declined for three quarters now from samsung. They are losing shares cross the board. You will see a lot of stories out there saying that the apple iphone 6 is killing samsung. There were only three days in the quarter that was available. Right, but people could have been holding out to buy it. Yes, but the big change because of the new iphone is probably not true. That there is a trend that goes way back before this quarter. We will see exactly why this is happening right now. Lets speculate, troy. Where do you think the problems are happening . Samsung is still the league the leader in the Global Market share. Are they getting hit on highend, the lowend, or is this acrosstheboard . Is this just smartphone saturation . Iing i agree with agree with cory on this. Ultimately, what we are seeing is these margins getting hit in the emerging markets and on the lower end. Samsung has spent a lot of its energy doing it highend products. But they have let the separate markets get behind and go. This is falling behind with companies coming in with products that are just as good, but significantly lower price. That is the challenge for them. But there is the suggestion that there is the suggestion that they are losing money in china and india. What about ships, for example . Example . For certainly, chips are a huge deal for this company. As bad as the scales the klein sales decline is, the profit decline is much more alarming. In order to move product, they are cutting cross cutting prices. If you imagine stones in china for example, a very fullfeatured phone for a lower price. Competing with apple, they have to offer all kinds of features that are expensive to offer. The combination of those things could be the reason we are seeing this impact on the Profit Margins of this company. Throw in the price of the chip and you have a company that could be having issues with profits. Troy, talk about samsungs other businesses and where they should be placing their bets. Its not going to be happening if its not going to be happening in smartphones, should it be in ships, in connected cars in ships, in connected cars, inhome . Out a fewad laid years ago 5 they had laid out a few years ago five growth areas. One of them was the solar powered industry. In terms of the internet of things, that is where they are pushing now. Them,opportunity for given that samsung is a producer of household goods. We are talking appliances, suggest washers and dryers, refrigerators. Bought smart things a few months ago. They can really try to tap into the connection to their products and how we are moving in the future. But i really think they need to look to other areas for growth and to try to not focus so much on the Global Industry the phone industry as a whole. There has been pricecutting the crazy. There has been flooding from chinese manufacturers into the market. It has been principally governed not on growing business, but big changes in a handful of policies big changes in policy with a handful of countries. Samsung is also in the midst of a product transition here. The Fourth Quarter can be the slowest the Third Quarter can be the slowest quarter for them because they are ramping up for fourthquarter sales. The deathly to ring knell for samsung. What about robots . More and more jobs are going to be replaced by robots. Certainly, mine. [laughter] but that would be in much smaller markets, even solar that would be in much smaller market, even solar. Joining you so much for us. We will continue to follow this story in more detail between the headlines later this month. Up into twoak separate companies doesnt come without a cost. We took a look at the extraordinary numbers behind the separation. Im emily chang and this is bloomberg west. Ibm is once again trying to offload its chipmaking business to global boundaries. In july, it had resume, according to a person familiar with the matter. They are offering to pay more than 1 billion more than the 1 billion it had previously offer the company to take the chipmaking unit. Ibm is trying to get less profitable businesses off its books as the ceo deals with nine straight quarters of falling revenue. Hps separation into two Different Companies is leaving investors hoping for a revival of the Silicon Valley pioneer. What do the changes really mean . Cory johnson has been digging into the financials of the company, as he loves to do. What have you found . Tohp also announced lands lay off another 5000 plans to a off another 5000 workers and another 6 million in extraordinary restructuring charges. Restructuring restructuring is up to 4. 7 billion right now. The question is what is behind this sort of permanent state of catching up behind hewlettpackard . Professor is stanford of accounting, charles lee. Great to have you on this show. Talk about what the restructuring is supposed to be. Cori, when a company goes through its lifecycle, theyre going to encounter what we call life events, and restructuring is opposed to reposition the company to be more competitive going forward. Is restructuring as an accounting treatment represented of of a midlife crisis for hewlettpackard . Is at the sports car, blonde, drug problem, or Something Different . Well, i think that in each case, we look at it as an opportunity to reinvigorate the companyies. In this case, hewlettpackard is facing a lot of issues and the separation is one way for the two entities to try to refocus. One of the things that jumped out to me is that it has, over not to julie from wegman meg whitmans restructuring or others, but this company over a dozen years has had significant restructuring charges over and over and over and over again. Is this a common thing . How where would you say this kind of thing is in the role of technology and or in the role of Corporate Finance . Well, stuff happens. But you do not want to see is is fortime charges these to be called onetime charges when, in fact, they happen every year. These are charges that have to do with major changes in the companys operations. Year, theyns every are asking you to ignore losses year after year, which is probably a not a good thing. Not good to see at a company year after year . What we have seen in Academic Research is that when you see companies who are recurrent restructures, the market seems to under react to this, to these charges. And over the next three years, the firms that do this tend to have lower cash flows as well as lower market returns. That restructure more tend to have lower returns and lower cash flow. Certainly, theres an impact on the number. When the analysts look at hewlettpackard, for years, they look at the nongap number. Which is not the earnings, but the adjusted earnings including the restructuring. Because the gap earnings are significantly lower. 44 billion, compared to the nongap never, the not real number of 80 billion. Yes, you will find that is pretty pervasive a large dash across large companies, particularly tech companies. You will find that is pretty pervasive across large companies, particularly large tech companies. And with a pro forma number that realistically reflects cash flows, on the other hand it to take that they want that out of earnings. Who wouldnt want that . Is this a unique thing with Technology Companies because they are so well known for embracing and affecting change . Olderthis more with Industrial Companies that are affected by that change . I think happens in both, but in the case of Technology Companies, a very large item is, in fact, stockbased, and nation compensation. D and the adjustment between many thehese numbers is ga difference between gaap income and pro forma income. Do we see that these dont work out . Across the board, there was a time when more than half of the s p 500 had restructuring charges in their income in a single year, which is pretty broad. You think the hewlettpackard thing is not unusual, or otherwise . The event itself is not unusual. I think the magnitude and the consistency with which theyve done it, well, it raises eyebrows. Stanford accounting professor, charles lee. We always appreciate your time. Thanks very much, cory johnson. Also, be sure to catch our special coverage all day tomorrow live from vanity fairs new establishment summit. We have a great lineup of guests, including shane smith, seo and cofounder of vice media ofwell as tom freston viacom. That is at 3 30 p. M. Eastern and 12 30 p. M. Pacific right here on bloomberg television. Just how much is the action camera go pro changing the Video Industry echo more of that next the Video Industry . More of that next on bloomberg west. Fax welcome back welcome back. Im emily chang. Go pro has launched its newest line of cameras this week. Tripled their space at best buy stores. Shares are up this week and have soared nearly 300 since the june ipo. But does go pro need to prove itself echo prove itself echo it is partnering with a public retailer. A smart strategist is here with us in studio. It is a good idea to partner . Andt is a very good Visionary Company and its a good idea to partner with best buy. We did store checks. It looks to us like its the standout performer. They have successfully moved the bar up to the 499 price point, a 25 increase over the high end of the hero three plus. We think that is because it is delivering real value to consumers. Is an outstanding camera. And an outstanding price. Do they have a lot more to prove . I think they are proving it right now. Earlyro arrived arguably for the holiday season. Its the kind of execution you like to see, back the way apple used to execute when steve jobs was around. I think this company is proving itself right now. The early indicators on sales prove that they are into Something Special with the hero for black. Jobs steve jobs at apple, really echo a camera on a stick . We have been looking at it as just an action capture device. And thoseyoung team with experience that is proving it gets it in the new age of facebook, twitter. I love the go pro on the surfboard, on my helmet. Snowboard. Kite boarding. The company has a valuation of 12 billion. 18 has valuation of billion. Those should easily be flipflopped already. And its going to be at some point. You have to give them a little bit of time to get there. What you missed in that litany that you stated was the go pro network. You are not spending enough time watching go pro video. This is a lifestyle company. But they dont have enough revenue. They do get a little bit of revenue from the go pro network. That was my question, how well are they managing this transition to becoming more of a Media Company . Is that really happening . Yes, we are looking at this video and they have certainly changed the sports Video Industry, and Human Interest video to a certain respect, but is it helping their business . Yet, because if you look back in time, to same way walt disney transformed the animation industry, the way nike transformed the shoe industry. If you spend time on their branded channel, you will see there is Something Special here. So youre saying its the next disney, the next steve jobs. Is that what youre saying . They have virtually no revenues from media. Disney didnt start making cameras when they discovered menu mickey mouse. It was mortimer. But here is my question. When will we see you meaningful revenues in media when will we see meaningful revenues in media . If you spend time looking at what this company is doing, you will see the seeds of it today. You will see that tiein with xbox. Its a great opportunity with the appropriate platform. You see what they have democrat success of youtube, the branded channel of go pro. You are seeing the seeds of it already today. Says go pro is the next apple. Up, with hp splitting its enterprise business, separating into two. Two, what do these changes mean . It is 56 minutes after the hour. Lets take a look at where markets are. Cutting global forecasts with german production missing forecast. Take a look at atco. It is thinking today. The Agricultural Equipment maker is cutting its fullyear forecast for a second time. It may be heard by sales that are low in all regions, as well as a stronger dollar. We will have more on the markets throughout the afternoon. You are watching bloomberg west, where we focus on the future of technology and innovation in business. Im andrew im emily chang. Down afteron stepped decades as ceo of oracle. Hp is living up enterprise into two businesses splitting up its enterprise into two businesses. Dreaming out to discuss the shakeups going on in the cloud business, sales and marketing president Vice President , lynn. You have a huge lineup. O, incredible. What will you be talking about . Force is the super bowl of Cloud Computing and its now the largest Software Conference on the planet. We have 135,000 registered attendees and will have millions watching online. It is not only the biggest dream force, but also the most exciting. Ours is about innovation and heaving back. Hitting back. Some of the speakers, Hillary Clinton, al gore, Mark Andreessen how do you create this lineup . How do you get someone like Hillary Clinton to your conference . Everyone is coming next week. We have government leaders like hillary, but also the economic form founder, les schwab, tony and technical luminaries like Mark Andreessen. And we are so excited that you will be interviewing him. I will be with him on stage. It will be phenomenal. And we have so many customers. There is something for everyone. How much does dream force impact the bottom line . What does dream force get out of this other than marketing . This is a Huge Investment for our community and for our customers. This is the place to be. Its a gathering to learn what is next in technology, to inspire, to motivate, but also about giving back. And that is so much of what we do at salesforce. It is an opportunity for each of us to give it back. Its all about fighting hunger. We will raise one million meals. We want the whole committee to come out and help us with that. On tuesday, its all about childrens education and childrens health. We have the bruno mars benefit concert tuesday night. Weve already raised since 7 million to benefit childrens health. And that is coming to dream force and we have thats coming to dream force on wednesday. Coming to dream force on wednesday. But there is so much going on in this space. Larry ellison and mark benioff have had a friendly and sometimes not so friendly rivalry over the years. How does this change things for salesforce . At salesforce, we are 100 focus on our customers success and we know that our success is predicated on their success. Our customers have propelled us as a leader and innovator. Forbes has named us one of the most Innovative Companies in the world for the last four years. Our focus has remained the same, helping our customers connect with their customers in new ways and helping our customers become more successful. But what about hp what about hp splitting into two businesses . How does this affect salesforce . Do you watch what is going on . Of course we watch what is going on. Partner andt customer. Us at salesforce work with hp photo we are deeply involved with what is going on. Our success depends on the customers success. Benioffuickly, mark tweeted a photo of the agenda thing ismajor new coming. Any hints . We will be announcing the Analytics Cloud at dream force, but that is just one of our new announcements that weve got. Weve been working in the last few years on major innovations in technology. Youve got to come to dream force to see. And if you cannot join us in san francisco, you can join us on salesforce live. We will be broadcasting to millions of viewers. Will be watching. I want to give you a can of food. Thank you so much. Marketing vicef president. Find out how the future of robotics is changing the future of labor. Im emily chang and this is bloomberg west. Get ready for a robot workforce. Gardner picks that robots and drones and smart machines will all workers by the year 2025 one third of all workers by the year of 25. They can accomplish a variety of work, including physical and intellectual tasks. There may come a time when robots displace most human workers, but in some fields this is already the reality. Describes what the government has used for decades. He talks in the book about the role tech has played in some serious with weapons of mass destruction. Take a look some serious close all with weapons of mass destruction. If something goes wrong with software in business sells, it could be a problem for couple of days. Wrong have something go in a commandandcontrol system, you could lose a city, state, or have nuclear war. This is how engineers try to solve some of these issues and save the lives of millions. Im a big fan of your work. I was really surprised at how so manythere are lessons about the world of technology and what Technology Means in the world into which it implemented. It and there are so many guesses involved. Is an eventc bomb oversight balls. Think about how tiny computer ther in that project scientist had. And supercomputers were basically vetted for the weapons program, but there was still a lot of guesswork. All kinds oflt, copulations that were wrong. We detonated the first to the verbal Hydrogen Bond deliverable hydrogen bomb. They were wrong by a factor of three. The power of the explosion was three times more powerful than they had estimated and they were worried it was going completely out of control. In the 40s, 50s, and early 60s, you had the most brilliant technical minds probably in the world, and yet there were still xpected inc. That happens things that happened. There were still mistakes. There were competing design goals with Nuclear Weapons. Which we see with other technology now, including the nuclear program. There were extraordinary hypotheses that had to me made oneway or another in designing these weapons. The book is not just a critique of technology. Some of the engineers in the book are the heroes of the book. It,if there is a moral in its about being ambitious, but having humility at the same time about what you design. There is a phrase used by early Software Designers that i use in the book, which is the titanic meant isand what that the safer you believe your system to be, the more dangerous it is becoming. There needs to be a sort of constant vigilance. With ourreatest Danger Nuclear weapons complex today, and i would argue with other complex technological systems, is complacency, a sense that it is working just fine, all is well. There is also this notion of not just about the bombs, but the systems around it and the legacy of the computing systems. Aboutll an amazing story a nuclear bomb that almost went off in arkansas in 1980. Howtell the story about these old systems, the people maintaining those systems with the simplest of tools did not most moderntrol the Technology Even of that day would have provided. And its a real danger. We have allowed our military in many ways to become obsolete in many ways after the vietnam war. Unfortunately, there are remnants of that today. The minutemen missiles were supposed to be retired in the early 1980s. When you go into the launch complexes for these missiles, they have computers that date back 25, 30 years, and software that is outdated, but has players and mayors of players ers and layerslay of additional on top of it. You need to spend the money and maintain them properly, and train the people who are maintaining them. Edit happening this year. President obama spent 10 billion, more than any president has spent since the 1950s, on the nuclear program. Does that technology spend, did that make the bombs a lot safer . Or is it increasing the capacity of the arsenal . It depends. We are not spending right now what we need to be spending to make the bombs safer. We need to be spending on the theear infrastructure, wiring, the cables, the Computer Software and training. And a lot of the spending you described is laying the new weaponsor systems, some of which we may need, some of which we dont. Need a debate on our Nuclear Weapons complex. Right now, we are scheduled to spend a trillion dollars over the next 30 years. A trillion . A trillion, and we need to talk about what we will get for that money. How much do we need . What do we need to defend this proper this country properly . Assumed when the cold war ended that the danger and the need for Nuclear Weapons went away, and it hasnt. One of the aims of my book is to bring this whole world back into the spotlight. Our editor at large cory johnson with eric schlosser, author of command and control. For a check on stories making headlines, i want to get to Mark Crumpton in new york. What else is going on in the world . Appear airstrikes do not to be doing enough to stop Islamic State militants from taking over a key town. The layins have entered the ani on the theory and and Turkish Border on the syrian and Turkish Border. The pentagon admits that a few dozen u. S. Troops will have direct exposure to possible ebola patients when they run testing labs in liberia. Specially Trained Personnel will run as many as seven testing labs. The u. S. Is sending 4000 troops to liberia to fight the spread of ebola. The class of 2014 has turned in and lowest math scores in the sat College Entrance exam since the year 2000. The move is reinforcing concern that u. S. Students are falling dangerously behind in math and science. Scores for reading rose a point, but scores for writing fell to their lowest mark since 2006. What is coming up on bottom line at the top of the hour . I will be joined by the finance minister of luxembourg. The u. N. Suspects luxembourg of helping Companies Like apple and amazon evade taxes. On that. T his thoughts and on the financial state of the eu when i see you at the top of the hour. See you in a few minutes. Thank you. Could the data have the key to the next graphic artist or Software Designer . We will explain. Welcome back. Im emily chang. Is turning tos the data to make decisions on who to hire, fire, and promote. And that reliance on big data is pushing Companies Like net tocks to like netflix look to countries like china. Cory johnson has more on the growth of the market place. Of bigas helped al qaeda companies and smoke has helped all kinds of Big Companies and small companies. We are not talking necessarily hr software, but how it is changing hiring, how employers know so much more about what is working and who people are, and not just the way we look at a resume and try to figure out if this is a person. Its about having the data. Businesses in0 america, 258,000 employees. We understand what it takes to attract and retrain ret ain great people. Its everything from a paycheck to a bonus check to a change in marital relations. Its all those things. Hire aare going to programmer in san francisco, i can tell you what it takes to hire that programmer. Do they get to see what a Successful Program looks like before they walk in the door . Absolutely. We attract retention and turnover we tracked retention and turnover and the difference it makes in different jobs. Heard that two thirds of all jobs will be replaced by robots. It sounds like there is a dynamic or data source that is changing the way this works. There is currently a fight for talent, despite the future of robots. The fact is, the jobs are being created in these small companies, a lot of them in san francisco. To get the right time, you need the right data. What is the experience like echo nobody what is the experience like . Nobody wants to fill out a resume or the paperwork anymore. You need to do it online and you are self selecting resumes for the right people for a very particular job, and it varies widely by industry. Are there certain data points that are more important than others . The data points are those that have impact on a company over a longer time frame. Declaring success from short runs in organizations is very hard to quantify and qualify. Executives,lot of ceos moving up the ranks to theye ceo and sometimes are great and sometimes they are not. Those are the hotshots, the success stories. It cannot all be done by computer, but a lot of the selection can. In the end, it takes human judgment and having a great hr department, whether it is outsourced or inhouse. Of the Software Different from others . Is a software solution. We have invested over 100 million in our platform. Its also the people on the ground that come into your office. Is the goal to provide a different kind of information . Absolutely. The goal is to provide a full suite of hr solution, both the people, the benefits, and the software. We are aligned with making your software. But its not only software, but people. Thank you very much. We appreciate it. Can we replace you with a robot . That is the question, isnt it, cory johnson . There is probably an app for that. For the bwest byte, where we focus on one number that tells a whole lot. What have you got . 11,496,000,000. Much hewlettpackard has taken in restructuring charges since 2002. And now they have announced another 600 million to go on top of that. That was not the headline yesterday, but has had the gaapct of boosting the non earnings that they like to talk about. Theysts suggest that company will have more trouble delivering earnings as well as increased cash flow in the future. Obviously, hp is making big acquisitions you made this point earlier for many years. When did the problems start . It was not under meg whitman that the problems began. Is a difficult business to be in. They have made the choice to go in the direction of certain technologies and the world has gone in a different direction repeatedly at hewlettpackard. When you look at the actual effectiveness of the company, those restructured ignoring the restructuring charges this is what goes on there. The last 14en that years has been a regular way of doing business at hewlettpackard. And there have been so many acquisitions that the company has overpaid for and they had to acquisitions in restructuring. But it does pull them up. It does set them up to have a couple of good quarters, someday, one might think. But 12 years later, maybe the joke is on us. How the charges are going to affect both businesses separately echo are they going to take these charges on equally . That is a good question. This split of the two companies is probably not going to happen until the end of next year. Is,question at that point will these two companies have worked all of that out in the wash . They will have to effectively value the things that they own and not on structure them anymore and not under restructure them anymore. The two businesses that they have will be what theyve got. Cory johnson, i know you will continue to dig through hps numbers for us. And dont forget to catch vanity fairs new establishment summit all day tomorrow. And our interview with great and carter. 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 mainstream perspective. Former u. S. Treasury secretary tim geithner takes the stand today in the aig bailout trial. And we will have highlights of our exclusive interview with the second richest man in the world, carlos slim. To our viewers in the United States and to those of you joining us from around the world, welcome to it we have full coverage of the