Transcripts For BLOOMBERG Bloomberg West 20141022

Shot by Security Forces returning fire. Nike is making a bigger push into womens apparel, launching a new sportswear collection for women. Spoke with our Stephanie Ruhle in an exclusive interview. Women sports and health and fitness is not new to nike and happens to be one of the most vibrant and fastgrowing parts of our business. Markie is nike is hoping to increase the billions of dollars a gets every year from womens apparel. Thestor carl icahn says apple shares he owns should be trading at double the price. Here he is talking about tim cook i think he is one of the best. Wife to best because he listens to you . I do not think he listens to anybody. He listens to himself. I met him once or twice, i watched him, and he is what Silicon Valley should have. Hn is asking for a bigger Share Buyback than it already has that and microsoft has a new Cloud Computing partnership ibm is trying to boost revenue after reporting a 10th straight quarter of falling sales. It also gave up on its fiveyear earnings goal. Brad, back to you. U. S. Technology companies are making a new push to improve relations with china. Tim cook has been in beijing meeting with chinas vice premier. Hackers that chinese have targeted icloud. Meanwhile, Facebook Ceo Mark Zuckerberg is trying to board a prestigious Chinese Business school. Chiefg me now is ivc Research Analyst crawford. Euphemism that she has got to be pretty peavy about what is happen to icloud and china this week. Absolutely. This is about communication. Steve jobs famously never engage to china, and i think this really starts with engagement, and he can either link back and be the victim or you can kind of open up a dialogue, and i think that is what tim cook is trying to do, he is saying this is our procedure, we increase these security of icloud. There have been reports in the Chinese Press that the Chinese Government may be behind us manning middle attack, so he has got to be angry. What can you tell the chinese vice premier that might make him and embrace a more handsoff attitude . Sort of line between Chinese Government and nongovernment is interesting because it tends to blend together at times. Tim cook is probably saying i want more transparency, i want to give you more transparency, so lets open up that dialog. He has got to be really upset and really concerned with who is behind that, but if you dont start a dialogue, then the distance just increases and increases, and then you have got a real problem and end up on the which isacebook, potentially locked out of the country, which is unacceptable. We will get to that in a second. Tim cook has said he things china will be apples biggest market. Are they on track, and is this a setback, this icloud hack this week . It is potentially a setback. I do not think you will see any device sales anything associated with it. I think apple is on track. If you look at the overall growth for china in general, we think that very quickly by 2018, china will be the largest versus xiaomi and lenovo . No, overall. They have got to go after it. Blocks, instagram lately has been blocked in china, so mark is taking to a University Business school why . What can he do there to try to lower the barriers to facebook . It starts with not empowering your consumer if youre the Chinese Government and assuming that any open communication is not great. Mark zuckerberg famously said facebook is not a social Media Company we are a Technology Company. I think he was to demonstrate that they are a Technology Company and that Technology Company can be useful and enriching to the citizens of china, so that starts with a dialogue and starts with trust and Building Trust taking things like behaving in a responsible way. I think from their he can then expanded to maybe people can give this a try. It will be a long spectrum. Lets talk about yahoo they recorded a profit for the first time in six quarters. Time for Marissa Mayer to spike beforthe football. There is cause for nearterm celebration in the sense of stabling the ship. When you look at the overall i. T. Market, somewhere between 3 or 4 , yahoo group at 1 . She is talking about 1. 2 billion dollars for the entire fiscal year. That is promise but it suggests other parts of the business not doing very well. How do they build a strategy to talk about what yahoo wants to become and not what it was . Doesnt give her more leeway, more runway with the shareholder activists . Kind a thorn in their side of limiting the ability to reinvest in the company . It absolutely gives her near room. Eeway, breathing now it is on yahoo to show more of the playbook as opposed to we want to get more relevant in mobile. It needs to be what is the sort of elixir associated with tumblr, does that compete with youtube overtime, how do they build more apps that make people more engaged in a mobile environment . Facebook did that and is in our pocket how does yahoo do that . Ok, crawford del prete, thank you four coming on welcome bac bloomberg west. Now have an update on the breaking situation in ottawa. Canadas parliament and other Office Buildings remain on lockdown. Bloombergs matt miller joins us now. Thank you, brad. I went to bring in karl belanger, the man man for the Opposition Party, and he joins us on the phone inside the parliament building. Karl, thank you for your time. Are you still on lockdown, and how safe do you feel . We are still on lockdown. There are about a dozen staffers with me in our office we have been in lockdown since the gunshots were first heard inside the building. As of now, we do not feel threatened, but we have been told to keep the doors locked, do not get out and to stay away from the windows. Why is that . Do you think there are other gunmen at large . We have heard that one gunmen who initially shot the wholder shot one gunmen initially shot the soldier shot himself. I know there is one person who was shot, and i do know that there is at least one other person that the police are looking for. There have been reports of other gunshots around Parliament Hill since the first shooting and since the first person was shot down by security on the hill. I did not me to commit a kid that he shot himself. We are reporting that release returned fire and he was been killed. We are showing video right now of the initial volley of gone gunshots inside the parliament building. Karl, can you tell a tell on that lasted . How long was the period that you are hearing actual live gunshots in the building . Hearing are you are the main corridor of parliament l, and the library of parliament is apparently where the suspect was shot, so that happened very quickly. What your viewers must understand is that right before the library of parliament, there is an entry to the left, to the government caucus room other the right to the caucus room, and a security acted very quickly to lock things down and to ask everyone to take cover while the opposition operation was underway, and of now i can confront you that those rooms were evacuated and are under protection right now. How many people were evacuated . Was Stephen Harper there as well . Was hendy building in the building and evacuated . The prima stir has been evacuated the Prime Minister has been evacuated. He is safe and sound and under protection as we speak. We are showing a live shot right outside where you are located. It does not look like there is a lot of action but obviously police want to take every action and make sure that everyone else is safe. Have you heard any information about why these gunman may have done this, what has motivated them and if they are at all related to the attack last week in quebec . Cannothis point, we speak on the identity or the motives of the shooters. It is really hard for us to pin that down at this point, so we will have to wait for the police investigation. What i can tell you is that the security perimeter is being enlarged. There are more and more buildings across Parliament Hill, outside the Parliament Precinct that are being shut down, including on the other side of the river where buildings are being shut down, and im told that the bridges between the two offices have been shut down. Two provinces have been shut down. Is there a checkpoint, or can citizens freely move in and out of the building . Not in and out of the buildings, but in and out of the precinct for sure. The Parliament Hill lawn is accessible. A few years ago they stopped access by vehicles, but until 9 11 you could drive on parliament till, anybody could do that. That is no longer the case, now there are checkpoints for our for all vehicles to be searched that as for the buildings themselves, if you are not, if you do not have the proper id, you are required to go to a metal detector, but there are a few Security Guards at each entrance both in Security Guard clothing in plainclothes. To make sure that you have access to the building and belong there, but it is not exactly a fortress either. Typically, obviously it is a very safe place, although last week we had the attack in quebec in which one soldier was killed by a car. Obviously the heat is on really, but do you think there is an alarming trend here, or could we consider this two incidents . At this point, we do not know if they are related at all. At this point, in quebec, the individual was under mental distress, soweto not know do not knowo we exactly if he is mixed with any organization outside of the country. As for what is happened here today, we have no information about the motives or the numbers at this point. But there is no question that security will need to be reviewed on Parliament Hill. Ewed aftern revi 9 11 and over the years, but there is a cross jurisdiction the were we have the rcmp different Security Services on the hill, and they will have to review what happened and how to make sure it does not happen ever again. All right, karl, thank you so much for taking your time. Im glad that you are safe there and we hope you get out of there safely and are able to move on with important business. Karl belanger is the principal secretary for the Opposition Party leader in canada. I will toss it back to brett dont. We will continue to to brad stone. We will continue to monitor the situation here, and brad come you continue with bloomberg west. Thank you, math, and we conti we will be back with more bloomberg west. I am brad stone in for emily chang, and this is bloomberg west. The San Francisco giants beat the Kansas City Royals in game one of the world series last night, but baseballs National Tv Audience for the playoffs was lower than previous seasons. Who was actually watching the game . I am joined by former oakland as Vice President andy dolan and brad adgate in new york. Brad, let me start with you. Viewingnk most of the was done online. Last night was the first sunday game was stream, the deal that Major League Baseball made with the networks. Typically, the world series has been aging a little bit. The median age of the viewer is over 50, and last nights parliamentary ratings was below last years game 1, but the good news is it is a lot more than what fox typically does on a night. An despite what to brad a saying, eight is low, down from 8. 6 last year. Change. Namic has i do not really pay that much attention to the national ratings, and this is really a localized event. Everybody in San Francisco is watching, everybody in kansas city was watching. A lot of people and the rest of the country, it was not a mega event, theyre onto something else. This does not worry Major League Baseball . I do not think so, and it is not worry commissioner bob seeley because he is waving goodbye, but at its core, baseball is really a regional sport. When you do not have the mega teams in the megacities, when you do not have the coastal cities or chicago or some be like that, the ratings are going to suffer. When we played the giants, this is the 25th anniversary of the earthquake world series, it was the lowest rated world series at that time, so it if it is not viewed as something spectacular with great legends from legendary teams, people shrug their shoulders, but that does not mean the game is suffering in any way. Recommend brad, Major League Baseball just signed an epic tv deal, double the annual money they had last time, yet the audience is down. There was that famous quote about analog dollars in digital pennies. Is there an equivalent i equivar Major League Baseball . Wifi think the new commissioner, rob manfred, will take steps of the previous commissioner bud selig has not done, so i think you will see some more initiatives. Mlb. Tv, the streaming, one of the achilles heels if there are blackout so if you are living in San Francisco, you cannot watch a giants or in as game, but in los angeles you can, so i think theyre working toward changing that, and i think that will give mlb. Com a big boost and more viewing online typically brings in younger viewers come and that is part of the. Reement to talk about here Major League Baseball is getting 1. 55 billion a year from the networks through 2021. Andy, lets talk about the game. No shortage of offense for the giants at least last night. Overall, production is way down. Is the game getting more boring . No. Ultimately the antidote to the stupidly that has been foisted upon it for generations from owners, players, fans, the media, from performanceenhancing drugs. Really connects the generations. I am not going to channel james earl jones, but it is ultimately a game that everybody enjoys. You can pass time. It might not be the national pastime, but you can pass times at games, and i think a game without a clock is actually a positive in todays nano second society. Are there ways for baseball to amp up production and make it a little more exciting . I think they should be very careful not to make it such a three ring circus that people are turned off. Analystshe metrical looking at baseball, but if you look at Major League Baseball advanced media, it is worth more than Major League Baseball, so you have a strong argument that the metrics and the people that follow statistics are loving baseball, but also the generational support for baseball is not going away, even though they talk about where our young kids today. Dolich,hank you andy former oakland as Vice President , and also brad adgate. Coming up, amazon gears up for the Holiday Season next on bloomberg west. This is bloomberg west. I am brad stone in for emily chang. Fedex is expecting record shipments for the Holiday Season, estimating more than 290 million packages will be shipped. What will the need for amazon. Com . With me is Bloomberg News reporter adams history on a adam. Amazon reach an agreement with Simon Schuster, a major book obligor, to sell Simon Schuster books on the website for agency pricing, which means Simon Schuster gets to set the price. Is this the beginning of the end of this cold war that has broken out between amazon and ebook publishers . It could be. Ike the publisher gets to set the price, and some of the reports about what happened is there are some exceptions in which amazon will be able to discount the prices, but this seems to be beenthaw in what has playing out, and i am sure there are a lot of authors are anxious to see what the terms are and want to see this. He kind of wonder, Carolyn Reedy from Simon Schuster sent a note that her publisher is saying this is a good deal for them, and you sort of wonder if amazon is kind of accommodating the publishers and what they want, why they even want to go and strike deals with some of these other publishers that have caused trouble for amazon. This has been a tough fight for amazon and they have been bruised in terms of the Public Relation side of it. There has been a lot of publicity coming their way. Paul krugman, the influential New York Times columnist came out and saying that they needed to be investigated Like Standard Oil was. Things like that are not things that amazon wants next to its name comes the Holiday Season, which they are hoping people will go out there and buy presents for their kids. Ok, thank you, adam. Lets bring in channel advisor ceo scott wingo. He joins us via skype. Scott, hello. High, brad, how are you doing . Good. I was just talking to Bloomberg News Adam Satariano. Is this the beginning of the end of the cold war between amazon and ebook guys . It will be interesting to see. Categories,s all not just books, is very protective about their ability to set prices, so that will be the really big piece that has been the bowl up her, and as they work through these different publishers, if they get flux ability there, they will be the most important thing for them. Ok, now the Holiday Season approaches. You wrote a fascinating blog websitechanneladvisors about the amazon for film and build outs come about all of the film is centers and dissertation centers that they will to prepare to make sure that what happened last year does not happen this year how inoculated or they for the supply chain . I have unusual hobbies, and one of my hobbies has been tracking their for film is centers, and amazon is very sick of about the number of the film is centers, and they have a lot more than you think. Our estimate is they have about 155 film is centers. Saideir two to call, they we have 15 rotation centers operating. We have never heard them use that term. The way a Fulfillment Center works is lets say you are in new york and you order a package, and it gets routed to the appropriate the films center in new jersey, and they load up the ups truck with packages destined anywhere in that region, an analyst ups, they sort goes to the Business Code and it gets delivered to you. With the new center, they rolled it out in 15 of their largest metros, it is one of those things that would happen is the at the provider into amazon, so they are doing more of the work, so now before they send it to ups, they sort them into zip code so they can get smarter about sending that package closer to you. Do sunday them delivery with the u. S. Postal service, but it also gives them the flexibility if they have gotten to the 11th hour of the holiday, they will have more flexibility because they can ship with other careers or they can even deliver packages themselves, and we know in many metro regions like chicago, boston, and whatnot, they are doing a fair amount of their own deliveries where they have done some math and they decided hey, for this zip code or this very it is cheaper for us to drive our own amazon trucks and to use ups. What kind of earnings does amazon delivered tomorrow . Revenues up, profit is nonexistent. It will be a pretty hefty , so come over 300 million this question over amazon about what point will be spending stop and them to prove what that they can really be a Profitable Company is something that people are point to be watching four. The some indication of how fire phone has done. That was baked into their projections. To . 99, has been cut which is never a good sign, so that has been baked into some of the projections at the end of last quarter. Scott, this is a company that is investing in so many different areas from media to the settlement centers, International Category expansion , and he stock is down 20 this year. As adam mentioned, we will probably see another loss tomorrow. Does this Management Team give in and pull back on any front . I dont know. So far they have had a pretty good pass from wall street on profitability. One of the things that when you look at amazon as a whole, yes, they are not profitable, but when you really peel apart the onion, there is a profitable core of amazon, and that is ir thirdparty marketplace. You have written about it and know about it, but about 40 of amazons items are sold by a third party that is not amazon, and what is interesting is , it creates aue headwind on revenue because the revenue is 100 come in if they sell 100 items to a third party, the revenue is effectively 10 or 15, so revenue for the same item would be lower, but it is much more profitable. They do not take inventory risk, it,even if they filulfill they put the for film and on a thirdparty seller. Fulfillment thirdparty seller. The investor sticking with amazon, they realize that and they look at the Retail Business that is also doing better in certain geographies and is profitable as well, so you have parts of amazon that are profitable, so that gives people the ability to hang in there and gives them the credibility to keep investing because they have proven that they can make things profitable over time. Ok, we will leave it there. Bloomberg news Adam Satariano and channeladvisors scot win go, thank you very much. And the focus on socially relevant and viral content, we take you inside the growing Media Companies next. I am brad stone in for emily chang. This is bloomberg west. Social media is everywhere, but getting people to engage and share what is important to them can be a fine art. Upworthy is a new york city media startup that may have found the right mix between clever headlines and socially engaging topics. Bloombergs alex branca takes us inside upworthy and new hack city. Perfection see what happens next headlines with phrases. Demark upworthy was started in new york, a nexus for news and Media Companies. The founders build it with a mission, get people to share socially charged stories that they otherwise would not. New york is a place of very opinionated people, and when we started upworthy, we wanted to do something that was not milling out on one hand, and on the other hand we wanted to be a site that wore our hard on our sleeve, and this is a great place to do that, and people are that. At th lawspics ranging from gun to Climate Change by adding quirky headlines and compelling pictures. If you can make it a festival and compelling rather than make people suffer about learning something that is aborted, maybe you can reach that largest audience. Those clicking the headlines are part of a secret sauce that drive 40 million to 50 million visitors to the site, which means with nearly two thirds coming from smart phones, making upworthy the 11th most popular site on mobile. The other is the storys collection of story selection of the content creators. I hope that some of the sticks. We spent all of that time watching things and saying nope, with not good enough, no, was not good enough 1000 times today. It is on us, all of us, to decide. Upworthy list many of its competitors, makes money by creating sponsored content, used by businesses who want to use an editorial platform to reach their audiences. Companies are finding they need to connect with a sense of purpose and that consumers, especially younger consumers, want to know what the brands that they are buying from actually stand for, and so upworthy is a great way for brands to tell that story. Alex breakup, bloomberg, new york. More bloomberg west is coming up next to dot welcome back to bloomberg west. I am brad stone. Bottom line is coming up at the top of the hour. Anchor Mark Crumpton joins us live from new york with a preview. Looking thanks, we are at issues facing Community Banks in america. The Bankers Association held its convention in dallas this week, one of the participants was Frank Sorrentino of connectone bank. We will discuss regulatory oversight, interest rates, and what keeps bankers awake at night. I will see you at the top of the hour. Brad, back to you in San Francisco. Thank you, mark. Google is announcing a new email product called inbox. I have only learned about inbox recently via a google blog post, so everything i know sound a little bit about a product commercial, but in is a new email system, not gmail, something separate, and it is supposed to work with a little little bit of Artificial Intelligence to act like a kind of personal assistant to help you deal with your email, which has probably become a problem like my email has dot there is too much of it, i do not know where the Important Information is, and it is not connected to any live updates from the internet that would make things work better, so for instance if i get an email from United Airlines with confirmation numbers and flight itineraries that i have to fly to San Francisco, that information will be highlighted, and it will link to the internet to tell me whether or not my flight is on time, whether or not my fight has been canceled, so that kind of stuff plus it will hook up with all of the other things in your phone like contacts, so if i need to call united, i will have a phone number there and reminders so that if the flight is delayed come it will tell me another day when i have to go to the airport. It looks pretty interesting. Any idea whether this is particularly tuned for a mobile experience . According to android police, which has been writing about this project big top, that is what this was called internally, apparently, it is going to be tuned especially for your mobile experience, for your phone, and it is also going to be an invite only thing. Remember when gmail was first put out there . Only the cool kids had it and you needed to get an invite from them. That is going to be the beta idea of this dot only a few people are going to get it and then send it to their friends and send it to their friends i am sure you will get a very quickly, brad, and i hope you will send it to me as quickly as you do get is like and tried out, to. O. Ok, matt, i will do that. Thank you. Walter isaacson has written a new book on innovators in the digital universe. Earlier, he said on surveillance and talked about leaders. When i was working with steve jobs about his biography, you think he is a loan great innovator, grandma romantic hero. Ae guy who comes out with billion ideas come in and you realize the best thing he did, not the mac or the iphone or ipad, was apple. He created a team. He partnered with wozniacki and then entered a partner with tim cook. He knew how to get the most loyal team around him. He was a tough guy to work with, but everyone who worked with him, like ben bradley, said they would walk the walls for him. He got the most talented people and they became deeply committed to his vision. To me, being able to do that because creativity is a team sport in the digital age you cannot really do it alone. Given all that, we have tim cook at the helm and apple is a very Different Company now than it was when steve jobs was running it, just for instance, tim cooks apple toy 14 the biggest purchase today was beats for 3 billion. Steve jobs did not make those kind of purchases. His biggest was 278 million. Is tim cook doing the right thing for apple, and what steve jobs have steered the company in this direction . First of all, i never can channel what with steve say. The most important he did say to me, to tim cook and many other people is that tim cook and the people at apple should not wake up every morning and say what would steve do, they would say what should apple do. Apple has done quite well recently. I cannot wait for the watch. I think that the iphone but they are iterations that watch is new and is part of that hold their it above the digital revolution, take our technology, make it more and a mitts personal, let it touch our wrist as opposed to machines that will think for us off in a different room. That intimate connection, steve had a thing for. So did most of the most great innovators, s the great innovators, sergey brin and others. Walter isaacson, the sense of really treasuring the youth and putting all the emphasis on getting things done in the 20s and 30s, where are the 50yearold and 60yearolds in Silicon Valley . That is a good question. Being an innovator, you have to be rebellious, you have to question authority. I think you do that a little bit better when youre in your 20s and 30s. Do you have to focus exclusively on what you were doing at work . Steve jobs was a great father late in life, not the best father early in life when he was really focused on his career. Is that what it takes . I do think for better or worse you have got to have a lot is billon, whether it gates or larry page or surrogate brent, you have an absolute passion for what you do. Yes, it is going to be disruptive, and people like Sheryl Sandberg are very good about figuring out how do we do balance. My problem with Sheryl Sandberg is in order to lean and, you have to be Sheryl Sandberg. Not everybody is. You have to have limitless energy. Not everybody has to be the worlds greatest innovator. There are many ways to make contributions in life, but i do not think we should kid ourselves. You are not going to create a start up and make it into a giant company, you know, lean in. But the entire starter coulter does not look at that dot everybody is building to be a superstar. Right thumb and they are doing hackathons. Travis,is important, thanks for bringing this up. Here is this basketballness, Steven Ballmer showing some emotion. Lets listen and watch mr. Balmer. Im unique in this world pretty much. [laughter] and the guys have done great work i mean, bill gates, obviously, steve jobs, obvious it, theyre guys even say they are amazing, but i was not just a passive participant on the ride, so i look at that body of work and say i feel really good. Balmer with charlie rose, must watch and must listen. Walter isaacson come i think that was the exact spirit of your book, the innovators are. He was able to form teams and run the company. Yes, they always find the great people to surround themselves with. With bill gates, it is paul allen. That was Walter Isaacson earlier on bloomberg surveillance, in his new book the innovators is out now. The bwest byte is one where we focus on one number that tells a whole lot today we have a e with bloomberg ei. S Technology Editor p wink providing over6, the newsroom at the washington post, and along with publisher Katharine Graham they made the post a journalistic force to be reckoned with. And bradley passed away yesterday. Why was he so special . Fearless, the pentagon papers, watergate of course, and he weathered ups and downs when it came to journalistic issues the as accuracy with organic cooks study that cook story that turned out to be fake at whack and he had to give the Pulitzer Prize back exactly. I read that he would have had 19. Unbelievable. You are an editor now. What kind of inspiration do you draw from the ben bradlee story . Fearlessness. To publish when we have people coming down on us saying dont publish and people pushing back our resourcesow to beat you and correct, we go with a, we dont stop. Thank you, puiwing. Remember, you can get the latest headlines on your phone, tablet, bloomberg. Com, and bloomberg radio. We will see you tomorrow. From bloomberg World Headquarters in new york, i am Mark Crumpton. The is bottom line, intersection of business and economics with the mainstream perspective. To our viewers in the United States and those of you joining us from around the world, welcome. We have will coverage of the stocks and is making headlines on this one and. Willem marx is back from brazil with a preview of sundays president ial election. The dramatic