The predominant flu strain. People over 50, the vaccine was 14 effective. The flu has mutated since the vaccine was created and manufactured. Radioshack preparing to file for bankruptcy. Radioshack is also talking about sprint taking the wireless sprint, the wireless carrier having at least some of radioshacks stores. Chinese uber competitor raised 600 million in funding, with existing shareholders ali baba and Tiger Global Management taking part. It is now valued at 2 billion. In china, upstart phone maker xiaomi is known for one thing, cheap phones. Now the upstart is jumping into the higher end market, taking direct aim at samsung and apple. Xiaomi Just Announced their biggest and most expensive smartphones for 371. That makes it a loss less expensive than the iphone 6 . Here is xiaomis ceo in beijing. We are lighter, thinner narrower, and shorter than the iphone 6 but we have a bigger screen, all without impacting function, performance, or design. But is this a risky move for the Company Whose success has largely been built on offering lowerpriced phones. Lets take a look at how xiaomi begin the worlds thirdlargest smartphone became the Worlds Largest thirdlargest smartphone. Xiaomi aint so little anymore. It now trails samsung and apple in Global Smartphone revenues. Last year alone, sales more than doubled. Xiaomi is flushed with cash following a private funding round valley way the company at 45 billion. That is worth more than blackberry, garman, and intuit garmin, and intuit combined. Xiaomi officially launched its first androidbased system. In 2011 xiaomi took on the iphone with its first smart phone. Xiaomi surrounds its product announcements with great fanfare. But how did they rise so far, so fast . The distribution model is barebones. Phones are sold only online and not a dime is spent on advertising. That helps xiaomi undercut competitors on price. The Companies Facing criticism over the similarity to the iphone. The company is targeting a handful of global markets, but its success in china may not be easy to duplicate on the world stage. Venture investors are betting that little rice has a big future. What does todays big announcement mean for china . Hans tung joins me from beijing. He is a xiaomi investor. What did you think . I was very impressed. The phone looks nothing like the iphone 6 . It is very slick. The photo taking quality of the phone is amazing. It is the best phone that xiaomi has ever made. When they announced it, xiaomi makes a habit of glomming onto other brands. [indiscernible] i think there were other announcements giving credit to the component makers, the qualcomm, snapdragon ship, for example. Why does xiaomi do that and other phone makers dont . Beijing wants to project its companies as being very prosperous to its consumers. People tend to associate lower quality with cheap price. The price point is interesting as well. Still coming with a much lower price point. That matters a lot in china. Will that matter outside of china where the phones are subsidized and most people in the bigger markets like the United States and parts of europe, where there are no subsidies, people are not paying the hope rise of the phone . You look at the emerging markets, what is china or taiwan hong kong, southeast asia, india, brazil there are a lot of users out there who would love to have the xiaomi phone. Xiaomi is demonstrating itself with popularity in china. [indiscernible] xiaomi will be a great item. The next biggest emerging market is india, but Company Sales were halted because erickson sued, saying they violated some patents. What was the focus at todays event on the important issue of patents . Based on past experience, samsung paid off erickson. If xiaomi pays, it would not be an issue. It is in discussion right now. I guess so. You write a 500 check, you can make a lot of disputes. 500 million check, you can make a lot of disputes go away. This recent round im sure an earlier investor is very happy. I wonder about profitability how important it is for this company and the razor thin margins. What do you think xiaomis target operating profit margin is . What do they want to do . [indiscernible] on top of that, all the Software Related services are to the bottom line. For 2014, beijing has stated the company will [indiscernible] in sales, and a net profit is roughly around 1 billion. For the first half of 2014 roughly around 500 million. [indiscernible] as a Company Gains more scale, there will be more profits. With a 10 operating margin as youre describing, you think that margin is going to get higher over time as more services are ladled on, or do you think they will stay at that 10 operating margin . [indiscernible] he also Shows Companies that xiaomi invested. Samsung takes a more conglomerate approach. Xiaomi is taking an ecosystem approach to make investments with other players to make great accessory products. Hans tung, thank you very much for joining us from beijing. Facebook is launching a new product for the workplace. Put down your facebook. Stop posting. You are supposed to be working. Facebook knows at and they are going to try to make employees more productive. Really . We will talk to brett taylor next. Im cory johnson. This is bloomberg west. I do not visit facebook while im at work. Im sure you have never searched facebook at work. Now facebook is in unveiling a social network entirely for Office Communications called facebook at work. But will it work . Or will it go the way of other failed facebook launches . Brett taylor has done a lot of work on this notion of what people do at work and how they share things and information. I have been using quip for the last couple of months and it is a fascinating solution towards this issue of what works at work and how can you be social at work. This facebook get what people do at work . Does facebook get what people do at work . I think they do. Facebook at work isnt necessarily going to take on traditional products like microsoft office. For me it represents this trend where Consumer Product experiences are creeping their way into the enterprise. A lot of people joke about using facebook at work. Almost everyone uses text messaging at work. What are people doing . If you want to talk to someone urgently or they are on your vip list, most people because email is so high volume at this point theyre using short form messaging, maybe facebook messenger, linkedin to communicate with colleagues. We have seen it with products like yammer making their way into the enterprise from the outside. It is not that surprising that Companies Like facebook are trying to more overtly bring experiences into their enterprise. I guess i wonder what facebook has advantage is here if it is knowing what people do, try to take these chatting experiences and find ways to make them work at work i wonder if there are things facebook knows about their users and the way people interact, and if there is some advantage to having the social grasp that can let them exploit that in the workplace. There are some advantages. I have been humbled by moving into enterprise by how little i knew about it. I worked at google and facebook prior to this. Enterprise software is different, dealing with i. T. Departments, security requirements. That is the biggest challenge facebook has. Whatever advantage they have they dont necessarily have credibility for the audience with facebook at work yet. A lot of work places Block Facebook and things like that. I do think the experience is familiar. To the degree that you think this type of experience is valuable in the workplace, having it look and feel like the experience that almost everyone has used at this point is an advantage. The sales and marketing and relationships with i. T. Departments is what i would look at as the biggest hurdles to overcome for a company like facebook. Facebook flops, there have been many. The list of facebook flops is not a short one. You have facebook credits, facebook phone, facebook gifts facebook emails, and more. Is it a culture of experimentation . I think it is just a culture of experimentation. I worked at google when you probably did all those things. No, you certainly dont put them that high in your resume, but i was at google and wall street criticized google for doing too many things. That has come around to the huge wins that have come around to that and forgotten all the misses. Facebook has had good streaks and bad streaks. At the end of the day, a company like facebook with such a huge project generating such revenue, its intelligent to invest in a lot of research and development. Do you look at what you are trying to do with quip is coming into the same area . Or, this is a competitor i dont want to have . Or, do you know why quip is going to kill these guys . I view them as complementary. Facebook uses quip. Most of the company uses quip. We are almost ubiquitous there. I think that the kind of serendipitous sharing that facebook at work represents is different than creating and collaborating on documents. One is a creative tool. Another is more about broadcasting to the people you work with. For a lot of vendors like us facebook at work is completely complementary. Its sort of completely separate from what were working on. On the other hand, i do think when any big Company Moves into a new market, you pause and think what is going to be next for them. Facebook is such a happy quip customer, we have not worried about it much. My first day working for bloomberg, i flew to new york and sat next to betty liu and jeff weiner. He said there will always be a linkedin separate from a facebook because therell always be a picture of you doing a keg stand that you dont want to share with work. Can facebook really be something at work . It is a completely separate instance of facebook. Your work persona is separate from your personal persona. That is smart. Facebook for mom. Thank you very much. Bloomberg west will be back. Intels were cast for the Current Quarter is sparking concern that the onetime benefit of increasing pc sales in 2014 wont happen again. I sat down with intels chief Financial Officer to find out the companys strategy for handling the pc slump. The Fourth Quarter was a strong finish to a great year. Our growth was broadbased over the course of 2014. The pc market grew. Our revenue in that segment was up. Then we saw a robust growth in the daters tend or stata center stata center. Do have any suggestions what we might be seeing, and if this was it usually look like the Third Quarter was a big boost from windows xp, but then he continued into the Fourth Quarter. The guidance isnt clear where that is going to come from. What do you expect going into 2015 . From the pc market we are expecting units to be generally flat yearoveryear. We are not expecting robust growth. If the pc business for us is flat, we can experience nice growth as a company. We are looking at flat pc overall Revenue Growth for the company in the midsingle digits. Within the pc market we characterize 2015 as being less growth coming from the enterprise and less weakness coming from the consumer segment of the market. Thats interesting. That seems like it will be tough. Why would a consumer even by a pc at this point with tablets being more functional . We have worked tirelessly with our partners to bring exciting, Innovative Devices to the pc market. Price points have come down to a point that for 200 5,000 2 50 300 you can get a touchenabled pc. People are replacing pcs that are three and four years old. That was a shift we saw over the course of 2014. The Data Center Business for the quarter was up 11 for the year. If you have 18 or the drivers that led that business in 2014 going to continue in 2015 . We believe so. There is a couple of real fundamental secular drivers that are driving this business for us. First and foremost, we are seeing a buildout of the cloud infrastructure. We are seeing robust growth in that segment. Those customers are in excess of 20 . We are seeing Big Investments in companies building at the ability to do Data Analytics as a result of all of this data being collected. The combination of that has been the driver of this business. It was up 18 in 2014. We expect growth rates in 2015 in excess of 15 . That was stacy smith, intels chief Financial Officer. Blackberry shares fell just as quickly as they spiked. Where does that leave blackberry now . Im scarlet fu. Lets look at how the major stock indexes closed out the day. Disappointing earnings from the banks. Apple fell 2 . It was downgraded to neutral from buy. Risk reward is well balanced at its current price level. Best buy was the worst performer in the s p 500 today suffering its worst day of losses in a year. The retailer warned the possibility would be pressured in the years ahead because of weak demand and deflationary pricing. Bloomberg west continues next. Welcome back to bloomberg west. It was a headline that said investors scrabbling yesterday. Reuters reported that samsung made a big offer for blackberry. They cited an unnamed person and documents. Blackberry shares went bonkers jumping 20 , adding 1 billion in market cap. What is the real value of blackberry . It raises the question. Alex branca and the chief officer at idc join us. This issue of buying blackberry has been out there for a long time. People use to look at the cash flow. Now they look at the business. What do they see . When you look at the business you see a couple different parts moving in different directions. John chen did some things that others were not willing to do, which was outsourced manufacturing. That has helped the gross margin story on the hardware business but they are still not growing that business commensurate with the rest of the industry. When you start getting into the Software Side of the business, the Software Side of the business is small. It has been growing. You get into the i. T. Part of the business, which is a question of what is it worth going forward. In the smartphone business, that could be worth a lot going forward. Some of the patents they have are around things we are concerned about right now, which is managing wireless spectrum, security, and the physical fundamentals around how you actually what you can do with a smartphone, things like keyboards and other ergonomic issues. When you look at the different parts of the business, samsung is an interesting company. They are into security like no other android supplier is, and they want to differentiate on top of the android platform. When you look at this company, is there a sense they are doing everything they can to position is for sale . This for sale . Right now it seems like john has his head down, trying to position for growth. They are still kind of missing on sales. You look at where hes building that hardware business is 45 of the business. Service is 45 . The Software Side of the business is only about 8 . He is looking to grow it. Hes doing that by going after a Partnership Like we saw with samsung a couple months ago, allowing samsung to use blackberrys system, which lets Companies Manage different devices, what data goes to what person, what kind of devices are able to access the data. Hes really pushing the nontypical blackberry products not necessarily the hardware. Hes pushing more into the software and services. Interesting stuff and for fixing the inventory issues. On the conference call, there seemed to be consistent questions from investors about what are you doing about inventory. All the cheap phones, what are you going to do. The only phones he has really introduced are the passport and classic, which are really geared towards the business customers high security, high usability, you have that keyboard in there. Hes trying to clear out the old stuff, bring in the new. You did see the interesting thing at sony when they got hacked. You saw their employees digging up their old blackberries. They were the most secure and they trusted them to keep their information safe. If there is an inventory issue there he is tried to move past it. The cat was already out of the bag in that case. Crawford, i wonder if there is any value in this. I cant help but think that while we are talking about blackberry getting out of the phone business, we are looking at xiaomi making a big splash in china getting into the phone business. If there is some kind of value in hardware out of blackberry i believe the value is not on the hardware side. I think there are some levers that john chen is throwing around outsourcing manufacturing, blowing out old inventory, and around making themselves more attractive to the tried and true black or a customer. Blackberry customer. What people do not realize about blackberry is the endtoend network and the way they handle messaging so efficiently on the spectrum. That security angle is something that can be differentiated on, the idea of blackberry as a service. If john chen could, you would like to get further away from hardware. He knows that is not a place they can differentiate going forward. You cant move that quickly when you are so dependent on that revenue stream. Emily chang asked john chen about selling to china. His response was interesting. Hes essentially taking a potential buyer off the table. Listen to what he had to say. Would you sell to a Chinese Company . Probably unable to do that. One of our biggest base is in the government. So are the five icountries. There will be a lot of regulatory issues and concerns. I appreciate that. That seems like a really boneheaded move to tell somebody our bidding price will be lower because a lot of the buyers cant buy it. Ibm just offloaded a Business Unit to lenovo, which is used in a lot of back end for corporate and government customers. They had to pull and refile to get security clearance to move forward with that deal. In terms of the kind of customer he wants, it could potentially scare people off if john chen were to hand this company over to the Chinese Company. Whether or not there is snooping and those kinds of malicious factors going on, some companies and some Government Entities just dont want foreign governments to have their hands and things that need to be very secure and very private and not get out of the eyesight of the people who are supposed to be seeing this information. Definitely do not want china to get their hands on all those selfies. Thank you very much. Go big or go home a lot of startups are now doing both staying big, getting big, and staying private. Now dozens of companies with 1 billion price tag we will talk about the growing trend of staying private next. Welcome back to bloomberg west. Google is moving its Google Glass Program out, but they are not kicking the glass holes to the curb just yet. Glass will be led by ivy ross, and google says it will wind down its google glass explorer program. What is most surprising is the size of these companies when they go out and the size of the companies that are not going public. Tech companies are staying private longer. The Second Market has aided this trend. Bill siegel joins me from new york. The Second Market in its first iteration was a different company. Lets clear up what you guys do. You used to go in and create a marketplace. Accredited investors could buy what does your company buy now . We have come a long way since the days of 2011 and 2012 and facebook and twitter. They were trading in the private markets. The feedback we got from those private companies was they did not like the activity, it was distracting. We stepped back and took a tender and put a new spin on it. Our service now is all about facilitating how the Company Private company tenders and buybacks, where the Company Controls 100 of the activity. They control the price, they control the disclosure, they control who can sell and how much. Theyre controlling who the buyer is. About half of these transactions, the buyer is themselves. Their purchasing stock directly from their constituents. The other half is a single or maybe two institutional investors, some current investor or a potentially new investor like a mutual fund coming out of the table. One of the Amazing Things is a number of companies, over 1 billion valuation that are staying private. Its growing dramatically. Absolutely. There has been a real shift here. It started with a jobs act in 2012. A portion of the jobs act, title five, changed the act to allow private companies to increase the amount of shareholders they can have from 500 to 2000. It exempted employee shareholders. This is very important. If this law had been in place, a lot of the venture backed private companies that went public with not have had to go public when they did. Would not have had to go public when they did. In 2014, we have over 40 venture backed private companies valued at 1 billion. It makes me think about lots of implications, not least of which is a guilty pleasure about the journalists who dont know how to write stories about companies unless they do an ipo. It makes you wonder if these companies are really focused on making money and building out great goods and services and not focused on the financial transactions, they can get in front of those important goals. Exactly. It is one of the reasons we developed our solutions, so these guys can focus on their products and their businesses and not have to worry about a secondary market that is distracting their own employees, where the price is changing every single day. Typically our best clients will do a liquidity event once or twice a year, and they will structure that liquidity event so that current employees are allowed to liquidate their options. They are allowed to get liquidity on their stock. It allows them to look at their options as a portion of the regular compensation. Lets talk about those sellers, who they are, and the sellers that come to Second Market. Who are the kinds of people selling . I always thought business would be a lot bigger. The companies coming to us have these transactions already baked. The type of companies, typically seven or eight years old, has raised over 150 million in capital and has valuation of around 1 billion and typically 300 employees. These are large, established companies. They are coming to us and saying we want to offer this as an incentive, as part of our equity, and we want to do it on a regular basis so our employees know they can count on us. Im also surprised you got so Many Companies doing share reports. Why do companies when they are private Companies Use their actual treasury dollars that are so precious for a start up, why are they using that capital to buy back shares . Its very common for these companies to do a primary raise, where they will issue a new security to an investor and immediately following that, do a secondary. They will use a portion of that capital they raised to conduct a secondary thereafter. When you look at these transactions, the average transaction we did was 20 million. We had some that were several hundred million dollars. What is more important is the cadence. The companies show the employees we are going to buy back stock every year. It doesnt have to be a monumental red letter deal, but we are going to buy back. Interesting business. Bill siegel, thank you very much. Bottom line with Mark Crumpton coming up at the bottom of the hour. Im cory johnson. This is bloomberg west hookah west. David karp has no regrets selling this platform to yahoo. He told my partner, emily chang, the Marissa Mayer has helped tumblr amass more than two million blogs. What are your whos future plans for tumblr yahoos future plans for tumblr . Marissa mayers Acquisition Strategy has been criticized. Critics have said tumblr wasnt making money. How do you respond to those criticisms . We are growing fast. If she wanted to go out and buy a Profitable Company at the time of acquisition, there were and still are plenty to choose from. She saw a real path forward in something that she thought could be not just a really big business, but a business with a lot of alignment with yahoo . We are a year in. We are starting to prove that. We are about to have a lot to brag about very soon. What is tumblrs ad strategy for growing the business now that you are within this Bigger Company . We have this really novel ad platform. Its about wide open creative expression, trying to get the most creative parts of the ad industry, the people who got into the industry to make ads. Ads that win awards. They tell the same stories that can inspire us to become customers of these brands, get us to aspire to drive the beemer or drink the coke. Yahoo is building more and more of their contents on top of tumblr today. The digital magazines you have probably heard of, yahoo tech and yahoo travel, those are built on top of tumblr. What was launched a few months ago was the ability to take that advertising for the Tumblr Network, where you come to get the reach demographics and engagement of the Tumblr Network you take that and offer it to the full reach of the network of yahoo. Catch the full episode tonight. 8 30 eastern and pacific. Bwest byte, we focus on one number that tells us a lot. Shelby holliday joins us from st. Louis. It is toasty warm. Maybe not so much. What is the byte . Its really warm out here. Todays byte is 1121, the percentage growth of tech startup funding in st. Louis making st. Louis the fastestgrowing tech city in the United States. That is according to cb insights. Im not saying st. Louis is the next Silicon Valley. All you people in Northern California can cool your jets. There are a few reasons why st. Louis is a great promising place. Number one, there is plenty of talent. Its relatively inexpensive. The toasted ravioli is a big hit out here. There are a lot of young people out here and schools like wash u. , st. Louis university are very invested in entrepreneurship. The government is very committed to startup funding as well. There are a lot of incubators, a lot of accelerators. People say this could be the next big midwestern tech hub. It is on the list of tech hubs to watch. So is austin, new york, scottsdale. Everyone wants a little Silicon Valley in them. Why not . I was reading a tech blog. It said that v. C. Wealth here is growing. A lot of people in the city have more money and they are looking at what to do with it. Tech is hot. The percentage growth, more than 1000 that is a big number right now. Maybe this will be on the map in a few years. Just shows you how technology is being embedded in every kind of growing business of every stripe and everywhere. Thank you very much. Get the latest headlines all the time on your phone, tablet bloomberg. Com, and bloomberg radio