Hospitalized. You are watching bloomberg. Bloomberg technology is next. Emily this is Bloomberg Technology. Beflix crown jewels estimates again. Benioffesforce ceo marc joins us taking down rising competition in the cloud. And why a judge decided not to arrest samsungs heir apparent. First to our lead. Netflix shares spiking in afterhours trading. They added more than 7 million subscribers to finish the year with 94 million members. The company credits the popularity of original content including the crown and Gilmore Girls in black mirror. A top of all of this is one of investors chief concerns. Joining us now, cory johnson. Walk us through. Pretty record. Cory those are some great numbers here. There were some terrible numbers here. Cage, it was interesting to see. That is part of their longterm plan. A change. Spending right now is going towards original content including luke cage where they are thinking its not just luke cage, but daredevil, iron fist, they will have their own avengers. Part of the marvel universe. They are thinking of how they are going to build a mountain of original content. They have spent a fortune on marketing. This is the biggest spin they have ever had. The numbers they put up in terms of marketing spent were not only greater than ever before. It even shows an increase. It is 11. 5 of revenue. They just raise a bunch of money in the debt market to buy more content. They are plowing get into marketing. He actually saw not only Great Success in buying subscribers internationally, also buying subscribers domestically. There was a takeup in the domestic describe hers. Domestic subscribers. X agree at 4 which i found positive for the company but that is merely a function of how much you spend. Caroline it is interesting. Sales are still up. You are seeing earnings, despite marketing, still beating. It looks as though the market is liking it from a sharing point of view. 6 billion being promised to bring is this going to alarm bells . It is a way to see where the content cost is happening. , Gross Margins dont show you what they are. It shows what ever what they want to. There was one number. You can see it trading up. Everyone is ignoring me. They spent about 100 for every new subscriber they got. That is not feasible. Caroline if you look at the u. S. , 50 of broadband homes. Far less if youre looking at the united kingdom. Cory if they can grow that much. Increase was interesting to them. A dollar for . 50 for only so long. When is it going to show up for this company . The cash flow numbers were stunningly bad. We see those numbers and they are positive numbers. Raise to spend on that is 7 13 weeks, million a day. How do you do that . All of this content in all of this marketing. They cant do this forever. There is cash flowing out of the door and incredible sizes. They are hoping they can outlast their competitors. I dont know what the plan is. If costs go up, and running out of places to grow and burning through this cash flow it could be a real problem. Eventually the piper is going to have to be paid. Caroline we will see how they trade up tomorrow. Cory johnson, editor at large. It has been 10 years since the company made its most are teaching shipped away from dvds strategic ship away from dvds into streaming. In 2007 netflix announced a bold departure from its dvd rental business. Watch instantly allowed users for the first time to stream a library of a thousand movies and tv shows over the internet. The ceo explained the move saying mainstream consumer adoption of online movie watching will take a number of years. The time is right for netflix to take the first step. Analysts were skeptical. Consumers saw Something Different and signed on in droves. By the end of 2010 subscribers had grown to 20 million. At the same time, blockbuster filed for bankruptcy. Its sights on a new venture in 2013. Netflix spent an estimated 100 Million Dollars on two seasons of its first original series, house of cards. Original kids dont come cheap. Producedprevents 600 hours of original content at a cost of have billion dollars. They plan to shell up another 6 billion this year. It is on the hook for 14 billion in future payments. Cash flow concerns aside, Reed Hastings bet on streaming video is paying off. Millionnow has over 90 global subscribers and makes 94 of its revenue on streaming video. Caroline a story we were watching, Alibabas Jack Ma commented on a trade war between the u. S. And china. He said a trade war would spell disaster for the world and that he would do anything in his power to prevent it from happening. Alibaba has a large part of its business tight the u. S. Giving a strong incentive. From devils,m switzerland discusses competition and why he is not worried. Caroline a lawsuit against Oracle America alleging pay discrimination. They pay caucasian male workers more than their counterparts. A spokeswoman for oracle said the complaint is politically motivated based on false allegations. Oracle values diversity and inclusion. Now to an oracle competitor. It is been a challenging few months. They have slowed growth but the company has seen a strong start to 2017. The forecasting sales will jump 21 . Bloomberg, marc benioff discussed the growth of the company and its competition. We had to do what we were doing from the beginning. Help them connect with their customers in a new way. That is why so Many Companies here, using salesforce. There is this sea change going on. Topanies are working hard develop that customer intimacy. You have a lot of competition. I think it is the size of delaware. Other you compete with and to what you invented. Great customer of ours. Amazon uses salesforce to people. Its we work with a lot of amazing retailers. I have a feeling you know who he is. Those guys, those next generate taylors who are getting slaughtered in the brickandmortar world, they need to connect with a new way through retail. Are exciting times. I guess everybody is making money, but you have your critics. How are you going to position salesforce with new technology . The fewone of technology guys and happy valley here. How are you going to reposition for the next five years . I cant imagine where the iphone 7 is in five years. It will be the largest segment of Enterprise Software by 2020. We are number one in that segment. We are continuing to innovate and look for ways we can become more successful. We are going to go through a phone. How do salesforce, your competitors handle the cloud through whichever phone you have in your hand, business or personal. That is fascinating. You just made a huge shift in your mind from where we started with personal computers. Everybody can have a computer far more powerful than the most powerful macintosh. That is something now in your pocket. Now computers are going to disappear. You see things like alexa, google home and others. We are just talking to our computers, talking to our watch. That is an incredible nextgeneration of computing. A theme, thee with idea of davos and the uncertainty of the uncertainty. Ive never seen so much lack of confidence here in Public Policy philanthropy. What would be your counsel to mr. Trump as he becomes . Resident what is his first to do list . When we were here in 2009 and 2010 things were a lot worse. People were pretty dour. They were really worried. I think they have political anxiety but i dont think they have economic anxiety. That was mark benioff at the World Economic forum. Netflix shares remaining higher in afterhours trading. Ambitions,s global we will bring you more on netflix earnings throughout the hour. International expansion has been remarkably steady. If you dont look at it by the ,uarter, what we have seen europe as a whole has been picking up momentum for us. We are just Getting Started in asia. In 2016 we saw a number of businesses get disrupted by tech giants, get hit by regulators, and responsibility of Silicon Valley commented question. 2017 debate with the consequences of their leadess . I asked who will the way, regulators or the tech titans like facebook and google . The smart businesses, including the ones you mentioned have gotten to where they are because they are forward thinking. They dont want to wait for a regulator to tell them what to do. They want to be ahead of that. Not just because they are good people but because that is the smart thing for their business, to ensure the sustainability and longevity of their businesses. Sometimes a company that is expanding is disrupting and has negative repercussions. Some taxi drivers will be displaced and not have jobs. There is going to be some automation that means those of less skilled will find themselves under employed for what they would wish. Does the Companys Health tackle that . You cant be disruptive and not break some eggs. All of these companies are thaning much more value they are destroying. They are creating more opportunities than they are eliminating. Theres always going to be some portion of the workforce trained in a specific skill who may not be able to transition to the new skill. The may not be able to make that transition. The vast majority will. Not only that, these technologies will attract more people to that job and grow the workforce as well. Would it be ubers responsibility to reskill people . I dont think question of responsibility. Its a question of strategy. If your business requires somebody to reskill a group of people and incur some expense in doing that, your business is not going to grow. We have to build a business that somebody can teach themselves. Money in a flexible way. Without any kind of specific training or retooling. That is what they are doing. Companiest see reevaluate how they talk to their user base. 2017, is that the year for that . We are very excited about what we have in our work folio. We have been doing this for 20 years. Many of these businesses have excitinging a very businesses in market positions that are reaching a point where some of them could tap Public Markets and that would get them to the next stage of their growth and development. Is the ipo the way to go . How do you feel the market is shaping up . The entre knowers we back always think about entrepreneurs we know always think about the ipo because it is a step in the path to being the company they want to be, the resources to be able to take on the whole world with their platform. It is not an end within itself. It is a step along the way. It can come along after an ipo. Of a finald transaction. That is something where a team baby. Actually sell their the entrepreneurs we work with want to push that off as long as they can. They want to keep building their company. Opportunities,nt holdin building up funds. Weve had a very active quarter. The last quarter of last year. We continue to see exciting opportunities in europe and in the u. S. What sort of verticals are you most excited about . We continue to invest in consumer propositions. That is always something we have been active then. We continue to see exciting things there. On the deeper technology, enterprise infrastructure side. We are seeing some interesting opportunities. That chairwoman janet yellen spoke wednesday from the Commonwealth Club here in San Francisco on the goals of monetary policy. And block optimism change. En bloc chains its promising the technologies we use ourselves in many Financial Institutions looking at it. It could make a big difference to the way in which transactions and sold inin the global economy. A south korean court has a warrant for the heir apparent. This is bloomberg. Ive spent my life planting a sizesix, nonslip shoe into that door. On this side, i want my customers to relax and enjoy themselves. But these days its phones before forks. They want wifi out here. But behind that door, i need a private connection for my business. Wifi pro from comcast business. Public wifi for your customers. Private wifi for your business. Strong and secure. Good for a door. And a network. Comcast business. Built for security. Built for business. Anything with a screen is a tv. Stream 130 live channels, plus 40,000 on demand tv shows and movies, all on the go. You can even download from your x1 dvr and watch it offline. Only xfinity gives you more to stream to any screen. Download the xfinity tv app today. You are watching Bloomberg Technology. Hasbritish dream court rule laid down a ruling in the brexit case next tuesday, whether parliament should have the final say before the u. K. Formally begins the process to leave the eu. That process is expected to start in march. The colombian president and noble laureate says the National Liberation army rebels have agreed to free a kidnapped politician. The move clears the way for formal peace talks in the countrys secondlargest rebel group next month. The u. S. Consulate is warning americans to follow directives of local authorities in cancun after another day of violence in the mexican caribbean resort area. Authorities say gunmen attacked the office of the state prosecutor, killing 4 people. I did earlier a day earlier, a shooting at a festival. Thousands of tourists are after thembia, president declared a threemonth state of emergency as he seeks to stay in power despite losing elections in december. The president elect vows to be sworn in tomorrow. Vice President Joe Biden and the greek Prime Minister tsipras discuss a reunified cyprus over the phone today. Brokered byalks are the u. N. Started today and will continue until january 20. The country has been split along ethnic lines in turkey since 1974. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Its just after 9 30 thursday morning and sydney. Lets get over to bloombergs paul allen with a look at the markets. Paul indexes off about 1 5 of 1 . Futures indicate a better picture in that japan and here in australia, we are expecting modest gains at the open. Here in australia, keeping and eye on woodside, the oil producer, the Resources Company both will be announcing production numbers today. The significance of this may be lost on u. S. Viewers. Back in australian hands. Elsewhere, keep an eye on cafe pacific, announcing plans Late Wednesday for the biggest biggest restructuring of the airline. The airline has lost about 30 since the new ceo in 2014. More from Bloomberg Technology next. Next. This is Bloomberg Technology tilde. m Caroline Hyde netflix shares higher in afterhours trading, almost 8 , posting its biggest quarter ever in terms of net additions to customers. 7 million. That beat analysts estimates. , 94 million. Se a big draw for those new users have been original content. Certainly been relatively addicted to the crown as of late. Fording a concern investors, about 6 billion is what they are looking to be spending next year. Out oneo check particular area of the bloomberg crate analysts recommend nations always check it out on your terminal, go to the stop you are looking at. This shows you how many analysts are saying, by this stock. 60 still say buy. 143 per share. That is trading around 150 times earnings, based on 2017 estimates. You see the price target, 12 target, is actually lower than the 130 we saw track from yesterdays trading. To see if thosee looking price targets could be matched to raise where the netflix stop currently trades. Now, lets get back to one of our other key top tech stories around the globe. A south korean court rejected a request to issue an arrest warrant to samsungs heir apparent. Is the investigation completely over . Our reporter a senior d irector at the Korean Institute of america joins me. Gentlemen, welcome to Bloomberg Technology. You first want to ask the key question. As the investigation continues, how much of this has had a damaging effect on samsung within south korea . We have to keep in mind that for south koreans, this would not be something out of line. Many south korean business leaders, including jay lees father, have been convicted of whitecollar crimes. The samsung chairman was convicted twice of whitecollar crimes. Because of his economic benefit for the nation, he was given two twoidential pardons by separate president s. Two separate president s. He continued his chairmanship throughout his life. His son is preparing to take that chairmanship most likely. He technically is second in command of the empire. Troy, elaborate, even if this isnt much of a surprise potentially to those in south korea, how much should International Investors and consumers brace and sells for change . Change . Lveelves for initially you wont see much change at samsung. If they were to face continued legal issues, i think you would see this plan continue. The larger question at least for investors will be, are the prosecutors able to actually tie samsung to the government and coercing it to vote for the merger through the National Pension fund. That will be the real key for investors Going Forward. Caroline how do you react to that, if that is the key question . How much more broadly does this affect conglomerates within south korea . Are we going to see a changing of the relationship between the government and these huge conglomerates . Its hard to tell at this point. It is very traditional and south korea for businesses to get donations, and sometimes even bribes, two government officials. This is something that goes back into the countrys authoritarianism in the past. Businesses get favors from the government and the government gives favors to these businesses. Thats how the south korean nation was built initially with the nexus of business and politics. With these allegations, we are seeing this question over whether samsung was coerced into crony,a donation to this or whether samsung willfully went into this trying to