Auto maker by globalizing models, cutting costs, boosting technology. It is unclear if he will play some role in the self driving car program. Yahoo will return cash to shareholders when it sells stake in alibaba. They will use at least half of any proceeds from the sale to fund the project. Yahoo reported Quarterly Earnings showing the Company Still struggling to deliver growth while contending with popular rivals. They will sell 148 million shares down from the originally planned 208 million. Now to the lead story of the day, apple and ibm burying their past rivalry. They will develop apps for the apple iphone and ipad tailored to work with ibm Data Analytics and cloud services. Ibm will sell apple products directly to business clients and apple in turn offers apps support. This will help them expand into the enterprise market. Helping them stay relevant in an increasingly mobile environment. Im a to bring in bloomberg west editoratlarge cory johnson and Senior Analyst from jmp securities. Obviously, these companies have been bitter rivals for a long time. Why not put the rivalry to rest, alex . Not bitter if you think about where ibm came from. What are you talking about . Once upon a time they were chipset collaborators. The battle lines are being drawn. Very powerful distinction between consumer and enterprise blurring in a b. Y. O. D. World. It is a very powerful combination. I get it. We know ibm server sales have been in trouble. They have been amazon rival in cloud. We have to see exactly where this Partnership Goes but on the surface, i like it. Who gets more out of this, ibm or apple . You say apple has already penetrated the enterprise market. To an extent, but you and i were talking earlier about the slowdown in tablet sales. Its a slowing of apple growth. Apple continues to dominate in all markets, but we see this in an ad hoc way. Most corporations by technology through their corporate i. T. Department often with the help of Companies Like hewlettpackard and, yes, like ibm, the most dominant company in all of the technology will services company. Services did 59 billion selling stuff and how to implement it. This announcement was all about apps, apps, apps. The news is you will have every Single Person in the ibm sales force will walk into the Customer Accounts with ipads and iphones available for corporate development, distribution, deployment as well as developing ibm maps on these devices that are favored by u. S. Consumers. We saw a lot of competition coming from android in the corporate market. Success of the Windows Phone taking the lace of blackberry, really bad news for blackberry and probably bad news for microsoft and android. That was going to be my next question. What does it mean for the others blackberry, google, microsoft . Hes right. This makes apple much more powerful in an enterprise sense and it goes beyond blackberry, in my view already a dead man walking. Amazon, google, competing for the soul of the enterprise. Im not sure that it is all onesided here. Ibm had been struggling. This is a very clear Strategic Alignment and they can use apple and could be a big deal. Alliances like this sound great but often they do not yield much of anything in terms of results. If you are an ibm salesperson and you walk into a Customer Account and you say, you dont like the blackberry, i have a Windows Phone for you . That is a hard sell. The ibm guys will benefit. Its a company that has tremendous struggles, shrinking revenues six quarters in a row. Six or eight quarters in a row . You also have a company that has managed to massage earnings per share but not really seeing improving operating results on a significant basis despite spending billions and acquisitions. Ibm needs help badly. Having better products to sell can only help. Alex, how much do you think this will add to apples bottom line and ipad sales . We go from being a midaged middigits grower as it saturates the consumer markets to potentially being a doubledigit grower again as it penetrates New Enterprise opportunities. Lets not forget these apps they are talking about, the New Enterprisespecific Business Model apps will coincide with a refresh on ios devices. We will be getting larger iphones. Empowering mobile users with customer and business specific applications loaded on them could have some very farreaching implications. A lot of things could move the needle for apple. It was interesting to see tim cook photograph with the ibm ceo but this is the second time weve seen it recently. Before it was jimmy iovine and dr. Dre with tim cook. Is this a new apple, a new more cooperative apple . There was a time when the macintosh computer did not have the best ships in the world and they would not or could not partner with intel. They did this combination deal with ibm and motorola developing a chip called the powerpc that ran the mac for im going to guess about 10 years or so. A long time ago. It was 10 or 15 years ago when they made the switch. These are people who were around when those partnerships were happening. Apple know whos the biggest seller. Now this two are together. Cory johnson and alex gauna from jmp securities. Alan mulally landed a spot at google after just retiring from ford earlier this month. We will tell you about googles newest board member next. Welcome back to bloomberg west. Im emily chang. Google just named former ford Ceo Alan Mulally to the board of directors. He will serve on the google audit committee. Mulally retired from ford earlier this month. Editoratlarge cory johnson is still with us. Joining us from new york is bloombergs matt miller. You have interviewed alan mulally many times over the years. Did he give you any hints about this . He did not. I spent the morning emailing back and forth with him seeing what hes up to, how hes doing thinking he would drop me a clue on the future, but he just said he was hanging out, finishing his Social Security benefits and practicing his tennis game, not really telling me anything about google. Thats about what i would expect from him. Hes not a fan of cronyism and he will not give anyone any favors. Just because we are great friends he does not give me the inside scoop. It does not surprise me hes gone to google to be a board member there. It seems ford, the way alan mulally sees it, and google, have more in common than one would think at first glance. Is this a google putting even more chips on self driving cars . I dont know. First of all, there is not a company in the world that would not want alan mulally on their board. He is a singularly impressive guy. Talk a little bit about his background. He spent decades at boeing. He did not get the job as boeing ceo and he left a good afford. Left to go to ford. Its a difficult situation he left to go to ford. You have the founders very involved in a company that needed significant change. He negotiated that in significantly reduced product line and did really and things that the company financially before the company was in trouble. They were able to survive and thrive while the others were begging for and desperately surviving on tarp money from the government. He also changed the ways that cars are developed. One of the few automakers where the interior electronics were developed on an entirely different plan than the rest of the car. Thats not the way detroit used to do things allowing for to be at the cutting edge of the driver experience in a way that no other u. S. Automaker has done, but matt could speak better to that and i. Hes really understanding how people use technology and thats a bigger deal than google self driving cars. The software inside the car, which they announced, will be a big deal for this company while they tie the android operating system and everything that you do including what you do in the car. What do you think google wants from alan mulally . Why not planes . He worked at boeing. Why not the Mobility Solution of the future and thats what he was talking about when i was interviewing him his last few months and weeks at ford, not just about one car that one person buys and drives around, not only alan but will ford was a huge proponent of the idea that we need to come up with a better idea henry ford was a huge proponent of the idea for a better way for people to be able to move from one place to another and do it in an affordable way. Its interesting to get back to the point. While alan recognize the importance of what you do, how you are connected in the car, the connected car is something that they had been working on for a while. Im not sure ford executed on that very well. I have a ford f1 50 raptor that i absolutely love and i was looking at a gt today, a dream car, but the systems that ford comes out now do not work very well, to be quite honest. It would be great if someone could figure out a better way to work these systems. German car makers have done a great job and bmw especially has a great infotainment center. Everyone else just does not do a great job of making it work and maybe google has a great shot at that. Speaking broadly about what this means of the world of technology, microsoft often came up as a potential successor to Steve Ballmer. Maybe they did not try to get him to come over there. What do you think bill gates and Steve Ballmer are thinking . They are both retired. Is a 7iron going to catch 170 yards . That is what they worry about on a daytoday basis. They will be concerned. This is a guy who could have helped microsoft in a lot of ways. He might be a better guy for it. Alan mulally is a guy whos a visionary thinker and really understands how to solve problems from a very senior corporate level. Its very hard to do these things and hes one of the best there is. They recognize one of the biggest competitors now has one of the strongest, clearest voices available in Corporate America and indeed the world. Cory johnson, editor at large, matt miller from new york, thank you. Yahoo Ceo Marissa Mayer is not happy with her companys Quarterly Earnings. We explain why next. Welcome back to bloomberg west. Im emily chang. Yahoo is out with Quarterly Earnings and Ceo Marissa Mayer is not satisfied. Yahoo reported just over 1 billion down 4 yearoveryear. Net income just down 6. 5 . For more on this, cory johnson as well as a Bloomberg Industries paul sweeney in new york. You were saying alibaba has saved yahoo again. It does not look so good. The core fundamentals that yahoo probably took another step back believe it or not this quarter. The company missed consensus numbers on revenue and eps Second Quarter so that was the disappointment. Thirdquarter guidance is also below expectations. The core display advertising business for them really took a big step back in the Second Quarter after showing a little bit of life in the first quarter. Investors are stepping back saying Marissa Mayer has been their two years and made a lot of investments, a lot of acquisitions, lots of positive core product things but were just not seeing it in the fundamentals as of yet. When Marissa Mayer took over two years ago, everyone said to give her time. Its been two years. Paul is saying out who is taking a step act. Do you remember what i said two years ago . Warren buffett has this great line i paraphrase. When a manager with a great reputation takes over a business with a lousy reputation, its a tough job. A lot of good people have gone in to try to get it to do Better Things and have approached it in very different ways. One thing Marissa Mayer has done is responding well to wall street. She had a board where dan loeb was a prominent figure and post for a lot of changes to help shareholders. She gets credit for tweaking alibaba in ways that will benefit shareholders but this is about business and yahoo s influence on the world. The financial machinations of buying back stock and fixing the alibaba issue to continue to benefit yahoo , those are financial machinations. The harder job is getting people to go to yahoo , use yahoo , and get advertisers to pay for it. You have a situation where Marissa Mayer spent over 1. 4 billion in acquisitions in the last two years into the same time you see revenue falling, restructuring taking away operating profits of the business is making less money on an operating basis, forget alibaba. At the same time, you have revenue is falling. Of the same time you have been spending over 1 billion in acquisition to boost that revenue. One of the changes she has made is doing the Video Conference call and we have a quote from her on that. Lets take a listen. Which transformed our culture by focusing our strategy on speed and execution. We have transformed our products by investing in those that can drive longterm growth. Along the way, we have reinvented every single major Consumer Product that yahoo . Now we are transforming the ways in which we generate revenue countering declines with investments in new products. That was just the audio. The video was so scary last time. It is best left to professionals. Paul, is she just not convincing . Shes not convincing advertisers. The advertisers are not coming. Thats exactly right. Think about their core display advertising business. They are losing tremendous amount of market share to the google and facebooks of the world. Clearly, the fundamentals are not there. Over 800 million users every month and the engagement is getting better. They are making investments in some of the key growth product in terms of video product on the internet. They are making investments but not converting it to Advertising Sales. They admitted this quarter they had an execution problem on Advertising Sales itch cost the pricing to go down about 24 yearoveryear on display advertising pricing. The execution just has not been there on the advertising side. And the question simply becomes at what point does the patients wear out . That is where alibaba comes in. More good news whereby yahoo can maintain a bigger ownership stake in alibaba postipo. Thats good for investors. Shes delivering on that front, the core fundamentals continue to disappoint. Bloomberg industry director of north american research, paul sweeney. This is developed after the bell. Strong guidance from intel. We knew the number would be stronger. The analysts got it wrong. Intel told us that a month ago. They gave really strong results particularly in guidance. Two things i want to highlight. Revenue growth for this company is really strong yearoveryear and really picking up from the doldrums that we saw a yearandahalf ago. We saw Revenue Growth last quarter of 8 . One year ago it was down 5 are sent yearoveryear. The other thing that was really, really impressive is gross margin towards 66 next quarter. Thats tremendous. These guys have gone in six quarters, that spectacular. Without mobile because they arent really there yet. We should not count them out yet. There are many generations to come. They can really make a lot of money. Great job this quarter and next quarter apparently as well. Cory johnson, editor at large. More with bloomberg west after this quick break. You are watching bloomberg west, where we focus on technology in the future of business. Janet yellen testifying in front of the Senate Banking committee today saying the recovery is not yet complete and more easing is needed to improve the labor market. She also question the valuation of social media stocks in the friend report saying, never the less the valuation metrics in some sectors do appears substantially stretched, particularly for some smaller firms in social media and biotechnology companies. Facebook, twitter, and yelp dip briefly. According to people familiar with the matter, reductions in engineering, marketing, and the nokia unit may be unveiled as soon as this week. This round of layoffs could be the biggest in microsoft history topping the jobs cut in 2009. Also with us, bloomberg industry microsoft reporter. This could be happening imminently. How big of a deal is it . You are bound to see a bot of reductions when there are implications. More importantly than that, they are changing microsoft into a cloud first mobile first company. With that will come certain changes, like it or not. Therell be some job reductions in certain areas. Nadella indicated some hard choices to come. How necessary is it for microsoft outside of nokia . This is satya starting to put his stamp on the company. He was the inside candidate. He was handpicked. All the outside candidates and they stuck with the inside guy that would follow the boards decision. They made a decision going in for Satya Nadella as ceo. Spending cash on acquisitions or whether to increase dividend payments, his hands have been tied. I have been talking to a handful of microsoft people in they are talking about things they are seeing inside the company, certain people moving to the head of different organizations. Satya is making the move about his personnel. Youll see people shaking out with the trees. This is a very big move to do it all at once. Not every company does wings this way. Ibm never reports they offs. Where as hewlettpackard, an enormous number of layoffs 50,000. Lets talk about that. Hewlettpackard has been laying off people by the tens of thousands. They have so many more people than Companies Like google and facebook. If you look at revenue per employee, it is nowhere near microsoft, once on the cuttingedge of this thing. Hewlettpackard, much big