Transcripts For BLOOMBERG Bloomberg West 20151123

Since 2007. Emily i am emily chang and this is bloomberg west. Coming up, alibaba founder jack ma is in talks to buy a stake in one of asias most venerable newspapers. Plus, highspeed Internet Access means no day of rest for holiday shoppers. Cyber monday to sunday. And hewlettpackard has standalone results tomorrow. We will preview the numbers for Hp Enterprise and hp queue. First, to our lead. Jack ma is in talks to buy a newspaper. He would be following in the footsteps of other tech executives getting a foot in the Media Business. There is jeff bezos, who bought a stake in the wall street journal, and chris hughes, who bought a majority stake in the new republic in 2012. I asked jack ma about this earlier this month. Take a listen. For my have to care shareholders and our strategy. Emily would Something Like that make sense . Jack yes, i think. We invested in we bow we online media. We invested in sony because internety that destroyed the Offline Retail business. We say well, if you can do better and we work together, we can do better. We want to make an example. If sunni can be better, if a regional store can be better, with the media, same thing. We think Internet Plus media might be very interesting to have, for us to understand them, for them to understand us. Examples, and also, for us, we need media to help our small, medium sized companies, to promote. By the way, advertising dollars from Small Business can help the media. It can help the economy in a way. Buyy so, are you going to the South China Morning Post . Jack i did not say that. I am watching several companies right now. A couple ofhat was weeks ago. Why does jack ma want to get how the Media Business and does it fit into alibabas overall m a strategy . Joining me now is David Kirkpatrick, a bloomberg. Ontributing editor south china post fancies itself a bit of a separatist from the mainland in terms of political leanings. Tom, i will start with you. What do we know about this . Tom as our colleagues in asia have pointed out, there are discussions of buying some kind of stake. We dont know exactly what the financial terms are. Explained in your interview with him, there are a lot of different ways you can slice this. , jack ma hasos been a real disrupter of the internet. This is an opportunity for him to bring some of the mojo he has from ecommerce in china to a publication that over the last several years has not done as well financially. Sot same disruption that has messed with newspapers here in the u. S. Its interesting, given the political significance. Unlike the united states, alibaba has a tight relationship with the chinese government. Its a necessity of doing business. The South China Morning Post has positioned themselves as an outsider with regard to the government. David, what do you make of that . David thats a good point. I dont think its easy to answer that question. I dont think jack ma should be viewed as in the pocket of the chinese government, for one thing. He would like to be seen as autonomous, but as you point out, in reality, you cant have a business of that scale without the nodding acceptance and probably active pursuits are participationive of the government. This is like the Washington Post of the region. From jacks point of view, somebody who wants to get into a high status product, this is the place to go. If i were a hong kong reader of the paper, i would have serious reservations about it being controlled by a chinese national. Although, if you are going to personchinese controller, jack ma is probably as independent a thinker as someone in china can be. Focused on Global Commerce and ecommerce, but he is saying having this could help our business. David it seems like every tech Company Needs to own a newspaper these days. This is media meets commerce. They are all coming together online and offline. If you own a media outlet with a substantial reach, obviously, you can use it for your purposes as well and every media mogul will say we cant do that we wont do that. Emily exactly. Doesnt it defeat the purpose of being a standalone media enterprise in the first place . i am sure jeff bezos did not only have business reasons to buy the Washington Post. There was probably also a personal interest. I would not be surprised if that was the case here. Been 13ibaba has billion in deals so far this year. With mike evans, who is in charge of Global Expansion for alibaba and asked him about the m a strategy in particular. Take a listen to what he had to say. Mike in this sector, ecommerce, where we are approaching close to 400 million the consumer desires are changing dramatically. A big part of our strategy domestically means we have to be positioned with the right investments to satisfy that demand. Alibabaom, how might use this investment to satisfied a mystic consumers demand . To the extent that, as jack ma said in his interview, you might be able to find ways to benefit your small to mediumsized businesses that do business on alibaba. I am not sure exactly how he plans to do that. The real key here, as we have scmp isuding, as cmp so highly regarded, a venerable newspaper. They are going to have to go to Great Lengths to make sure they keep the reputation they have mainland china. It is a global newspaper in many ways. We look to it for an authoritative voice on many issues. They are going to have to work really, really hard, and you dont want a situation where it is starting to feel like jack ma is turning this into a vehicle with any particular point of view or business strategy. At the same time, the wall street journal is reporting that alibaba is shopping its stake in their version of groupon or yelp. They do movie tickets and restaurant bookings. One of alibabas competitors is trying to nail down a stake in this company. What do you make of that . Its a decision to separate the assets from the other world. Essentially, alibaba is saying why should i own a 7 stake in something when one of my top two competitors is also holding a stake . Why would i want to be in that rather than control my own destiny, build my own world, and compete like crazy in the market against the player they currently hold a stake in . They are basically saying let me get out of this thing, control my own world and they are going to have a battle there because this is a market leader. , thealso have alipay largest payment platform that is independent in china. All of these things combined. Alipay, and building their own competitor, thats pretty interesting. They have already put a billion dollars into the joint venture, so this will be their ticket to freedom. Emily i like that. Asck around with us, as well David Kirkpatrick. We are going to be talking about cyber monday, or black november, as we are now calling it. Tom giles, thank you for joining us from new york. Report details the continuing economic shift. According to a london firm, the number of startups in china nearly doubled from 20102014. The country has been pushing to develop a consumeroriented economy. To help with that transformation, china has provided subsidies and financing to promote internet and tech innervation innovation. There are 4000 new businesses launching every day. Coming up, a retailer moving its cyber monday to sunday. We will tell you who after the break. And after a disappointing Earnings Report, will gamestop goes the way of Blockbuster Video and radioshack . Thats next. Gamestop,are watching falling as much as 15 in todays trading. The forecast missed estimates, even with the holidays approaching. Ales of a highly anticipated game about star wars fell short of expectations. Walmart is pushing cyber monday back to sunday. All 2000 of walmarts deals will go live at 8 00 p. M. Eastern the sunday, running into next day in part of what the as part of what the retailer is calling cyber week. Larger trendof a of rolling out sales before thanksgiving. Kirkpatrick. David syria gritting cyriac roeding. Cyriac the problem is this is red november. The bottom line for the retailer does not look good. Emily 50 off. How can any of these companies be making money . Cyriac that is the big problem. All of these retailers are saying we have to stop discounting. Then you walk into the store and it says 40 off. Something is not right. Then black friday comeslong and it 60 off. We need some new strategy. Emily david, have you been shopping online like i have, or are you waiting for black friday . Weather, a lot of retailers are feeling the hit of a lack of Clothing Sales for clothing people would normally be getting for winter. The statistics monday, is called cyber the dollar amount of shopping has gone up dramatically year after year, but it still amazes me how little commerce is happening online considering the kind of convenience and deals, and the efficiency that has emerged in our economy around this. I think its logical for walmart to be pushing this really hard, especially since amazon has come up their tailpipe so hard. Aily amazon started countdown to black friday on november 1. But this shift is something you know a lot about. Shop kick is focused on offline to online and online to offline. 92 percent of retail sales in america are happening in brick and mortar stores. Emily that is shocking. Cyriac 92 offline. Is the total. Influenced byis previous online activity. You go online to check out a product, but you end up buying it at a brickandmortar store. Then mobile comes into play. You can influence that. So, one of the things we did at shop kick was to say what if we could replace a 30 discount with a . 30 reward and achieve . He same with best buy four years ago, and it turns out its true. You can see that with all this technology, that you can drive people to the store and reward them just for walking in with . 30. Emily interesting. Now, overnight, apple changed their phone bill boards to apple tv here in san francisco. That. E video of i am assuming apple tv will be one of the hot items this holiday season. What do you think . David people seem excited about it. Shop kick is really beautifully positioned for this transition where we are trying to get convenience both in the physical world and the virtual world. Say apple tv is an example of the same trend because it is trying to bring together the traditional tv experience with the convenience and choice of the internet. Abouts the big story commerce generally, which really applies to a lot of the stories we are discussing tonight. The virtual and physical worlds have to come together because thats the way we all live. Noty apple tv is compatible for four k yet. That. i dont fully get i think its still a cool product. I think its going to be a hot item under the Christmas Tree this year and a lot of people will go for it because it is finally the interface everybody has been waiting for. Remember steve jobs said it was a hobby. Now it has turned into a business. We will find out after the holidays if that is the case. Emily well, i am going to buy one. I am ready for my upgrade. Hopefully my husband isnt watching this particular show. He just gets the bill. Thank you so much. David, you are with me throughout the show. Thank you so much. Activist investor carl icon has another target in his sight. Filings show he has taken a 7 stake in xerox. Shares in the Document Technology company are surging after hours. Ichan is one of wall streets best known activist investors. Just last week, we reported that he swapped a large position in ebay for 45 million shares of paypal. Coming up, is this steel medicine for innovation . Megamerger bad medicine for innovation . Give us the could best clue yet about whether aliens exist. A major deal today in the pharmaceutical industry. Pfizer and allergen joining forces, creating the Worlds Largest drugmaker. The in version structure allows pfizer to take advantage of ireland, butes in there are implications about r d and innovation in this area. Mean for r d . What does it mean for innovation . Saunders, the ceo of allergen, soon to be coo of the mega allergenpfizer, does not believe that pharma should do drug discovery. He thinks that startup Drug Companies should be doing innovation, whereas pfizer should be focused on marketing, getting drugs through the late stage of the pipeline and out in the market. He thinks a pharma should cut back on earlystage are any r d. Emily is this a loss for health care . Our new drugs going to be created . Caroline the major question is are big drugs being made out of the pipeline . There has to be people who will buy the drugs coming out of biotech. Thats a question. Is there enough capital in the space that these small Drug Companies can ipo, can get bought by big pharma, because they need to have buyers. Right now, there is. Vc money has been flooding into biotech and these small companies. What sort of trends are you seeing . Withine its interesting respect to drug innovation. There are two sets of vc firms. There are traditional life scientist. Vcs inu have tech Silicon Valley who are interested in health, but a little more cautious about getting into the drug making world. They will do digital health, digital apps, Software Companies around health, but they are scared of moving into Life Sciences because then they have to deal with the fda. New drugs obviously are going to keep being created, but would you say the pace is going to change . Caroline not in the near future. So far, we are on a wave of innovation with new money pouring in, and we will continue on that trend for a while. Thank you so much. Hp enterprise and hp quarterly reporting earnings tomorrow. We will tell you what investors are looking for next. We live in a pick and choose world. Love or like . Naughty or nice . Calm or bright . But at bedtime. Why settle for this . Enter sleep number. Dont miss the ultimate sleep number week going on now Sleepiq Technology tells you how you slept and what adjustments you can make. She likes the bed soft. Hes more hardcore. So your sleep goes from good to great to wow give the gift of amazing sleep, only at a sleep number store. This week only, save 50 on the ultimate limited edition bed. Hurry, sale ends monday. Know better sleep with sleep number. Emily im emily chang and this is bloomberg west. A are joined by julia for first word update. Good morning. Julia thank you, amalie. Jack ma is making headlines again, being linked with south chinas morning post. Talks are in an advanced stage and an announcement may come soon. It was once the worlds most profitable newspaper, how it however, it has struggled in recent years. Jack ma will join jeff bezos and chris hughes in going to print. Ford has joined honda, nissan, and toyota in saying it will not use takata pies inflation in its vehicles. Takata has acknowledged takatas inflation and its vehicles. To cut acknowledged it is under stress takata has a knowledge did is under stress with more than 20 million vehicles being italled has acknowledged is under stress with more than 20 million vehicles being recalled. Will use proceeds to meet annual growth targets. ,after winning a patent suit unwired planets shares soared. Interesting. How big a deal is it . It seems like a fairly significant win for a small player in the tech space. Julia absolutely. Companys win goes a long way toward validating their portfolio. Its a good tech company. It only has 16 employees, but assets wereal acquired from erickson in 2013. A lot depends on the outcome of the lawsuits. And also negotiations over the chargewired uses to their technologies. Company, butn tech watch this space, it seems like it is going to do all it can to protect its property. Emily thank you for that update. Emily i am emily chang and this is bloomberg west. Now for a look at some Tech Companies we are watching, i am joined by Anand Srinivasan and our guest for the hour, david kurt patrick. Avid, David Kirkpatrick david, we talked so much about square last week. The company is out today with a new chip reader. Originally announced this partnership at the Worldwide Developers conference. What do you make of this . The first reader that can accept wireless transactions . A big move and well timed. They have always been very narrow in terms of what they did. I think its interesting the way the stock jumped almost to the level of the previous private investment rounds when there was so much hand raking about the price they went out at. I think they were looking for the pop and they got it. Jack dorsey, despite his multiple responsibilities, is a great ceo. Emily i did speak with jack dorsey on the floor of the New York Stock Exchange last week. Take a look at what he had to say. Jack we are going to focus a on the new reader. We want to accept a chip card without having to think about it. Square and match both went public last week. Both had a big top. Pop. Big they both ended down slightly today. What you make of the performance we have seen so far . Its challenging being a Public Company in any environment. A difficult environment and the new ipos are figuring that , many of thesely companies had heralded evaluations on the private side. Now that they are going public, there is a lot more responsibility for them. David, it wasnt just a pop. It was a fairly significant pop. Do you think these ipos were priced poorly . There is a lot of psychology and ipo pricing and part of it is you want buyers to feel it they had a good deal got a good deal. Ithink in squares case, seems like they couldve priced at higher and still done fine, so maybe you are right. Maybe it was underpriced. How optimistic are you about the future of square to become more than a Credit Card Payment Processing company . These other businesses may become more significant. The ceo is expecting to see a lot of growth. But what do you see square becoming . David i think square is a Small Business software company. Its not just a transaction in payments company. I think jack dorsey sees himself as empowering Small Business owners and entrepreneurs even to the level of people who are sole proprietors. I know in his mind he thinks its analogous to the way twitter empowers all of us to be broadcasters on the internet, which was a revolution, and he wants to create another revolution for Small Business. Following to other stocks, Hp Enterprise and hp ink. This will be their first Earnings Report since the big split. What are you looking for . I think we will see a tale of two cities and the expectations will reflect that. From hp, i want to see growth. Enterprise services, it is a selfinflicted wound they have to correct in order to show sales growth. Ink, given the trials of the pc market, i want to see stable growth, but i also want to see operating stability as the quarters go along. Both Large Companies even after the split, so i want to see some serious progress on operating income and cash flow from hp ink and i would like to sales growths of from Hp Enterprise. David, do you think that one or both of these companies can really reinvigorate themselves . David any company that is company, its a legitimate question, how will they reinvigorate themselves . But i am curious, i would love anand, hpnon enterprises calls themselves a cloud company. Do you think they can compete with microsoft, google, even ibm . You hit the nail on the head. This notion of a private cloud is yet to be invented. If its an innovation, its something the customers dont want or havent figured out they want yet. When we think of a cloud, we think of google, facebook, yahoo , amazon, microsoft. Intel had its analyst day last week, and half of the enterprise public going to the cloud. The other half is looking inside the company and becoming a different sort of platform. Even intel is seeing this. This notion of a hyper cloud tech thatisco, old may or may not be legitimate is a structural problem for Hp Enterprise. Its a fantastic question. I think the answer we will find out soon enough. We are going to be watching the numbers tomorrow and we will bring that to you. Thats why love you, david, for hitting the nail on the had there. Asnd srinivasan, thank you always. May the force be with google users. Today marks for weeks four weeks until the premiere of the isce awakens and google allowing users to choose the dark side or are the light. You can use custom maps and youtube. There are more features to come. There is also a tally. So far, the dark side has the edge, but not by much. Another departure at yahoo . We tally up the damage with Marissa Mayer. Tomorrow on bloomberg, managing director Richard Clairton adjoins surveillance at 6 30 a. M. Eastern. Clarida joins surveillance at 6 30 a. M. Eastern. Yahoo nett is leaving and adding to a growing trend of departures. Barrett is leaving yahoo and adding to a growing trend of departures. In total, yahoo has lost 13 Key Executives this year alone. Mass exit us . The how much do these departures point to yahoo s struggle under the leadership of Marissa Mayer . Joining us is our editor at. Arge, cory johnson it seems like more bad news former us up. For marissa. A hard thing. Management change means more managing change. No marthai both noma nelson. She is probably best known for creating in style, one of the great magazines of the last two decades. Worked at people as well. When you start to chart some of these numbers. You see a significant change in this calendar year over the steady drumbeat of change over the prior year. Pretty Senior Executive departures. Who is senior . Who isnt senior . Emily a couple were big hires for her. Bob peck out there saying it might be time to consider new leadership at the top. David, you and i were talking about this last week and you were on the side of give Marissa Mayer more time. David i am always on that side. I tried to be charitable. I like her. I think she did great work at google. To look athave yahoo and their quote unquote strategy. It feels very reactive. As corey points out, if some of the Key Executives she brought in to build a powerful media powerss, to improve the of the Media Business, are leaving, thats not a good sign. Have goodnue to business is like yahoo mail and some of the apps all of us use, the weather app. News app thate delivers headlines, but in reality, they are not big enough to sustain a company that if it were ever to spin off alibaba has to be perceived as an Exciting Company with the capability to grow. Emily we were looking at some. F the numbers just three of yahoos Board Members were on board before she joined. I was speaking to someone who is no longer on the board and he said my goodness, give the woman a break. Give her some time. I mean, do you think she has had enough time . Think thursday very clear drumbeat out there saying that what she is doing isnt working. Oren buffett said when the reputation of the business is bad Warren Buffett so when the reputation of the business is bad and the reputation of the manager is good, the reputation of the business wont survive. Changes beget more changes. Martha is a terrific editor, but a lot of people dont like to work with her because she is a terrific editor and likes to make changes on her own. A wave of changes at one level creates a wave of changes at another level. I dont think this should be a great surprise to yahoo watchers because it has always been thus. Emily the woman is about to have twins. She is about to go on a short maternity leave. I want her to succeed, david. How do you see this playing out . Of somebodyhink better than marissa who doesnt have a job. David Tim Armstrong didnt have an easy job turning around aol. He improved it. Media businesses based on an old model are not an easy task to revive. Im sympathetic to the notion that marissa needs time. I think the nature of her hiring and her personal disability in the industry, she is under a more intense microscope than anyone else at a company of that size or a company that important. The companys importance may not be as great as the scrutiny she gets would indicate, aside from the fact that it owns this huge chunk of alibaba, which is sort of an historical anomaly. Its a tough challenge. I think she has a lot of gifts as a leader, but as i have said before, i have been disappointed to see the strategy become more and more reactive. Aol, google, and twitter all have higher profitability per employee than yahoo . Cory they have super high margins. She has been there for quite a while and spent billions of dollars to make it happen fast. She didnt say this is going to go slow. She said its going to happen fast and she spent billions of dollars of Investor Capital to do so, and it hasnt happened. Cory johnson, our editor at large. David kirkpatrick, it has been great to have you here throughout the show. Coming up, a Massive Science project is underway in the middle of one of the driest deserts on earth. The director of the giant telescope project tells us about this major undertaking, next. Coulda fire warning that have severe implications for future missions to mars. We will explain next. Emily today in out of this world, matt damon may have been able to survive mars in a hollywood movie, but in reality, nowhere neare ready. A report found that deep space travel poses serious dangers to astronauts health, including in adequate food, radiation exposure, and heightened risks of developing cancer. It comes as a warming warning send the firsto manned mission to mars. Sticking with space, construction has begun on the magellan telescope, a multinational science project led by the u. S. To build what will be the worlds most powerful telescope and give us use into space up to 10 times the resolution of the hubble telescope. But why . From l. A. , the director of the project, pat mccarthy. Thank you for joining us. If it is more powerful than the hubble telescope, what kinds of things will you be able to see . Pat in some cases, things we have never seen before. In many cases, we want to take objects and phenomena we see today and see them with 10 times the clarity we have now. In particular, we know that the with way is teaming planets but we can only see a few of them because they are too close to their stars. With 10 times the projection of the hubble telescope, we could see composition and structure, and understand if our solar system is typical of planetary systems in the milky way or unusual . Can go back to the very first moments of the universe, before the big bang, to see the extraordinary clarity in which galaxies form, blackholes form, and become the universe we see around us today. This telescope going to help us discover if there is alien life out there . Lost dr. Like we have mccarthy. We are having trouble with his hearing. Pat, can you hear me . We are, it looks like having some trouble with dr. Mccarthys audio. Such a great story. We will try to bring him back for you at some point. Dr. Patrick mccarthy, working on the worlds most powerful telescope. They say it is going to be ,inished in the early 20 20s 10 time the resolution of the hubble telescope, which is 34 feet wide, the Largest Telescope in the world, currently. This one will be 85 feet wide, and i am hearing that dr. Mccarthy is back. That, are you there . Do you read me . I am. Es, my question was, will this telescope help us discover of alien life is really out there . Pat i think it will help us discover if planets are conducive to allowing life to exist. Is there water . Is there atmosphere . Is there chemistry similar to our own . I dont expect we will see alien life or little green men, but we will have an understanding of habitable conditions conducive to life, water in its liquid phase, temperatures right for condition similar to what we have on earth today. Emily you are targeting early. 020s how soon will this be operational . Pat our goal is to have an eye on the sky in 2022. By 2024 or 2025 we should have full capability and be doing science fulltime. Mccarthy, patrick working on the biggest telescope the world, thank you so much for joining us. For this edition of bloomberg west. Tomorrow on the ship does it for this edition of bloomberg west. Tomorrow on the show, hp has Earnings Reports from two separate companies. From our studios in new york city, this is charlie rose. Charlie reid hoffman is one of Silicon Valleys most successful entrepreneurs. He cofounded linkedin. Today, it operates the Largest Professional Network on the internet with more than 400 million members. Is also a partner in greylock who has backed some of the industrys biggest hits in recent years including facebook, instagram, dropbox, airbnb, and more