Ferrari is heading to india. Sale. Ndred 85 million 125 million. Tee he will invest 20 million more at the company. Hong kong and china closed for lunch. Points. Seng up 96 the shanghai composite flat. The nikkei composite looking down. Time now for bloomberg west. Emily i am emily chang and you are watching bloomberg west. Patience is not a very for some other shareholders. Activist investors pressuring the company for immediate and dramatic changes. Survival of the fittest in the semiconductor industry. We will take a closer look at why so many Chip Companies have the urge to merge. Taking a plunge in a hightech treasure hunt. A new competition to map the ocean floor. First prize, 7 million. First to our lead. The hits keep coming at yahoo c. E. O. Marissa mayer. Less than a week after she laid out her plans to turn around the struggling giant, activist investors are turning up the heat. Over the weekend, one of yahoo s largest shareholders urged the board to begin selling assets immediately saying we believe the company should prioritize the sale of the core business, a portion of assets, or the entire company. Another investor says yahoo needs to cut 900 jobs, replace Marissa Mayer, and focus the core business on finance and sports sites. Joining me to discuss from toronto, managing director and author of this, eric jackson. Also with me for the hour, David Kirkpatrick. Eric, i will start with you. You have a small stake in yahoo . What is your motivation here . Real motivation is to increase the value dramatically of the company. I have been a shareholder often on but mostly on for almost 10 years since late 2006. I have seen a lot of c. E. O. s come and go. I have seen a lot of promises go unfulfilled at yahoo . I sat by and watched what has gone on for almost four years now with the current Management Team. It has been tremendously disappointing. And yet there is still incredible value in the company. I would like to see that extracted. I dont want to see it sold off for parts at a cheap valuation. That does not serve the longterm shareholders well. Emily springowl has 300 million under management. You have a small stake you acquired recently though you will not disclose the size of your holdings. Why not . With the size of our firm, we are clear about how big we are. We are not the size of starboard. Our stake is not the same as theirs. And yet i think my views on yahoo have been on the money for a number of years. We have spoken to a lot of the largest shareholders in yahoo over the last few weeks and have their support for what we are offering. We are putting forward a third alternate plan for the company. There is the border view we heard last week that everything is fine and we are going to go ahead with this plan and spin off the court. Then you have the starboard planned to sell now at any price to get rid of it and be done with it. We think there is a better path forward for shareholders. Emily you do make an interesting point that they could look into this issue for a year and decide they cannot spin off the core business. David, what is your take on erics proposal . The thoroughness is impressive and the commitment to thinking through some problems i admire. The thing i strongly agree with is the core of yahoo has committed value. This Company Still has an extraordinary brand. By some measures, upwards of one billion users. I am often made fun of on this program and elsewhere for still using yahoo mail. For my personal mail, yahoo mail works fine. 80 million other people like me seem to like it as well. Companies that wellestablished and entrenched with such contemporary products, even if they dont have brilliant management, can move forward from here. Im eager to hear his ideas in more detail. But i think yahoo has tremendous opportunity in its core still. That is what i like about the plan. Emily we are equal opportunity email users, so i appreciate your continued use of yahoo mail. Lets dig into what you think they should do. You say they might get 6 million for the core business now. If they do what you suggest, they could get 24 billion. If yahoo does everything you are suggesting, what does yahoo look like in two years, five years . In the ideal world, in two or three years, there would be a different Management Team in charge, a dramatically smaller yahoo . We would not have 12,000 plus employees. There would be more on the order of 3000, but they would be amazing employees. Morale would be through the roof because there would be clear leadership. The best and brightest are working at the Company Going after the opportunity in front of them. I think the company would be milking the Core Revenues they still get. 80 of revenues come from desktops, things like homepage and mail. While revenues are declining, they can probably last longer than people expect the way a. O. L. Dialup revenue has done that. They will be focused on new opportunities in finance and sports. Yahoo has got to have best in class mobile apps in those areas. There are opportunities still in things like overthetop for yahoo . They missed on version one under the current Management Team. But i think they could have another go at it and be successful. The cherry on top would be i would like to see a partner like Liberty Media involved as an investor, around the board table at yahoo , because i think someone like that can add tremendous value guiding on the restructuring that has to happen. There is a tremendous amount of value with alibaba and yahoo japan. I think the current idea of spinning off the core is not going to be the best course of action. I cannot think of anyone better than liberty to be part of the discussions to figure out the best steps forward and how to maximize value of the stakes. David here. One thing that has been said is this is a hard company to turn around. Marissa took it on at a time when this was a real challenge. I personally think she has made good moves. What do you think is the biggest mistake she has made . No question the biggest mistake is she did not cut headcount. She increased headcount after she came in, much to the surprise of everyone. One of the slides in the deck has a quote from Mark Andreessen in the days after Marissa Mayer was appointed. One thing he said at that time was he expected there should be Something Like a 10,000 person headcount reduction at the time. We have seen some cuts more recently. But we did not get that out of the gates. Some speculate that is the reason why dan logue left the board. It has been a backtrack for the Management Team. After they upped the headcount, they realized they were too fat given the revenues for a company that had to backtrack recently. But it is still not enough. Emily david, you have continued to express sympathy for Marissa Mayers position. Do you maintain that today . I feel i have to mention the woman had twins just days ago. Should we give her a break, just for a week . David i am not an investor. I am a Bigger Picture guy. I do give her a break in one respect. But if you look at the performance of the stock, it has been poor compared to assets comparable. I would not necessarily say i think she has done a great job. When i look at this presentation, tumblr spent all that money. What did they do with it . That is a legitimate question. Alibaba is the asset that has defined this companys history in the last couple of years. For whatever reason, marissa has not allowed the story to move beyond that. That is unfortunate. I think it has been a tremendously difficult task for anybody, and i sympathize with the challenges she has faced. Maybe she should have cut more people. Emily what is your response . The people i talk to who work in San Francisco in silicon valley, some of these people used to work at yahoo years ago. The talent that has gone from yahoo to other companies is staggering. When i talk to those people, folks with yahoo ties and those who dont, 95 of people are saying clearly is something wrong with leadership at yahoo . It is not working. They are never going to say that publicly because what is in it for them to be critical . Maybe the person they are going to say it too is a fan, a friend. This is real. I think these are legitimate concerns raised. Most people familiar with the company feel it is legitimate. I hope the board takes them seriously. Emily eric jackson on what yahoo should do. Has yahoo responded to you . They have only responded to say they are in receipt of the presentation. Emily we will see if they do. Let us know. David kirkpatrick staying with us throughout the show. Coming up, another twist in a tumultuous year in the semiconductor industry. We will walk through the millions of dollars that have changed hands and focus on what could be the next major plot twist. Emily it has been a busy year for the chip industry. M a has reached a 10year high with nearly 100 deals in 2015 valuing 110 billion. Some of the biggest deals of 2015, intel buying altera for 14. 4 billion in june. But why the rush of consolidation now . We checked in with our team of analysts. One reason, with hundreds of Chip Companies, the sector was fragmented and companies have been looking for balanced exposure. Another reason, rising r d costs. In 2014, intel spent 11 billion in research and development. Micron spent 1. 4 billion in 2014. Is it really cheaper to buy a company than it is to spend on its own r d . Joining us to discuss is ian king who covers the chip industry for us. I would like you to give us more color in terms of what kinds of chips are doing well. What kinds of chips are not . How is that driving consolidation . The Semiconductor Space is probably broken into three major areas. One is analog, dealing with realworld signals, audio, video, power. The other is logic, processing and computing. The third is memory, which as the name would imply is processing memory as well as storage. In memory, we have seen an incredible amount of pricing pressure. An incredible amount of weakness from a supply and demand balance perspective. There has been some consolidation potential driven by consolidation of factories and reducing r d. In logic, it is all about what products i want to be in and consolidation driven along those lines. I want to expand to networking. That was the predominant rationale for one deal. Then you have analog, which is a terribly fragmented market where the number one market share player which is Texas Instruments only has a 20 share. It is the smaller ones getting together to compete with the big ones or the big ones starting to say i do not have that particular niche area and i want it, so i am buying a smaller one. For a host of reasons, the area continues to be ripe for consolidation. Emily ian king has been reporting on qualcomm contemplating a split. What is the latest and why would this make sense . It depends on who you speak to. I latest reporting is they are going to against the pressure they have been under and not doing the split. Those that have argued it makes sense have said they are under tremendous regulatory pressure around the world. Get the chip business away from the licensing business and the regulators will leave them alone. Those that dont like the idea are saying you need a lot of money to invest in chips. The company gets a lot of money from the unique licensing model, 7 billion just from licensing alone. That pays for a lot of r d. Those who like the company as it is say stick together. If i could jump in, the split from a qualcomm perspective was a terrible idea. Our analysis has shown this is a company where one part of the Company Helps the other. The chip segment benefits from having intellectual property, the licensing segment. The chipmaking part shows customers how valuable it is. Splitting it up would treat it like an industrial company. In the long run, the value of both segments would be lower. This is a great relief if what ian is saying comes true and the company decides not to split up. Emily there are so many complex relationships in the chip business. Apple and samsung are rivals and yet apple buys a lot of samsung chips. Talk about the broader relationships and dynamics we may not be as aware of that may be driving some consolidation. I go back to what he said. This is getting more expensive. There are fewer companies that can build these 8 billion plans. Qualcomm does a lot of business with a lot of companies and outsources manufacturing. Samsung is a customer, a supplier, and a competitor, if you can imagine. Emily while still supplying chips. The modems. Emily thank you for giving us the lay of the land. Coming up, wall street turns negative on apple. Why one analyst is predicting iphone sales will drop for the First Time Ever in 2016. Emily shares of apple closing down 1 after getting hit by a trifecta of iphone estimate cuts by three wall street firms. Morgan stanley predicting sales will drop to the First Time Ever in 2016. Barclays cutting the price target and a warning from j. P. Morgan on the apple supply chain. Joining me to discuss, Vice President and mobile analyst at Forrester Research and back with us, David Kirkpatrick. It sounds a little gloom and doom. Is it that gloomy . I dont think there is any gloom and doom in a market that will see 500 million more smartphone owners at the end of 2016 than today. Emily do these predictions were you . They dont. There are about 7 billion people on the planet, about 6 billion of us have mobile phones. 3 billion have smartphones. Emily what is your take . We read grim predictions about apple. When people talk about it, they say it will be a little less amazing than they thought it might be. David i think it is funny and analyst firm drops their estimate of the future price target from 165 to 145 in the stock drops from 115 to 111. That does not make sense. If it is still likely to hit 145 or whatever analysts think it is going to do, you dont suddenly lose heart. I agree with julie. I think this is an Incredible Company that still has a unique position in the most Important Technology sector in the world. Because they are the highpriced and highprofit player, as more people want to get the best product in the area where they care most about technology, apples opportunity remains gigantic. Emily lets dig into this, julie. Morgan stanley is saying shipments will fall by 6 next year driven by higher prices in overseas markets. Also talking about saturation. Lets talk about the international markets. We were in beijing. They are working hard to localize products, which is something apple does not do. Does apple need to be more in tune to global interest . Possibly. When we say global interest, we are talking about china and india. Those are the only continents in the world with more than a billion consumers. Those are the only markets in the world bigger than the u. S. Emily should apple be doing more to reach those users . There are a couple of things you have to look at. In china and india, the size of the middle class or upper class is larger than in the u. S. , so there is a large market of consumers on both continents that can pay apples prices. If you look forward and talk about what will differentiate a mobile phone experience going forward, it is not hardware innovation. It is in software innovation. Nobody has a better chance than apple because they own the experience. Emily what about that apple might be coming out with a smaller iphone 6c . Is that smart or reactionary . Is that a good move . It sounds like a good move. As someone middleaged, i love the 6s plus. But a lot of men say it does not fit in their pocket. Emily we have heard steve jobs say you give people want before they ask for it because they dont know what they want. What do you make of a potential move like that . David he also said he wanted apple to be the b. M. W. Of computing. B. M. W. Has different product lines. If youre trying to reach billions of consumers in india and china, you want to give them the best products. The great thing about apple is it does not cost that much to have the same smartphone as elon musk or anybody at the top of the line. That is what everybody wants. That is what apple allows. That is extraordinary at whatever price. Emily David Kirkpatrick with us throughout the show. Julie, thank you for stopping by. The force may be with disney this week. We are talking star wars. The only way to get better is to challenge yourself, and thats what were doing at xfinity. We are challenging ourselves to improve every aspect of your experience. And this includes our commitment to being on time. Every time. Thats why if were ever late for an appointment, well credit your account 20. Its our promise to you. Were doing everything we can to give you the best experience possible. Because we should fit into your life. Not the other way around. Samsung is asking the Supreme Court to overturn the damages awarded to apple. Cut ofas awarded a profit on handsets using their designs. They will decide whether to take up the case next year. It would be to first Supreme Court case involving patent design in 20 years. The Commodity Index at its lowest levels in 16 years. There are warnings that prices could go lower it Stephen Roach says chinas slowdown could extend declines and he warns that some companies are in denial over the shift. The dollar is very important for commodity markets. If it does continue to strengthen, that together with continued concern over the prospects for the chinese economy will i think make it difficult for Commodity Prices in markets to rebound and turnaround so, commodities are after a super cycle obviously going the other way. Australias treasurer has confirmed a budget blowout. Blamed on falling commodities and weaker growth. Morrison says the underlying deficit will expand the 27 billion while the gdp growth has to 2. 5 . Sed down the deficit