The westernbacked opposition wants the rebel groups to put the peace talks on hold. 24 hours a day, powered by 2400 journalists in nearly 150 bureaus around the world. Bloomberg west is next. Emily i am emily chang and this is bloomberg west. Coming up, netflix forecasting weaker subscriber growth. Can International Growth give them the boost it needs . Lus, ibm revenue falls for the 16th. Straight quarter we will look for 16th straight quarter. We look for green shifts. First, to our lead. Netflix shares plunging in afterhours trading after forecasting weaker subscriber growth this quarter, especially in new or markets outside the u. S. They expect to add 2 Million International customers. Thats important because netflix for beings future able to bring the ondemand tv revolution to the whole world. This overshadowing firstquarter results. Hulu is doing some great work, amazon is, hbo, showtime. There are so many competitors and everyone is working hard to build the best content. We are seeing growth in the overall tv market, that is displacing linear tv. It is natural that everyone is coming in as they realize that the future is internet tv. Emily joining us for a full breakdown is lucas shaw who ourrs bloomberg and l. A. , editor at large, cory johnson, and our partner from hippo adventures. Corey, subscriber numbers from last quarter were pretty good. It is the forecast that does not look good. What are the big themes . Y the forecast is so important because netflix grandfathered in a lot of their old customers and said they will not do that this time. We do not know what the effect will be on their customers. Growth of only 500,000 new customers predicted for next quarter, combined with that millionntment in only 2 being added internationally suggests a Slower Growth rate. The question is, how big can this business be . The suggestion perhaps is that netflix is getting closer to how big it is going to be. The reason that is a problem for netflix is that they are contracted to buy so much content, their costs are staying high, they need more customers. If they cannot add more customers, they will face Serious Problems honoring the commitments they made already. Emily i was speaking to david nevin, who competes with netflix, and i asked him what is netflixs biggest threat . Look what he had to say. At some point they have to start making earnings. Emily is the original programming going to pay off . They have to grow a lot of subs to justify that amount of programming spend. They are racing the clock. You know david nevins well, at what point do we know if it was worth it . We should start to know early next year. Reed hastings has said that netflix will deliver material profits starting in 2017. There are profitable in the u. S. , but if the growth does not keep up overseas, or if currency markets hurt them, we might not to the profits next year that they had forecasted. One thing that i thought was interesting that they pointed and one reason, why the growth outside the u. S. Might not be as fast as people want, that they expanded to 130 new countries in january. Onlyhe most part, they are appealing to people who can speak english and have International Credit cards, which means they cannot add on most of the local speakers. Emily just in time for netflixs earnings call, amazon decides to announce a standalone video service. Be, an amazond to prime number you had to be an amazon prime member, now it only costs a few dollars more to do the whole shebang. How does this change the Competitive Landscape for netflix . Netflix is the target for everybody, including people who come from linear tv, like showtime which is an offshoot of cbs. They have been here the longest, they have established the model and will be the target. Netflixame token, should have many of cards to play. We just mentioned internationally that they only appeal to people who speak english. They could add local content. In the united states, they could take pages from linear tv. They could start doing Live Television or news. They could tier the programming overtime. They have this ability to target what people watch. There is a lot that they can do to grow. By no means do i think they have reached the end. Emily netflix has said they are in talks to break into china. How realistic is it . They have said almost nothing. Line in their letter to shareholders today that said they are in discussions and have no material update. It is pretty much the same line they have had for a euro or two for a year or two. Anytime i have had the chance to ask Reed Hastings or anyone, they have nothing to say. That is typically a bad sign. You heard on the call today when asked about offline viewing that Reed Hastings has said that is something they would have to consider when previously they said they would not. There would be some change in the language about china if there were progress. Emily that is a story to continue to watch. Thanks a much eric hippeau. Want to speak with you about ibm. Big blue shares of dipping afterhours after releasing firstquarter results. The 16th quarter of revenue decline in a row. It is a company in transition having away from its Software Businesses with new growth and data analytics, cloud, and security. What is next for big blue . Cory, i will start with you. Waysame question here in a that we are asking about netflix. When will we see these investments that ibm is making hit the bottom line . Co 10 billion in investments in the last couple years in acquisitions. Throw in the 0 17 quarters ago and you have no growth for 17 quarters in the top line. They said they would be focusing on more profitable as mrs. , but we are not profitable businesses, but we are not seeing that come to fruition. They have stopped their old form of delineating the different business units. We do not know how this compares to the last because they did not give us the numbers. They have a completely different structure. As a result, they want to start over and they will get that chance. The 5 decline looks a little better, but they had some currency conditions. The dollar is a little bit weaker. The strong dollar they had been complaining about was not as much of a problem. But this shows you what a tough business, not just ibm, but throw in hewlettpackard, cics sco, oracles sun business, d ell, we can see all of those businesses struggling. Emily i mentioned earlier that we would talk about the green shoots in ibms business. Where do you see bright spots . You are seeing Cloud Business up 36 in constant currency. Analytics, security. All of that is taking place. We have been talking about this for several quarters. This portion is smaller than the legacy business. It will be a few years before you start seeing Revenue Growth and catch up to the decline. Anarag rana, cory, thanks for holding there. We will take you through the twists and turns as the legacy internet up and he waits for elementary bids to roll in. Preliminary bids to roll in. Emily verizon is said to be fer when anrd an of unexpected player is jumping into the ring. In the meantime, Many Companies who are reportedly interested have decided to pass. Here to break it all down is my guest host eric hippeau, as well as anthony, who covers yahoo . Instantly, today is a deadline, but as far as we know, yahoo would still accept a bid tomorrow. What do you make of the field of potential players . Yp,zon, white the, potentially the daily mail. I think verizon is in a poor position to acquire those assets. They could combine it with aol and create a mobile advertising juggernaut that could compete with the googles and the facebooks of the world. I think verizon is in the best position. I never other names, thought that the vast majority would stick around and make a bid, which is why last week i came out with a note and essentially said that i thought mid Single Digits was about the bidders i expected for yahoo this week. Emily eric, you are in an interesting position. You were an early investor in yahoo , the former owner of, the huffington post, owned by verizon. Depending on how you value yahoo s core business and the fact that they would try to do this depending on the kind of like a reverse merger. I dont know what to think of it. Business. Ld legacy it seems to be very small am a about 1 billion in revenues. About 1. 5 billion in market cap. It seems like an unlikely candidate to buy yahoo emily what about the yahoo japan part of the story . Is there a chance that that part of the company could end up in a bidding war . It could, but i think it is unlikely. Tos a complicated asset throw into the mix because of Tax Implications and ownership implications. What we will see happening today and tomorrow is probably a m oving target. Probably some other d assets like emily is it about what will appease the starboard investors, what will avoid a proxy war, or is it about Melissa Myers trying to keep her job . I think it could be all of them, but at the end of the day you have to please the shareholders. Given their failed attempt to spin off alibaba shares, i think the board has the responsibility to shareholders. That is the best way to reward your holders, the best way to create value in the stock. I expect them to sell the entire asset as a whole. Yahoo we are watching earnings on tuesday and there is a big yahoo Shareholder Meeting coming in june. Eric, how do you expect this to play out . I am a little confused. The reports were that there were reluctant to give open information to the bidders. That there was a whole process that was muddled and confusing. I think that probably scared a few people away. I dont know that the private equity guys could make a good decision in terms of what to price to put on it. Expectations are that revenue will come down again. Without full cooperation on the part of management, the board, and the company, it would be very hard, if you are a future bitter looking at cash flows, it would be very difficult to make a good decision. Emily and some people are looking at a reverse morris trust, which is a taxfree merger. That would send certainly be an interesting turn of events. Thank you so much for joining us. Eric hippeau, you are sticking with me. We will be staying with this yahoo conversation. Up next, areata huffington on Marissa Mayers arianna on Marissa Mayers leadership. Emily in this weeks edition of studio 1. 0, i sit down with Arianna Huffington, editor of the huffington post. We talk verizon and whether she believes the Telecom Giant has a longterm strategy that includes yahoo and the huffington post. And thatn has decided, is why they want the huffington post, that the future for them has to include a very fast Media Technology company. So, yahoo would fit very well in the strategy. There is competition with softbank and maybe google. We will see what happens. Emily what are the synergies that you see with verizon and the huffington post. Verizonynergies with have huge distribution potential. Were moving more and more into video. Have mobile video play, and have produced and paid for great content from many providers. Huffpoantastic for because it gives great distribution. Emily what do you think of the Wireless Company getting into content . It is an interesting new world. I think it is a smart move because the world is changing. It is really the animators did innovators dilemma. If you do not change fast enough, then it is too late to change. In a sense, if the New York Times had changed early enough when it came to digital technology, there would be no room for the huffington post. Emily there has been such intense scrutiny on Marissa Mayerss leadership, do you sympathize with her . Absolutely. Marissa is a working yahoo who chose rto run a certain way. At the moment, clearly shareholders are not happy with the way it has been run. Emily do you think that yahoo could be revitalized with new leadership . I think that one of the great advantages of yahoo is that it is a hybrid. It is a journalistic enterprise, and it is a platform. It owns tumblr. I think tumblr is an incredible asset. As more people want to express themselves in 140 characters, and you have an Incredible Opportunity to use tumblr to allow people to express their views and use it as a native advertising play, we see that this is, for us, one of the most important monetization channels. Our relationship with goldman a mattress company, they create intersections that are for me one of the most evolved forms of native advertising. Emily would you like to see yahoo at verizon . Absolutely. It provides us a bigger playground. Emily my interview there with every on a huffington on on Arianna Huffington on studio 1. 0. A developing investigation, seranos is under investigation by the theranos is under investigation by the fcc. Caroline, what is it that you know . It looks like we are having technical difficulties. Can you here me . I can hear you. Emily what is the latest that we know . Right now, we have just seen a document from theranos, where they told us they are informing their Business Partners of a number of investigations, some of which are new to us, including investigations by the fcc and the Attorney Generals Office in northern california. Emily how does this ramp up what we were speaking about with regard to cms . Is this a separate story . It is a separate story. They are different investigations. We did not know previously about the fcc investigation. This is more scrutiny on theranos. The company says they have been complying so far. It had just asked to see documents and the company is cooperating. Some serious allegations being leveled at theranos. I know this is something that you will continue to follow, and we will bring you new developments as we have them. Coming up, the Online Education udacityyou density launches in china. My interview with the founder later this hour. If you like bloomberg news, check us out on the radio. I am mark crumpton, you are watching bloomberg west. In japan, a series of earthquakes that struck on thursday are the nations worst in five years. More than 110,000 had to flee their homes. The uss is delivering bread, water, and readytoeat food and other supplies to those cut off by the quakes. Rescue crews are continuing their search for those reported missing. In ecuador, hundreds of aid workers are joining search and rescue efforts following the saturday earthquake. It was the heaviest earthquake in ecuador in decades. Experts say at least 350 people were killed. 110,00010th out houston area homes and businesses are without power after rain fell that flooded roads. Public transportation has been suspended, and schools and city offices are closed today. The mayor urge people to say at home and off the roads. Donald trump and Hillary Clinton are leading ahead of tomorrows new york primary. Mr. Trump has the support of 56 of likely gop voters, ted cruz 18 . Hillary clinton leads rival berniesanders 55 40 . From bloomberg world headquarters, i am mark crumpton. It is just after 6 30 p. M. Monday here in new york. I am joined by bloombergs paul allen. Good morning. Paul good morning, were expecting a very good day on asian markets today after the dow broke through 18,000 points for the first time in nine months. If we look in new zealand, currently the only market open, looking kind of flat. We are expecting gains in australia and japan in about 90 minutes time. In japan, we will be watching shares here. We are also watching the bank of korea. They will make a cash Rate Decision today, currently at a record low 1. 5 . In australia, we will be looking at shares of the mining giant rio tinto, due to announce First Quarter production numbers any minute now. It has been a bit of a rough year but recent recoveries in Commodity Prices are typically helping them higher. Were expecting to see some Strong Production numbers out of rio tinto when the report in a few minutes. I am paul allen for bloomberg tv in sydney, australia. Emily the tech world has lost a giant. Bill campbell has died at the age of 75 after a long battle with cancer. He was known as the coach in Silicon Valley. Both for his previous career as a head coach and as a mentor to some of the greatest minds in technology, from steve jobs to jeff bezos, to googles larry page. 1983, he became a close friend and confidant of jobs, later playing a role in his return to apple in the kinetic seven. In 1997. You interviewed him many times over the years, what was he like . I think he probably would as ifpent in discussed there were something profane about this discussion. He was a behindthescenes operator. He never sought the limelight. He was gregarious, delightfully profane, and insightful. He did not seem to know much about technology, the bits and insightfulbut he was about organizations and people. That is why so many executives and investors used him as a resource about how to structure their companies and deal with interpersonal issues. Emily Bill Campbell, our close friend died this morning. He helped build google and in countless ways made our success possible. Tim cook tweeting, built campbell believed Bill Campbell believed in apple when few people did. Eulogy at a a Memorial Service for steve jobs on apples campus. He talks about scott forestall an apple. Listen to what he has to say. Scott forestall was demoing the new phone. He was demonstrating siri. Scott did it a couple of times, and steve was across the room and said, let me have that phone. Scott said, be careful now, i have this premuch