tv On the Move Bloomberg December 23, 2013 4:00am-5:01am EST
>> apple connects with china mobile. they finally strike a deal to get 1.2 billion subscribers access to the iphone. >> the amnesty continues as putin releases one of pussy ri ot's members. mikhail khodorkovsky says he will work to get other risen out of jail. >> and an exclusive interview with the las vegas sands billionaire. he talks about the future and why he is not lacing his bets online. online.ng his bets
good morning. welcome to "the pulse." we are live from bloomberg's european headquarters in london. >> we begin with a deal between apple and china mobile. after six years of negotiations, the two companies have struck a negotiation -- struck an agreement. us withine high joins the details. it has been a while coming. >> six years of haggling and finally, apple is able to access a customer base that is more than double the population of the united states. 1.2 billion. this is a big gap in the distribution of the apple iphone. they have already been in china since 2009. but via the second-largest carrier, china unicom. finally, the deal is sealed with china mobile. just below two thirds of the market they currently control. the customers7,
can lay claim to an iphone 5c or 5s. >> what sort of sales growth are we likely to see? >> morgan stanley says this could add 12 million iphone sales for apple in 2014. that is about an eight percent increase on the amount of iphones they sold in 2012. they sold 150 million. the entire amount that china mobile has as its customer base? the cousin it is so expensive. generally, anch, iphone will cost you in china. there are less subsidies in china and far less discounts. generally, only a smaller portion of the chinese population will be able to put up that kind of cash. still, more units being sold. >> they have got to make this work, apple and china mobile
seeing growth slowing. this could be just the pick me up they need. >> in china, apple is the fifth biggest handset provider in the country. well behind the likes of samsung, lenovo. they see their market share being eaten into across the globe. saturation when it comes to the higher-priced smartphones. in the fourth quarter of 2013, apple is expecting single-digit growth in sales. the first time we have seen such slow growth since 2008. we know that iphones are particularly profitable for apple. they are desperate to start boosting sales again. china mobile also feeling the strain in terms of a growth slowdown. first year we are expecting for profit to decline in more than a decade. they have been investing in the likes of 4g. interestingly, it is their own 3g and 4g homegrown networks that put off apple.
now it is all about growth. hsbc says one of the main reasons china mobile is seeing a slowdown is a slowing revenue because of the iphone deal. finally, they clinched it. >> thank you very much indeed. >> the amnesty continues in russia. putin has released one of pussy riot's members after mikhail khodorkovsky says he will work to get other political prisoners out of jail. >> german chancellor angela merkel helped broker the deal for his freedom. ryan chilcote joins us from berlin with the details. please be advised, some of our pictures do contain flash photography. weekend was the first time that mikhail khodorkovsky has announced -- has addressed the press as a freeman in more than a decade. he walked into that rest conference, that is where you got flash photography.
he was greeted like a rockstar. i have not seen a kind of pandemonium in more than 20 years as a reporter. room was absolutely packed. the cameraman and i were not even -- were not even able to get a camera position as we were stuck behind hundreds of people. they were just trying to get a photo of the man as they applauded him and he came into the room. when you take that kind of reception coupled with where this was happening, a museum at checkpoint charlie, all of the cold war symbolism was there. perfect situation to be the freedom fighter and lash out at president putin, who he says kept him behind bars as a result of a political vendetta for more than a decade. what did he do? he says he has no issue with resident boudin and does not intend to try to overthrow the russian president or enter politics or fund the opposition or even reenter business. he was asked if people should boycott the winter games. he said no, it is a celebration of sport.
that is no reason why people should not go there. when he was arrested, he was russia's richest man with a $13 billion fortune at the helm of a $36 billion company. him what investors should do today with russia. i thought it was a softball where he should say people would not in -- invest in russia. he said, god forbid i should answer that question. pardoninges putin's say about boudin -- putin right now? >> on the one hand, it is clearly a concession to the west. germany, other countries have been working for the freedom of mikhail khodorkovsky and the activists from pussy riot for some time. mikhail khodorkovsky talked
about this yesterday. it is a bit of the symbol of the strength that president boudin believes he has, that he can let these dissidents, if you will, go. and not worry about any threat to his rule. -- if mikhail khodorkovsky had said that he thought any of them could mount some serious opposition to his leadership, then he probably would not have let them go. so yes, concession. sign of weakness, i do not think so. >> certainly a great political exercise ahead of the sochi games. ryan chilcote with the latest on the release of mikhail khodorkovsky. >> it is time for a bloomberg exclusive. says he mayson build individual casino resorts in major european cities after aborting plans or a $35 billion mega-resort in spain.
he was speaking to our middle east editor, elliott gotkine. elliott joins us now. ,espite the downturn in europe he does not seem to be that put off. >> he is not. in fact, he seems to be eyeing major european cities. barcelona, paris, even athens as locations for such an individual integrated resort. his expectations for europe are more modest than what they were when compared to the metro -- the megaproject in spain. largestwould be the resort development under taken on a commercial basis. i cannot, neither can any other company, afford to bet that kind of money. u.s. dollars or even euros. a new government could come into power and change everything that is part of the agreement. i needed some sort of indemnification.
that hes also concerned would not get guarantees from theeuropean commission, european union itself, as well as spain on an individual basis. with that in mind, he ditched the whole project. he sold it, if you would like. >> in addition, he has been lobbying against online gambling in the u.s. >> he is a serious opponent to online gambling. he is lobbying furiously against it. i tried to get him to put a number on that. he would not be drawn on exactly how much he would spend. certainly, he was adamant that this is not something that is good for america. takes to spend what it get the point across. it is not going to take a significant amount of money. in my position, whatever it takes is ok. i am just very much against it. i am morally against it and i
think it is going to kill the entire industry. it has the potential to kill the entire industry. they just willy-nilly allow internet gaming in europe without any consideration for the land-based casinos. >> it is also self-preservation. >> it has nothing to do with my business. i am not in the category where my customers would play on the internet. we take bets that are quite significant. we take bets up to $1 million per hand. in singapore. taking thereisk- with anyone who has that kind of cash to throw around. , land- is saying is look that hesinos, the sort is involved with, you can see who is coming in and you know who you are dealing with. it is easier to get a handle on things like money laundering and
underage gambling. he says he is against it from a moral perspective because online gambling allows anybody with an aectronic device to turn into casino. you do not know who you are dealing with. it could be used by criminals and underage people. certainly, you cannot imagine many people gambling $1 million on a hand of poker. >> thank you so much. what a character. the 12 richest man in the world. elliott gotkine with that exclusive interview. >> what else is on our radar this monday morning? a british airways plane has collided with a building. four employees were slightly injured. the plane took the wrong taxiway as -- as it prepared to take off. it hit an office building adjacent to the runway. 182plane carried passengers, none of whom were hurt read >> -- none of whom were hurt. 2400 canada, more than
people without power. trees came crashing down on cars, homes, and power lines. the electricity provider has called it one of the worst ice storms the province of ontario has ever seen. >> tiffany has been ordered to pay $450 million to swatch after a joint venture between the companies failed. a dutch panel ruled tiffany was in breach of contract. swatch lamed tiffany blocked -- claimed tiffany blocked development to create swatch watches with tiffany branding. >> he once called himself the louis vuitton don. these days, kanye west is boycotting the brand. we will tell you what turned them off to the label. ♪
>> welcome back to "the pulse." tv,re live on bloomberg streaming on bloomberg.com, your tablet, your phone, and any windows phone as well. >> let's talk about phones and little bit more, continue our conversation on the long-awaited deal between apple and china mobile. the two companies have struck an agreement to give china's 1.2 billion wireless subscribers access to the iphone. >> joining us for more on the impact of this agreement is the founder of china market research group he he joins us on the phone from indonesia. give us a sense of how significant this is. i was speaking to an analyst
before and he was saying, beef -- because the price point is so high, it is great that they secured the deal, but we look not see margins are sailed anything like in the u.s. >> it is great to be here. it is actually not about price. if you take a look at it, the inone 5s has outsold the 5c china because the apple products have always been the aspiration, must have project -- products for the chinese. it gives them access to 759 million mobile subscribers. china mobile controls about 62% of the market. this is key for apple. the real challenge is that only 20% of china mobile users actually use 3g. most of them are still using the 2g network. it will be critical for apple and china mobile to convince most of the user base to 4g,pfrog over 3g and go to which will be released in
january 2014. this is going to be very difficult because most chinese subscribers do not like to sign multiyear deals with carriers. , whereefer to buy cards they buy seven dollars or a dollars worth of phone cards and when they are done using it, it will buy another. it is not as great a game changer as a lot of people think , but it is a good step for apple. >> how good a step? it took a long time to get this deal to bed. you kind of wonder who has come out on top. give us your assessment. >> that is a great question. i think apple is five years too late to doing this. china mobile was the dominant player five years ago, but their market share has gone from 70% to about 62% over the last three years. apple itself saw $23 billion of u.s. sales in last year. in china, that was double from the year before. this year, they flatlined.
they have been losing to samsung at the high-end, and they have been losing at the mid and low end. it will not be a game changer for apple. we expect that they will sell 8,000,000-10,000,000 more handsets in 2013. the adoption will be very slow. it will be a lot slower than many of the analysts were estimated -- were estimating. ofs deal was more of a deal -- you are not going to see many more new subscribers signing up for this. >> your company has worked with apple on their strategy in china in the past. how exactly do the chinese use their phones? a lot of chinese consumers like having to phones. apple is not the cool new thing. it is not -- it is now samsung. what is the positioning of apple in china? >> that is a great point.
a year ago, apple was the must- have product. rich people wanted it. middle-class chinese who were aspiring wanted it. i interviewed a girl making 250 u.s. dollars per month who had a $1000 ipad. i asked her how she was able to afford it and she told me that she saved up for six months so that she could have it. apple products were the must- have product. this year, people have been switching to the samsung galaxy at the high-end. that is why i think you will see a lot of the early adopters are actually signed up for contracts on their 3g system. the early adopters will not be able to switch to the iphone and this new system. >> nevertheless, there will be a lot more phones coming out of the supply chain. is the supply chain capable of renting this one up? are there going to be issues? >> apple has always had supply-
chain problems in china because their products have been so popular in the west. year,lly, until this apple released new products in china six months after the united states. what is key is that they will be launching this new iphone in january. that will give them enough time to be able to manage the supply chain for the christmas season in europe and the united states and be ready, hopefully, for the chinese new year on january 17. chinese new year starts january 2014 and it is a time when the chinese do their biggest spending. the supply chain will definitely be an issue, but they will hopefully be able to work to get it out. it will also continue to face increased margin pressure. placeis no longer a key to do business. the salaries of the factory workers for apple suppliers in china continue to go up. that is also negative for them on the supply-chain side.
>> thank you so much. now let's get some company news. >> bloomberg news. the first detailed glimpse into fraud allegations. fraud at massive agfeed chinese operations. one e-mail translated by bloomberg shows a frustrated finance -- manager. he says he wants to work on the real stuff, but they need to falsify data takes up too much of his time. >> ford is said to debut and aluminum s series at next month's auto show. they have asked alcoa to lend a military grade metal for the display. alcoa makes aluminum glass shields for battle bound cars. it" sequel ranks
number one again in the u.s. and canada. it raked in $31 million. 2" opened a second. >> and we have not seen it yet. as we had to break, it is time for today's pulse number. that is how much the world's richest lottery has paid out in spain. gave 400,000ize euros per ticket. it is a welcome reprieve for spaniards from brutal economic problems. ♪
>> welcome back to "the pulse," live on bloomberg television and radio. >> to the markets. a little lighter on volumes, but let's see what is going on. caroline hyde is going to tell us. >> we are still holding onto our gains at the moment. spain just heading into the read. overall, we are still higher. the dax up by almost 14%. the ftse 100 also trading up. a bullish sentiment. the imf optimistic on the united states in terms of growth. they say the budget deal in washington, the federal reserve starting to taper, that removes an awful lot of uncertainty. of course, the data backs it up. third-quarter gdp of more than
four percent on an annualized basis. that is what we got on friday. consumer spending and business investment driving at higher. credit agricole says look for the rest of the year to close on a more positive sentiment. end to have a positive trading. the stoxx 600 up .2% overall. on the year, only one industry group is lower and that is mining. everything else traded higher. today, it is all about the financials. that's begin with tech. apple suppliers here in europe and arm holdings is the key one amongst them. technology all driving higher this morning. finally, we see apple sign a deal with china mobile. swatch up .3%. 400 million swiss francs coming its way from tiffany after it won some legal the negation. they could be selling -- premier foods could be selling shares next year.
>> will come back to "the pulse" live from bloomberg's european headquarters in london. here are bloomberg's top headlines. the amnesty continues in russia. vladimir putin has freed up -- ryan's members with another band member expected today. this is after former oil tycoon mikael khodorkovsky says he will work to get other prisoners out of jail. the imf is raising its outlook for the u.s. economy. managing director christine lagarde said there is more turnkey there in 2014. she credits the budget deal in washington and the feds plan to
taper its bond purchases for improving conditions. tiffany has been ordered to pay $450 million to swatch after a joint venture between the companies failed. a dutch panel ruled tiffany was in breach of contract. swatch claims tiffany blocked the development of the venture to create watches with tiffany branding. you have more on this now. >> certainly do. let's bring in david tweed from berlin. tiffany will take a $300 million charge in the fourth quarter. run us through what we are talking about here. of all, this relates to a joint venture that was set up is2007 between swatch which switzerland's biggest maker of watches, not watch it -- plastic watches they make but they make rent including amiga. their plan was to make a brand called tiffany and it would be sold by the joint venture. alleged thatch
tiffany was actually blocking the development of this joint venture. that is why they brought this case. ,hat we see here is this award $499 million against tiffany. as you say, quite a charge. >> put that in context. talk to me about how big that is to the company's bottom line. >> let's look at the earnings. the diluted earnings for the year which ended in january, tiffany has already said that it is going to dilute those $2.35 a by as much as share. they're in mind, in november their forecast was that they were going to own about three dollars 75. it is a big chunk. it is bigger than their entire earnings last year which is probably why you see tiffany shares trading down around numeral rate percent. -- 3% in germany. you are not seeing a big move upwards in swatch shares but that could be the tiffany ceo saying as well as they are being
shocked and disappointed, they are going to continue with legal counsel. maybe people just aren't banking on this being the last sound in this particular fight between these two companies. that said, it looks as though it is good christmas for swatch sales. >> sales are up a little bit this morning. david, thank you very much indeed. francine, let's intend you to talk about luxury. >> designer companies have been hiking up their prices prompting the likes of rapper kanye west to claim the price increases are too extreme. now toe hyde joins us gauge the luxury market. designers and accessory designers are getting too expensive. i am a little bit be mused by y kanye west inc. they are too expensive. he is not exactly locate. >> he used to wrap about louis vuitton.
his bottom row with his teeth are diamond and gold. a real diamond and -- a real diamond of course. he thought they were cooler. he proposed to kim kardashian recently with a 15 carat diamond ring. it was all over. this guy doesn't do things by half but he does claim that the vuitton bags are too expensive, too extreme he said. i might add, he has issues with louis vuitton. he felt -- he felt a bit rebuked. louis vuitton refused to meet him in paris and he has been annoyed and said to all his fans to boycott the brand. it is kind of highlighting that louis vuitton is desperately trying to get that aura of exclusivity. he is trying to get more exclusive, trying to get more upmarket. they are doing that by hiking up their prices. thinking, how much does
a louis vuitton bag cost nowadays? as soon as i heard this i was like, how much have they gone up by? fax they're pretty phenomenally expensive. , 500 -- $5,350. average, the more exclusive bags you are seeing on your screen have been hiked up by some 13% in the first nine months of this year. that is double the rate of pricing increases versus the more obvious logo canvas bags. they are trying to up them. these are far more exclusive in the minds of the chinese and the minds of the buyer. chanel's jumbo flat back raised 84% in price over the last three years. you can blame currency swings. you can blame the rising cost of raw materials. makeverall, it is a tri-to
-- it is trying to make them go the extra mile. in the age of austerity, we don't want brands that shout quite so much. you want to kashmir, understated luxury. >> low-key, the ultimate luxury. thank you. guy come over to you. >> not quite sure how to follow that. 2014 was a year for airlines. they anticipate a record income of $19.7 billion. about what 2013 has looked like in relation to what 2014 is going to look like. what carries on and what stops? fax one of the biggest things we saw in 2013 was the rise of the middle eastern carriers. you saw qatar join oneworld. you saw emirates pick a huge order in dubai. had which is etia
going to be in the running to buy a chunk of alitalia. that is a big theme of last year. it is likely to continue into next year. consolidation in the u.s., you have seen that happen. the benefits of that are something that they are flagging as being positive through 2014. the continued restructuring in europe and what that means for low-cost carriers. >> is that going to continue? it looks like there are a whole series of airlines that nobody is that interested in. etihad is looking at alitalia but there is another down in portugal. there are lots of small regional airlines that are really struggling. you wonder what is going to happen to them. >> you do. kepthrough this year, i hearing executives say consolidation is going to happen in europe. you have seen it happen in the u.s. and that has been very positive. 3 billion passengers they are predicting for next year. interesting tobe see how 2014 plays out.
what some of these carriers are going to do -- you have seen tens companies and even in europe in the low-cost carriers. every and talks about easyjet and ryanair. , you see german wings. these are big plans that these airlines have. >> what is the story with the local capacity? you have easyjet buying a whole load of planes. they are making an aggressive run but what is the capacity story versus the yield story? >> it is going to be interesting. next year to some extent is not too bad because a lot of the capacity is coming in in 2015. a lot of it is going to be important for both easyjet and ryanair. they are positioning themselves to really solidify their positions. they started flying to moscow this year. they did the link between milan
and rome. that was a big business win. customers love this. you also see ryanair. they have had a rough time. they had this profit warning. they were talking about flagging this up. they are now doing a bit of a rebranding, edit of a shift. while you may laugh at that, that is also part of their strategy. they want people to be excited about ryanair so that when they get these new planes they can fill them up. we will have to see. very nice, thank you very much indeed. from planes to cars, 2013 served up its usual array of weird concept cars and attempted to push luxury to new heights. paul allen takes a look back at some of the creations. ♪ >> is it a car or is it a tv?
car surelyturistic takes the prize for 2013 in the odd concept car cattery. honorable mention goes to the car owners who only ever wanted a tiny bus. you will almost certainly never be able to buy -- the latest automaker to unload a hydrogen car. >> hydrogen fuel-cell vehicles generate their own electricity onboard. >> a great idea. 13 years and of the 21st century, an idea still absent from the roads. here is something you can actually buy. only three are available for sale at $2.28 million each. >> it is always a pleasure to be here in dubai. >> rolls-royce also chose dubai to show off its phantom encrusted with 400 diamonds.
the emerging markets weren't left out of the action. vietnam, and increasingly upward population is trading from motorbikes to cars and picking up some inadvisable parking techniques along the way. while manufacturers of bulletproof cars are finding a market in pakistan's notoriously exciting southern city. >> i am feeling very safe. >> on the subject of safety, ford showcased its collision avoidance technology in belgium in october. the car will take over steering and braking if it doesn't attacked the driver doing the job -- doesn't attacked -- detect the driver doing the job. paul allen, bloomberg. color,n't get over the that blue car just looks like a blue smarty. >> it was the cow at the con yes -- end.
us now to talk london's top gastronomic trends of 2013. what we can expect for 2014. goodyear, bad year? the british economy is coming back. has it been a good year for london's restaurants? >> very good year. they keep going in the right direction. it has been a fantastic year, lots of new openings. >> is it stuff coming over from the states? is it the revival of british? >> it is mainly still casual dining. everybody is opening brasseries. i think the trend will the american restaurants in the coming year. we have balthazar that came out a year ago. before that, wolfgang puck. i think there will be more. fatty crab. >> what is it called? fatty crab.
>> where is guy taking me? fatty crab sounds amazing. what is the hot new thing for 2014? first quarter? >> where should i be making my first reservation? a very successful british chef in london is making the rounds. april 2 it is scheduled to open. it might be the biggest opening of the first few months of the year. >> amazing. not cheap. i will give you a break. >> thanks, fran. [laughter] >> it is more top us, right? >> more top of style. -- tapas style. pulpetto.ening
it is reasonably priced italian food which i think you should like. >> ok, book. thank you. to go to one of chicago's newest restaurant, you are out of luck. they don't take reservations and there is no waiting list. we visit this top secret restaurant. been in ahave ever restaurant on the afternoon rush, this will be a familiar scene. one thing here is different. unusedants set up in an conference room. everyone working here as an employee of grub hub. so are the customers. want the cinnamon cream coffee cake. >> what are the opportunities? we want to get in the mind of a restaurant. >> for grub hub, this is a big year. they will do $1 billion in
orders this year. the restaurant is part of a self-imposed crash course in the food service industry. the goal is to learn more about restaurants so that grub hub can build technology to process more orders than they do today. >> you can process the orders perfectly. you can prepare her for food. if the order doesn't get to your house in the right amount of time, you are pissed off. >> some of the revelations seem pretty obvious. the tablet has to be really glad to be heard in a commercial kitchen. they are allowing restaurants to change their menus on-the-fly. thousands of restaurants are now using the tablet. making smart phone apps for drivers is more difficult. the company had one for about a year but it it is in the testing phase. to jumpstart things, grub hub's director of product has been driving deliveries herself. >> trying to navigate the landmines of getting into these apartments that don't have buzzers working. >> calling people when they are not answering their phone.
it is a lot more challenging than i was expecting. the only way that restaurants take orders online. it is the most popular. the company can offer its clients more diners and more data. >> we saw a big interest in indian food. it has been trending up dramatically. restaurants should be able to know that earlier rather than later. >> is not clear if that is what restaurants one. for many of them, the biggest concerns is the commissions. they start at 10%. this has led to grumbling from restauranteurs. the ceo says that its goal and its clients goals are the same. >> i don't make a dime unless you make a dollar. it is success based. it is very low risk. >> everyone seems here pretty happy. gives grub hub employees a way to get away from their desk and hang out. everyone is appreciative when you show up at at their desk with a cake. >> josh taking us through grub
hub. >> that is a great name. coming up, illuminating london since the reign of king george the third. more than 200 years later, the company is still on top with gorgeous displays on oxford and regent street. >> we're going to be live with its director of sales next. also coming up, he says online gambling is a disease. we bring you more of our exclusive interview with the world's 12th richest man, sheldon adelson. that is right here in the second hour of "the pulse." ♪
>> welcome back. you are watching "the pulse." in today's new energy, we are looking at impressive christmas lights. also, energy conscious. piggotts has provided ornate displays to london's west end for more than 50 years. overyear's display uses 600,000 led lights. each bulb uses 75% less energy. it is actually quite green. for now, i am joined by piggotts 's director of sales. good morning. merry christmas. when does christmas start for you guys? and how big a job are we talking about? you have regent street, oxford three, amazing displays. first of all, give us a sense of
the process you go through. >> christmas starts for next year in january. what goes up has to come down. we start on that process. obviously, talking to our clients and customers, we start looking at what they want to achieve for next year. that could be a redesign of the current installation or it could be they want something totally new. february,ss starts march, april as we start to create next year. >> so it is a long-term process. how big a shift is it to go from traditional light bulbs into led? >> we have been using led for the last 10 years. most schemes that you will see our led-driven. everyone is more green aware. cost-conscious, all of those things. can do more, presumably. >> they can do more. with incandescent, the light is dispersed. centralized.uch
it is a point in time. what you see in regent street this year is because of what we created the led into. it is like an inverted diamond. they seem brighter this year than they were last year because we are refracting that like better. as technology comes about, -- >> so you are still learning how to use that. all customers want better efficiency and better lights. what led gives us is a different thing. some customers want traditional. some customers want something that perhaps is more funky, more in keeping with the scenario. and oxford street set of lights, how much power doesn't oxford street set of lights used before and after? >> if we could talk about regent street, that is the kind of a ggest.-- bi there are 30 crossings on regent
street. each of those crossings takes about 38,000 led's. incandescent would have been 14. >> massive difference. is the power consumption holding you back? was there an issue with that or was it simply just, we can now do this? >> we could just know do this. it became commercially viable in 1998. we are really only 15 years into the technology and what the technology is going to be able to do for us. it is now much of the led. it is what the case is. it is how we can play around with the light for our customers. >> david, have a great christmas. thanks for stopping by. david like joining us from piggotts. onfor those joining us radio, the first word is up next. for our pure is a second hour of "the pulse" is up next. the german chief economist will
>> apple connects with china mobile. they finally strike a deal to give wireless consumers in china access to the iphone. >> amnesty continues. putin releases one of pussy rio t's members after khodorkovsky says he will work to get other prisoners out of jail. >> our exclusive interview with sheldon adelson. whyalks about the future of he is not placing bets online.