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tv   First Up With Angie Lau  Bloomberg  July 21, 2015 7:00pm-8:01pm EDT

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angie: wrong number. iphone sales rose 35% last quarter but still missed estimates. apple shares are tumbling after hours. largest ever lost. microsoft hurt by falling sales in the right down at nokia. go pro has the wind in its sales. china is among its top 10 revenue earners. welcome to "first up."
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i am angie lau in hong kong. let's check in on markets in asia. new zealand, slight gains at the start of the session. we are seeing another day of gains after a six-year low yesterday. yesterday, we had immigration numbers more robust than expected. we are waiting for policy decisions tomorrow. that is the state of the kiwi. we are counting down to opens in australia, japan and korea. up.ei closed one percent but check out chicago futures. a slower open. apple is falling in extended trade after missing estimates in the third quarter. let's go through the numbers with sarah frier in san francisco. how do the numbers look? >> not as good as people wanted.
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iphone sales, disappointing this quarter. that is what caused the stock to dip so much. some of the other numbers, we could not get clarity. apple watch numbers were not disclosed in this particular earnings release. people were definitely asking questions about how big it was. angie: apple made a clear distinction it was not going to pull out apple watch numbers. it was going to be under the banner of "other," but this is the number everybody wanted to know. what do we know about sales of the watch? >> we know they were better in the first nine weeks than the sales of iphone or ipad in their first nine weeks. what we do not know is, when you tim cook says do not
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look at the other category as a measure for the watch. there are things that are shrinking in the category, including the ipod. you cannot use it as a backward calculation, as many analysts were tempted to do. angie: ok. he is not making it easy for us. what about china? china is not making it easy for apple, either. is apple changing plans in asia given the recent turmoil, the stock slowdown in the economy? >> they were incredibly steadfast about continuing on the current trajectory in china. they have plans for 40 more stores, they are on track to do all of that. they said nothing is changing about their excitement about the region. iphone 6 plus is selling especially well in the greater china region because of the big screen. apps created,000
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by chinese developers. angie: all right. we are seeing it here. sarah frier, thank you for that. it is an important time for earnings. a lot to talk about. su keenan joining us to run through other big names. what can you tell us? >> three big earnings to talk about in tact. tech. ibm continued to fall. we are seeing stocks rise and fall on that report in extended hours. let's start with a downer, inoo!, missing the mark terms of sales forecasts. that is pushing shares lower after hours. what we are seeing is third to 240 millionng versus 279 million.
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on the conference call, they are saying spinning off alibaba is their highest priority. one analyst says you are seeing them hit on some prices, miss on the other. ofe of a miss is the focus this report. turnarounder's remains a work in progress. >> what you are starting to see in the company is a battle they are going to have to fight to be relevant. an enormous spend amount of money to grow their revenue. as she said in the press release and on the call. they have to add new services faster than anybody else to maintain growth rates and attract new users. >> bottom line, a lot of analysts say the recovery is tentative for yahoo!. big winner inas a
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extended training. shares up from 2%. they are optimistic on the conference call, raising the projected third-quarter etf. they were looking for an estimated $.23. again, very much an optimistic forecast. they are also really pleased with china results and progress they are making there. microsoft, they posted the largest ever lost after the nokia right down. we are seeing tumbling shares in extended trading. ibm is another company struggling for relevance as the market is shifting, trying to get into cloud computing. still troubled in their fundamental business. we saw shares fall from 5% in the regular session after they reported revenue declining for the 13th quarter.
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interesting to see how it plays out. angie: thanks for that, su keenan. checking other headlines for you this morning, japan is helping e offset a sales slowdown in hong kong as more chinese tourists head to japan to shop. they have only seven stores in the city. erry may try to lower its threat in hong kong in the face of rising costs. sales of swiss watches surged 23% in the u.k. in the first half of the year. also because of chinese tourists. they are being snapped up by tourists and mainland china who theover there to buy watches cheaper than in their home country. italy also reported improved sales, offsetting a decline in hong kong over the same period.
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china construction bank has been told to beef up money laundering controls in new york. they are the second is bank by volume. they received an action for falling short in risk management compliance. the order calls for better oversight of account alders and the creation of an internal audit program. the escalation of toshiba's accounting scandal threatens international confidence in japan, inc. toshiba's president has quit over accounting irregularities worth one $2 billion. shery ahn, what did he have to say? he did not tell anyone to falsify the accounts but he would take responsibility for what went on. independent investigation of the books stretching back six years found out that toshiba inflated
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earnings by $1.2 billion. that is a minimum amount. at least $1.2 billion since the financial crisis. to knock a said this would -- tanaka so this would greatly affect toshiba. >> i believe this will be the biggest damage to the brand in the 140 year history. it is not easy to regain trust. go matter how long it will take, i trust our credibility can be recovered under new management and board members. other executives quit, the vice-chairman and an advisor. no charges have been filed against toshiba or the executives. but we know the report found vice-chairman saw to delay losses. employees could not go against management wishes. the accounting irregularities
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were skillfully hidden. angie: it is really the reputation of the company. how do you trust a company that basically defrauded investors of real information? and what about the reputation of japan, inc? is regarded as a symbol of japan's industrial prowess. it has a history of 140 years. the leader of the investigation committee was shocked by the fact that a leading company in organizational structure conducted such a thing. analysts say this leaves foreign investors with a feeling of uncertainty towards japanese corporate earnings. the stock exchange will examine toshiba's internal management and see if it needs improvement. it does, it could designate toshiba as a security on alert.
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the stock has plunged in the past few months. just over the past four months, plunging more than 20% and also this month. angie: what is toshiba doing to stay afloat? shery: it is saying it will sell some assets in order to raise money, according to a statement yesterday. toshiba selling its $1 billion stake in a finnish elevator. we expect their 2014 earnings by august 31. angie: of next, looking for clues. what the current earnings season says about the strength of u.s. markets. stay with us. ♪
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angie: checking headlines around the world, the first funerals held for victims of the suicide bombing in turkey. 31 people died in the attack
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close to the border with syria. no one has admitted to the bombing. authorities say islam escape is an obvious suspect. protesters clashed with police in istanbul over turkeys "killer government." flocked to cubans the u.s. embassy in havana, hoping warmer ties will make it easier to get visas. reply --nt system requires months of waiting. cuba and the u.s. reopened and the seas on monday. john kerry will travel to havana next month for a flag raising ceremony. alexis tsipras returned to eternalnt to defeat an -- internal revolt against the new bailout. there were cuts on aid worth
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more than $90 billion. members led8 syriza by yanis varoufakis refused to support the first forum. an measures have prompted upgrade to ccc+. the s&p 500 fell from new record levels ending the day down .4%. the dow jones fell after a commodities rout. declined, but slowed a bit. gold is little changed. that is the result of the day. let's get more with jack from chicago. was it the earnings disappointments i carried the day? >> i think that is what it was.
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there is not much other economic news. disappointment, the previous shadowthat really cast a over the market during the day. angie: do you think the consumers are coming back? what is this earnings story tell us? even though 72% of companies projectionsearnings , only something like 36% are beating on the revenue side. we are not seeing revenue. i do think we are seeing some elements of strength globally. perhaps we will see some surprises on the upside on the economic front. , looking attime
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your notes, you're looking at the s&p 500 and seeing that, in fact, there is a caution signal. it is near a 14 year high. tell me about the danger of valuations. >> forget profits for a moment and focus on price relative to revenues. the reason i like revenues as part of the equation is because they are unadjusted. revenuepanies report the way they receive them. all the companies in the s&p 500 have positive revenues. if you look at earnings per share, in my view, it is organic as a box of twinkies. revenue is where you want to go. prices are trading at a 26%
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above median levels in the last 20 years. we have been higher. we are higher than that over the 1999-2000 period. but there have not been that many periods when price to sale is higher than now. angie: what does an investor do? what is a good strategy to employ? >> the market is expensive. to does not mean it cannot get more expensive. anyone in the market should stay in. we continue to monitor momentum. we have not gotten out. as ast look at it cautionary note, a big headwind. unless we get a resurgence in s&ps that outpaces the without having prices drop. leaving continue to monitor
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momentum. as long as it moves in a positive direction, the snp moving averages rising at a rate of 8% per year. as long as it keeps at that rate or higher, it will stay above the 200. in thepricing september-december fed liftoff. >> that has certainly factored in the markets. not a lot of surprise in growth, but if we start to see a couple up, we are seeing nice elements of growth in europe and japan, notwithstanding that toshiba news. all in all, the developed market will probably outpace expectations this quarter, and that could prompt the fed to go
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through with september tightening. angie: glad you brought up toshiba. a lot of people wondering what is going on with toshiba. i want to get your personal opinion about it. for it give you pause toshiba and japan in general? >> is a foreign investor, i look ofjapan and notice about 40% nikkei companies are trading below book value. but what is book value? things look cheap. i think that is worth owning. perhaps for the next few quarters as their economy outpaces expectations. on the other hand, if the toshiba news is more widespread than the company itself, that could undermine confidence in
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that market and really set it back even further than where it is now. angie: yeah, yet another asian market. china really shaking things up for foreign investors. how are you feeling about china these days? that chineses households are saving 40% of their incomes and there are few outlets for them. it is not surprising we are seeing that investment going around. the chinese are buying watches. they are trying to buy anything with score value to save some of the income they are earning. they do not necessarily want to consume. they want to save. given the limited options, it is not a surprise we are seeing bubbles around the market. we will have to see how beijing
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manages that. i do not believe china will be the engine of growth going forward. perhaps some of the growth we see will come from the developed world, which is a switch over the last 15 or 20 years. angie: absolutely. jack ablin, thank you for joining us. chief investment officer at pmo. russia ands. to israel, a shadowy network accused of one of the biggest hacks in history. ♪
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angie: american and israeli police have arrested four people in connection with the hack at j.p. morgan that compromised the personal data of millions of customers and is said to have connections to west palm beach and moscow. how did they catch these guys? >> it was a wide-ranging investigation. the spamming campaign they cameedly used the data for from millions of customers. one of the biggest hacking attacks in history. a big concern for customers in the u.s. and around the world,
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given it was considered the fort knox of data. they were arrested tuesday in israel and the u.s. it is unclear if it is connected. of the complex web cybercrime indicates the criminals allegedly used their network to steal data. angie: the fbi says the cyber criminals stole data from other well-known companies. zeb: that is right. fidelity and e*trade. . any saying they had no indication data had been taken. e*trade has not responded immediately. if you take a look at overall privacy concerns, it is a concern to customers as well. the fbi's continuing the investigation. angie: are these individuals linked? zeb: not directly. j.p. morgan chase has not
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specifically been named in the fbi complaint unveiled tuesday in federal court. angie: zeb, thank you. coming up next, far-reaching repercussions of china's stock rout. we will look at aftershocks. shanghai composite recovering, four straight days of gains but lots of voluntary. on monday, we saw a reversals. directional changes. whenurse, that story "first up" returns. ♪ ♪ ♪ ♪
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your eyes do not deceive. it is rainy and cloudy. amber alert rainstorm level warning for locals, which means you could be deluged. bring an umbrella. we are 30 minutes from the open of trading in japan, australia, and south korea. you are watching "first up." ♪ angie: top stories this hour,
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ande's iphone shipments third quarter earnings have missed projections, raising questions over whether demand has picked. shares fell almost 9% in extended trading. apple has not released sales numbers for the watch. microsoft has posted its largest ever quarterly loss, hurt i-87 point -- $7.5 billion write-down at nokia. this overshadowed gains at its cloud operation. the ceo announced 8000 more job cuts and wants to narrow the focus of microsoft's mobile business. the president of toshiba quit after the company inflated earnings by more than $1 billion over six years. he will be followed out by two
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predecessors. murachi willhi take over as interim president with a new management team next month. no charges have been filed against the company or the executives. let's check markets in asia. new zealand right now slightly gaining. new zealand wavering a little bit, at $.66 u.s. right now. all of this ahead of the policy decisions tomorrow. there is speculation they will have to cut from 3.25% down to 3%. in japan, this was the view yesterday. very optimistic, a weaker yen. nikkei climbing .9% higher. check out the earnings weighing
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wall street and headwinds for asian markets this morning according to futures in chicago. pointing to a lower open for the nikkei. dollar yen slightly strengthening. nokiaoft's acquisition of is weighing on the company. shares are tumbling after its largest ever quarterly loss. we have marked tracking the story from san francisco. deal has lost all its value. it is just a little bit more here. that is a big ouch. >> not good. it is truly a flop. really an awful investment for microsoft, which thought it could crawl back into the smartphone business after an
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early lead eight or 10 years ago. the nokia deal is not panning out. it is not microsoft's all-time worst deal. they did some investments in the dotcom bubble that they wrote down for $9 billion many years ago. they bought this company they had to write down 98% of its value in 2012. but this is one for the history books. angie: that was under the area of -- era of steve ballmer. but microsoft is set to release windows 10 on july 29. how have windows sales been doing in the run-up to the new version? >> also not great. windows is dominant on computers, pc, that industry has been in decline.
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by the end of this year, we will have been dropping for four straight years. windows sales have been flat for dropping since 2010. the windows 10 release is a crucial one. maybe they will be able to make up for some of the decline in that business. the timing is about right. i think they are really hoping that this works after a bumpy ride with some of the more recent releases like windows seven and windows 8. 10,they are jumping up to hoping it will give them more luck. angie: not good seems to be the refrain of the day. were there at least any bright spot in the earnings for microsoft? ofthey showed some signs life in the cloud. azure, which is their hosting to compete with amazon
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,nd google was up significantly as was the cloud group that offers 365. but that was far overshadowed by debacle and other declines in the business. milian, thank you so much. microsoft not the only one reporting. let's head to david with a look at other earnings headlines. david: let's talk about yahoo!. efforts to revive its fortunes are not paying off. shares fell in extended trading after the sales forecast came in below estimates. they missed by as much as 7%. marissa mayer has been hoping to boost sales by investing in mobile. we expect revenue to remain largely flat at $1 billion. most inres plunging the
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nine months after sales fell for a 13th straight quarter. beatinguarter profits estimates on floor costs. sales were down 40% in china. ibm has been divesting and refocusing on data analytics and the cloud. but investors are not sure of the plan will pay off. climbing in after-hours trade after second quarter estimates beat expectations. their rising third-quarter profits also topped estimates. the company will be speeding up innovation and china is one of its top 10 markets. those are the top corporate headlines this hour. angie: bhp billiton announcing a 9% rise in production for the
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third quarter and a potential hit tanda line profits ahead of earnings season. let's get to paul allen in sydney. how are the numbers stacking up? >> pretty good. we will talk about the good news. iron ore production up 14% on year to 60 million tons, narrowly beating expectations. we had the iron ore price around 52. costss been stripping out all day long. also good was petroleum, up 4% on year. third quarter, 63 million barrels. call was down slightly. was down slightly. now the bad news.
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bhp taking a hit to profit. $650 million. he got a preview of this last week. they had some impairment on ofle assets at a net loss $1.2 billion. numbers,he production we could give bhp -- see the market give bhp a bit of a whack. how did south 30 to do? pretty good. record aluminum production. 1.2 million tons for the quarter., 242,000 coal rose substantially, 8.9 million tons.
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million.ical, 1.9 they are the largest manganese producer. they have taken some loan cash impairments of $1.3 million. 32 also be closely watched. angie: paul allen, thanks for that. the recent earthquake in the markets in china has sent tremors through corporate earnings around the world. companies selling things like fried chicken, trenchcoats, iron ore, and cognac have taken a hit. is here with details and the aftershocks of china's meltdown. yvonne: looks like it could be felt for a couple weeks as we see the biggest brands report earnings for the second order. for the past decade, china has been one of the biggest markets
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for these products, including cars, luxury goods, and raw materials. this could be a welcome sign for many of these companies when we see markets like brazil and russia not picking up the slack. talking about some of these conference calls and ceo's tired of being blamed for the slump in profits. y, sharesc maker rem dropping the most in and let them months -- 11 months. china wholesalers are holding back on car net orders, so they saw a slump. you can see the demand for drinks, wallets, down after this anti-corruption campaign. let's talk about how they exposure to china is -- big exposure to china is. slumping 10% in china.
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the pizza hut taco bell owner. 62% of the revenue comes from china. ore, first-half profits bumping 61%. they take more than half of their sales from china. a french supermarket mayor as well. retail consumer goods feeling a lot of pain right now. andalked about hermes burberry. they are seeing a big slump in sales. audi talking about financial aid to some dealerships in china as well. angie: things are looking dim. multinationals have basically said, if you are not in china, you are not make money. but they are seeing a pullback.
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any chance of a rebound? yvonne: many companies remain optimistic. you have consumers willing to spend. the long term, people are seeing a bit of upside. netflix is still trying to introduce a service to china next year. unilever talking about partnership with alibaba. kohn, the elevator maker, talking about one third of sales coming from china. they will highlight the business in a briefing. for many companies, things are looking good long-term. but it could get worse before getting better. angie: thank you so much. iphone sales jumped 35% but missed analyst estimates. we will dissect earnings when we return. ♪
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angie: checking headlines around the world, iran's foreign minister has defended the nuclear accord, which has been criticized by some politicians entries. sayingd sharif quoted as iran had not caved in on the deal, which lifted sanctions in return for curbs on the nuclear program. the parliamentary committee has 60 days to examine the deal, the same amount of time as congress. china's state media has criticized mitsubishi's apology u.s. prisoners as slave labor during world war ii, saying it should be extended to chinese p.o.w.'s as well. shinzo abe will make a statement in august marking 70 years since japan's surrender. these said he must face up to the countries dark past and offer up apologies to china and
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korea. one said of formula goodbye to bianci. his funeral was held in nice in the presence of emily and friends and other drivers, including lewis hamilton. he never recovered consciousness after the crash. is number 17 is being retired as a mark of respect. let's return to our top stories this morning. disappointing results from apple and microsoft. revenue missed estimates. microsoft saw its largest ever met lost because of the nokia write-down. joining us is the chief analyst at technalisis. let's talk about the watch.
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tim cook was very clear -- it is under the "other" banner. but what are analysts saying? >> what people are saying is million-two the $2 $.5 million range. that is the general ballpark. what they are doing is looking at the "other" number. looking at the growth and adding more. making assumptions about selling price and watch sales. of the gold ones and lower and ones. it is somewhere in that range. from a financial perspective, the watch at this point is kind of meaningless. is focused on it because, psychologically, it is a big deal. it is the first apple product post-jobs. there is a lot of back and forth
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defensiveness on the pro-apple side and a lot of apple bashing on the anti-apple side. it is a real lightning rod for people to look at. angie: his $2.5 million a good number? >> it is a good number for a brand-new category. it is a not so good number for an apple product at this stage in the company history. angie: jim cook it was better in cook saidweek -- tim it was better in the first week. saying it didally better than iphone and ipad ofes in their first weeks being introduced to the world. is that a consolation prize? >> that is true. but you have to remember a couple things. those products were introduced years ago when apple was a
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smaller company and did not get as much attention. to those products were introduced to the u.s. only, where the watch was not released completely worldwide, it was released in several countries. damn lies,bout lies, and statistics. angie: what should we be looking at specifically when it comes to apple? why are you concerns -- concerned? >> the biggest concern is iphone sales. clear it is, it is doing very well, as it always has in asia. the question mark you have heard is, luxury goods in china. apple has been counting on china for growth. year-over-year numbers were great. quarter over quarter, not so great. part of that is chinese new year.
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but you still need to look at that as a percentage of revenue. china actually went down two points. that is the big question mark. and is apple's biggest concern for smartphones overall? i think it is. we will see the worldwide smartphone market start to slow. everyone will take a hit. samsung, lg. apple does as well. that is a bigger concern. iphone is 60 plus percent of company revenue. angie: that is a number microsoft would have loved to have had with its nokia acquisition. but it is pretty much down to zero. that was a huge write-down. it overshadowed a lot of positive numbers. >> it did. that is the thing. short-term, it is a huge hit to microsoft.
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but they are taking their medicine now and will get past it. the next quarter, they do not have to worry about that. shipments are not zero. in europe, windows phone has a low teens percentage of the market. in the u.s. and asia, it is significantly lower. i have done research with commercial buyers. microsoft's strength is in business and commercial. there is some level of interest in a windows phone for a corporate purchase device. everyone assumes it is byob these days, but that is not really the case, even in the u.s. they have a long, hard road. i will not kid you. but the good thing about microsoft it was -- is we saw ure, 365. az
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bob o'donnell, thanks talking -- for talking to us. up, find out how a rise a soy sauce prices could mean rise in shares for a japanese company. we look at market movers. ♪
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angie: welcome to the stock exchange. there looking ahead to opens in australia, japan, and south korea. we have asahi glass. angie: i thought you are going to say beer glasses. yvonne: earnings yesterday looking good. operating profits up 30%.
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sales down 6%. but they did raise their profit forecast for the year. stock has taken a plummet in three months, but they are still up 20%. they did talk about the performance in america is doing better. overall, pretty split. but we will see how things go. angie: david? kikkoman.-- doing their part to help the boj meat inflation by raising production of sauces. i am looking at kobe pusan. and buying back
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6% of shares. angie: that is the verdict from the stock exchange. we will come back in an hour to see how they have done. a lot more in the next hour. ♪ mom has always been one of those people who needs to keep busy. if she's not working in her garden, she's probably on one of her long walks with bailey. she was recently diagnosed with a heart condition. i know she's okay, but it concerned me she's alone so often. so i encouraged her to get a medical alert button. philips lifeline offers the best options to keep her doing the things she loves in the home she loves. if she ever falls, or needs help, i know we can get to her quickly, and with her condition that can be critical. and even though she doesn't typically go far from home, the button always goes with her. these days, she's still as busy as ever. just the way she likes it. innovation and you. philips lifeline.
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>> tonight an exclusive behind the scenes on a candidate. find out why some are outraged. mark: on tonight's show, trumps a dream, a senate team, and we are here from columbus, ohio where junkies it became the 16th republican for the presidency. here's what it sounded like on the are. >> i have the experience and the


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