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tv   Bloomberg Technology  Bloomberg  November 1, 2016 11:00pm-12:01am EDT

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mark: i am mark crumpton, you are watching bloomberg technology. joined mike pence in valley forge, pennsylvania today and took aim at president obama's signature legislative achievement, the affordable care act. congress toill ask convene a special session so we can repeal and replace. and it will be such an honor for me, for you, and for everybody in this country because obamacare has to be replaced. florida,dade city, hillary clinton was joined on the campaign trail by former miss universe, alicia machado.
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clinton reminded voters about the state critical role in presidential politics. florida can decide who our next president is, which will affect the nation and the world. -- italian prime minister matteo renzi says it will take time to rebuild following sunday's earthquake. wife toward the affected region. south african president wants the country's high court to block a state watchdog report about allegations of undue government influenced by a wealthy family. critics have accused zuma of presiding over a government tainted with corruption and political interference. from new york, i am mark crumpton. this is bloomberg. bloomberg technology is next. ♪ emily: i am emily chang, and
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this is bloomberg technology. tech earnings.of we are keeping score. electronic arts boosting its outlooks for the holiday quarter. plus, an upbeat revenue forecast. details on how jack dorsey's other company performed in q3. sinks sony.e the japanese electronic giants nosedive. shares of electronic arts are higher in after-hours trading after beating analyst' estimates. --andful of the video game to one point $1 billion. investors are closely watching the guidance for the holiday quarter. they are raising their forecasts, but still lower than some analyst had estimated. andael pastor and l.a.,
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matt kent german -- matt kente rman. eathe key points, is that continues to deliver on strong results. the core enterprise and other sports games are performing very well with engagement up significantly year on year. out,have new games coming battlefield one and titan fall two. they are all on a good start. these are in early stages. it looks like they are executing on their strategy well. emily: you mentioned the new shooter games. for its sports titles. how do you expect the categories to stack up? >> sports is pretty stable. basketball has faded into
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obscurity. they are every other year with golf. overall, you are talking about modest growth. in the shooter category, they have two big games this quarter. lester, only the star wars battlefront games. they should be up hundreds of millions of dollars, year-over-year. it is a growth vehicle for them. last year at this time, we were focused on the star wars battlefield game. what is the big focus this year? >> definitely the new shooters and expansion into new platforms. mobile game growth is a huge platform. star wars, galaxy of heroes launched almost a year ago now. that is the driver of mobile growth. they have new games coming in that area. and they have done new things with new platforms and technologies, such as virtual reality that are coming online this quarter. emily: we talk a lot about the transformation of these companies in the digital world,
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making up 53% of the quarter. managed the ea transition to a digital world? >> they are better than anybody. the only company that compares to them in the west is activision. activision purchased king, so it is about one third of the revenue. they have been doing this 15 years. they are not particularly good at it, better position to thrive. they have been pretty good in anticipating the shift and they were ahead of the curve. it hurt them five years ago, the stock could not get out of its own way. but they just started to execute in the last three years. emily: activision earnings coming up later this week. and some of the gaming conference over the weekend. how are you expecting activision to stack up to ea over the next
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few months? >> and this is probably a down quarter for activision. you have to calm the starcraft expand -- expansion pack. highest rated game in four years. activision has to compete. they will talk a lot about you sports -- e-sports. i think next year is all about being advertising. likewill run ads in games can be crushed. quarter, ea outshines them. was a hot kid on the block for a little while, then fell from grace. will we continue to see more hits from zynga over the next
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couple years? --zynga it is about stabilization and growth. they need to offset the legacy business. then we can start talking about growth. they have more good games coming out. but for them it is all about stabilizing their active user base and the business legacy decline. emily: michael, would you agree with that? their legacy business is almost an afterthought. they are on their third consecutive year at $700 million in revenue. a $740 millionn or $750 million. they are starting to grow again. it is all about the fourth quarter launch, a game called the dawn of the titans. i do not know when the launches, but i assume thanksgiving. that is the game that gets the stock moving. if it works, the stocks go up.
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if not, i'm not sure they can get up on their own. emily: thank you both. staying with a earnings, at the shares higher in after-hours after it raised its forecast, expecting product improvement and new seller services to boost sales over the holiday shopping season. the company reported slowing growth in the value of the goods that moved through the online marketplace. coming up, square third-quarter earnings just out of it -- as the company wrapped up its third year on the public markets. we will wrap up the numbers you need to know. and what is behind sony's nosedive? we check in with our tokyo team. ♪
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emily: tesla's balance sheet make it a boost from solar city. ther pending acquisition of solar panel provider could add $1 billion to its cash balance in three years. casemusk, has made the since the tie up has approved since back in august. it has been widely criticized, with some critics calling it a poor use of teslas cash, and a distraction from teslas carmaking business. square popping into extended trading, up. estimates,analyst and an increase in transactions from larger businesses. 32%.e posted revenue, up
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in that loss of $32.3 million. moreompany also reporting than 35,000 business loans from its capital division. joining me now, a former visa executive and the ceo of the start up time. and our bloomberg tech reporter who covers square. start out with the highlights and the payment volume, which is going up. >> there were very high expectations going into this quarter. in order to move the shares, they had their own guided metrics on analyst estimates and raised forecast. investors are reacting very asitively to this area it is boost of confidence for investors in this company because they are really moving toward profitability. you saw the losses narrow. i think that was the biggest highlight and the ancillary
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businesses are becoming of increasing performance. it does not look like they boarded new investors. they saw a lot of liquidity there, as well as caviar. they shared a few new data points that are positive, but still not full disclosure. emily: how would you rate of progress, especially since they are taking on larger companies? million awesome, $12 this quarter. overall, this merchant acquiring is is is a huge category. it is a large marketing companies in this market generate 40% or 50% margins. there is no reason they cannot get to that level over time. if you look at the landscape of the players that are trying to be in this category like amazon, intuit -- now it is square against a traditional, older company that in many respects,
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are more like dinosaur, feet on the streets sales. i do not want to name the specifics. but there -- the way a small margin gets a terminal if they have an independent sales guy to sell them a big block and go through an implementation buses. square is totally self surface -- service. that is why people are taking it and making huge progress, and signing on more and more merchants. emily: what is going on with square capital? are they struggling like lending club? what need to separate square is doing from lending club. square is offering loans through its payment portal to businesses that qualify. they are using algorithms. they are seeing a lot of payment and sales data. toy are only inviting people
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apply for the loans if they know they have the ability to pay it back. we saw 70% increase in loans that were given out, as well as retained their low watch rate of just 4%. this is very positive growth. skeptical of the business will feel a lot more confident. to undo million dollars of initiated merchant advances in this quarter. they really do have a unique advantage versus other companies that play in the space specifically. they continue with somebody like in on deck. lot to give spend a these loans. has almost 3 million margins and they see all their transaction data. it does give them an advantage in that category. it seems like every quarter, twitter is having it tough -- but now it is good, a 3.87 cap.
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i spoke with the former ceo of microsoft do is a very large stake in twitter. he said, i would love it if jack decided to only run twitter. i am sure square investors feel the same way about square. that what he is doing is tenable over the longer term? how big do think square will become? twitter is that bigger and where his passion lies. >> there is no question the square investors would be unhappy if the recent rumors were true about twitter. a conferenceented last week in las vegas, he was super energized about square. i think probably what is overlooked at square, the executive team is all-star. it is all the top and former google and yahoo! executives. would be better if he was there more often. merchant acquiring business
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is a great, great business with huge margins. i think they have a long way to grow. can they double it or triple it? >> yes, i think it can get much higher, just from the acquiring business. i think other things like square capital, caviar, to some extent that is just noise. that means the company could be worth even more overtime. but the core merchant business in and of itself is an attractive asset. emily: we reported that square try to sell caviar at one point. but it is very much a part of their future. what is your read? >> there has been some growth. 11 times more order volume since they acquired it in 2011. they have hired hundreds of employees, they started as a small business.
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we need to remember that they recently pulled out of three market. i have spoke to a lot of people who said there was only a small handful of order volumes. they are focusing on a few markets where they think they can gain a substantial share, pulling out of areas where their competitors are still thriving. howink it is still unclear big caviar can become. thank you, as always, for joining us. coming up, we will hear from the ceo betting that the internet of things will lead the way to an i.t. revolution. and a reminder, all episodes of bloomberg tech or streaming live on twitter. check us out weekdays. ♪
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emily: tune in to bloomberg television in prime time for the latest episode of the david rubenstein show, peer-to-peer conversations, 8:00 p.m. in new york. berkshire hathaway ceo warren buffett. >> we had roughly 2% or lower growth. do think it is possible to grow 3%, or more in the economy? 2% growth, if you have less than 1% population growth, that means in one generation, 25 $18,000 orave maybe $90,000 in gdp per capita. $19,000 in gdp per capita. catch the six part series in the full interview wednesday, 6:00 p.m. eastern. competition to reign over the internet of things. one company looking to make its
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mark, which recently closed at $70 million. their aim, to connect manufacturing equipment, medical devices, and equipment used by the world's largest companies. cluster, double what it was in 2012. but the numbers are expected to decrease to $3 billion this year, joining me now to discuss .hem -- the iot he worked at oracle a long time, tom, thank you for joining us. you have seen many technological shifts. why is the hype around iot dissipating? business been in this for four decades. i have seen the transition from mainstream commuting, internet computing, cloud computing.
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each of these was an entire replacement market. it is clear that the next generation of computing is about smart connected devices to the internet of things. this is an entire replacement market for everything that is happening, including all of the others. what are the limits of iot? we hear about chips in our clothing, bodies, food. what are the limits? >> in five years, there will be 50 billion, in 10 years, each of us will haven't in that it in our bodies or be wearing sensors. health care, financial services, telecommunications, transportation, the energy industry, you name it. emily: you are taking on companies as big as a ge, post to startups like microsoft,
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backing some of these upstarts. what do you have on them? when we started oracle, we took on the big software companies and did pretty well. we took on oracle and others and did pretty well. we maintained a leadership position globally. we have about 100 million under management today. 100 million more than anyone else in the market. emily: what about the security issues, cyber attack issues? chip,ct that for every means another potential vulnerability. >> it is a critically important issue to which we do not pay enough attention. you look at the threat of critical infrastructure, that it is under. there is a myth that somehow data is more secure behind a
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firewall than in cyberspace. i would argue that the opposite is true. the nsa or department of state for details. emily: what do you mean by that? secure andd to be our own data rooms when it took a forklift to move a storage device. in no longer takes a forklift. but it is not the only opportunity where we could secure data. using encryption and avoiding penetration in cyberspace, this is the place we can avoid it. your: i am curious about thoughts on the election, you have made a contributions in the past independents and republicans. what do you think of the current election, having seen many elections and the impact of many presidents on silicon valley? sad think this is a very state of affairs. i think that the united states is and perhaps -- it is just a
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shame. we should be ashamed of ourselves. it is very sad, very scary. and it is very concerning. emily: have you chosen a side, and if so, will you share? no comment on what is going on. but it is hard to see a good outcome. emily: what do you think a hillary clinton or donald trump presidency, how will it impact silicon valley innovation? >> i think silicon valley is unstoppable. is not the government going to get in the way of creativity or innovation. no matter what they do, it will not stop. it is accelerating at a rapid rate. it is very exciting. keep our eye on you. thank you so much for stopping by. come, there has never been a u.s. presidential
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election with as much big data analysis as we have seen this year. what kind of impact is that having a week before the election? we will discuss. and you can check us out on the ,adio, the app, and sirius xm.
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>> i am paul allen with the latest first word news. -- a new finance chief as she seeks to restore confidence in the influence scandal. prosecutors talk about the close friend at the center of the allegations. she was an advisor to the former president. the commission chief becomes finance minister. the qed jumped after australia's jobless rate fell in the third quarter. employment increased 1.4%, almost three times the gain economists expected.
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ending the easing cycle. labor markets could help the governor grandma with inflation, back to the middle of his 1% to 3% range. the group continues a search for its new chairman. brand -- sales in october more than tripled while other automakers saw declines. the addition of an suv and compact sedan has drawn new, younger customers to the brand. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. >> i am shery ahn, checking the markets. the sentiment has been, investors flocking to safe havens. the dollar-yen up. slumped in the morning session ahead of the holiday in japan tomorrow.
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take a look at this bloomberg chart. you will see the volatility in japanese markets, they have actually been decreasing. this is average volatility. it has been steadily falling. that, as the boj refrains from taking more action and maintains monetary stance unchanged. the nikkei coming back from the lunch break, down 1.7%, extending declines in the morning session. couple the most in a months right now. tomorrow, they're headed for a holiday. stock markets losing before they go on the break. that risk assessment is sending investors to whether safe havens, such as gold, which is up .2%. -- searchingching for the 10th consecutive session. jumped, wellar has
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have a jobs report at a new zealand this morning showing the job rate fell to the lowest level since 2008. dampening prospects of future rate hikes in the country. ♪ emily: this is bloomberg technology, i am emily chang, with one week to go before election day in the u.s.. we are focused on what data analysis can tell us about voter sentiment at this moment. to make itants easier for voters to learn about voting for office. you can log on, take the quiz, find out which candidates share your views. it is based on voting records and public disclosures. voting for office. we are joined now with the company's latest research coming in, days ago, before election day. number one, you have been
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looking into, where did the tea party go? where did they go? did they fold into trump supporters? >> the short answer is, yes. i'm surprised people are not sick of hearing about the election, i will try to make it interesting for our viewers. an interesting thing has happened in relation to the people who used to support him on the republican side. those really aggressive challengers to establishment, republicans like paul ryan and so on, they have locked to trump. the tea party has become the trump party. the other thing on the other side, you see a lot of consolidation behind hillary clinton. a lot of the holdouts, the bernie sanders supporters who could not bring themselves to get behind her, they finally do seem to be coming our way in terms of donations, if not necessarily all their opinions about what she might do as president. there are some interesting changes.
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but the kind of data we are our users,ow for where it will be most useful is not the presidential level, but lowered on the ballot, where people have not got any idea who the candidates are for state legislature and so on. those are really important positions that affect education and health care and transportation, really big parts of people's lives. thecandidates often get on ballot without anyone understanding where they're coming from. our data looks over who is giving money, gives our users a really good guide as to where the candidates stand and to their views. emily: you mentioned clinton is finally consolidating democrats. weeks, you have found it she vastly out rates trump in every industry except agriculture. tell us about the trends you saw. he has not put, much effort into fund-raising.
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if you like pioneering and you approach of the election campaign, you do not go out there and try to raise as much money as possible, it is interesting that the republican candidate is not getting the support of business, apart from that one sector. it is of interest to our audience, the tech sector, almost completely united behind clinton. there is one high-profile exception to that. but generally speaking, technology getting behind clinton. donorswhat about smaller in general? how have both of the candidates handled them? more recently, trump has done well with small donors. he has made more of an effort over the summer. clinton has diversified her base, somewhat. she is still very reliant on some of those big donors.
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trump seems recently to have done better at mobilizing small donors. i still think that frankly, at the presidential level, there is still far too much influence of the big check writers. a long way to go before we get the true democratization of fundraising, which is the only reason we started. emily: in the last week before an election, what benefit can fundraising have? i know there is last-minute fundraising going on, what impact does it really have? >> two important things to bear in mind. one of the most familiar things that campaigns do, which is spend money on ads people in certain parts of the country get absolutely sick of because they can barely turn on the tv without seeing a political ad, that does not deliver you much benefit at this late stage because you can barely by the inventory.
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the electoral college, the fact that the state, ifs divided you live in one of the many states in america which are solidly democratic or republican, your vote is really unlikely to shape the outcome. that is why we hear so much about all the battleground states. one thing that is interesting happened recently. someone created a crowdfunding campaign to raise money to give people rides to the polls in those battleground states. they are teaming up with lyft. if you donate money to this particular crowdfunding campaign , which is on our homepage right now, even if you live somewhere like california -- if you're watching in california or new york, a solidly democratic state, looking for something to do to support hillary clinton, this is one of the most useful practical things you can do. you give money so people who live in the battleground states
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where it will be decided, can be helped to actually get that very practical help to get to the polls and vote. emily: good to hear that you guys are doing that. exist in it did not the last election. your goal is to educate voters and make sure they have more information than ever before. do you see evidence that it is working? our voters more educated than they were four years ago? >> i do not know. that is a big part of our mission. we want people to participate in politics at every level. we build tools to help run for office, especially at the local level. we want people to be engaged in better informed to vote. we do not want the political system that is so dependent on big donors. it still is a real problem. the fact that so many people are just not interested, and really turned off, especially in this election season, where the candidates at the top of the
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ticket, both have proved to be unattractive. we still have a long way to go. for us, we think that focusing on the local aspect of politics is probably the best place to start. people can feel that if they run for office in our local community, they can make a difference. you can see the difference you make if you run for school board or local counsel. and then with less partisan bickering, local politics may be the best place to get people engaged. emily: last quick question. there are concerns the polling might not necessarily be representative of the actual result. we saw this of course with brexit, which i know you're very familiar with. what are the hillary is leading, but what is the chance that it turns out to be different than what we believe them to be? >> i think there is a high chance of that. if space to the similarities of
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this election and brexit, you have a huge group of people here in america, as you have in the u.k., who for many years have felt the nobody is really listening to them. that incomes have fallen, they have lost their jobs, they fill really let down by whoever has been in power. whether that is labor or conservative in the u.k., or republicans or democrats here. their attitude is, what difference does it make, we have not voted? that withthe people brexit, they thought, here is a one-off chance to make a statement in get a big change. we are seeing the same sort of thing with trump. i would not be surprised if a supporters,e, trump who have given up on politics, think he is the disruptive shake up the system needs. speak upare afraid to because of all the attacks on trump in the media. emily: i am expecting the next
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few days of be very eventful. something will happen. thank you, as always, for joining us. profits plunge 86%. ♪
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emily: on today's tech funding ridesharing app, to share $600 million. this is according to a person familiar with the matter. that would give the company enough capital for 18 months. they are planning to participate in the round. of asia techeditor coverage, joining us. huber said india is its priority. can ola sendoff uber?
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>> of that is the big question here. china, hasr exiting to prove it can succeed in these big international markets. india is at the top of that list. it is also expanding into latin america and southeast asia. india is very important. for a while it looked like ola would be vulnerable because it did not have the capital to fight back by subsidizing drivers and customers. if it is able to complete his fundraising for $600 million, it will give ola a lot more firepower to defend its turf against uber. let's talk about sony, their profits falling off a cliff this quarter. posting earnings that plunged 86% from a year ago. what happened? >> there were a couple special charges in there that led to the decline in the net income. they are selling their business,
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taking a battery because of that. they also went through an earthquake. concerning them a sharp decline in net income because of the special, one-time items, you are seeing a stronger yen that is putting pressure on our operations. particularly on the camera sensor business that has been very successful for them historically. also in the games and smartphone business. that will be an issue to watch over the long-term. emily: can the new products coming over the holiday quarter that push into virtual reality, you see that providing an upside to expectations? >> in terms of financial impact, it will probably limited to the next quarter or so. it is a relatively small business. but there is a land right now for virtual reality headset. it sony once be at the forefront of that. they cannot with a headset price a bit lower than the competition.
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business hastion an established base they want to be able to capitalize on. what investors will look for is the potential of the business going forward, rather than specific financial impact. emily: moving on to alibaba, which reports results before the start of u.s. trading wednesday. this is a company that is trying to bit -- bring investors more transparency. sort of rattled investors, talking about how alibaba needs to make a transition. it is competing with every e-commerce company now. can they distinguish themselves beyond that? right, alibaba for a long time has push to move beyond the traditional chinese e-commerce business they had. sometimes it makes people nervous because they're moving into territories they do not know as well. they bought a company in southeast asia that does e-commerce.
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that is one of the potential expansions for them. aggressivelyng into the cloud business, following amazon's lead and using the servers they already have to deliver cloud services. so far it has been successful with and china. they are trying to move the services outside china and customers, too. we will see whether that business is succeeding. emily: what about the house of the chinese consumer? with alibaba president, mike evans a few weeks ago. from the outside you see gdp growth slowing and greater concerns about the flatness of the chinese economy. it may never grow as fast as it once did. companies likee alibaba saying the chinese consumer is still healthy and spending money. what are we actually seeing on the ground there, and how are those two things not at all -- at odds?
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>> alibaba has been able to capitalize on that through their history. we will have more insights this quarter. the chinese economy is growing steadily, even though it has slowed. alibaba is benefiting and expanding middle class. also, the shift to online come ae will have november 11, that will give us a lot of insights into how excited consumers are about some of the things alibaba is offering. alibaba has become a proxy for the chinese consumer that would like to move beyond that and ever a more diversified business if they can. emily: single day coming up on big shoppingtheir day of the year. will it be a one off, or is it a really important boost to earnings for the quarter? >> it is one data point. alibaba has done a great job of marketing, it is a little like
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black friday in the u.s.. it will become a big media event. but we need to see whether it is sustainable over longer periods of time. and if they can capitalize on opportunities outside of the country. peter ahlstrom joining us from tokyo, thank you very much. they have joined the list of investors to get a stake in a multibillion-dollar technology fund. the abu dhabi investor holding talks at the japanese telecoms and internet giant, and plans to money and sovereign investments into the potential $100 billion fund. softbank also talking to investors. if the $100 billion funding target is met, it becomes the biggest private equity fund in tech. coming up, facebook reports earnings wednesday after the
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bell. ♪
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emily: instagram is launching new shopping tools designed not to interfere with the browsers shopping experience. it will allow 20 select brands to tack products in their photos, which navigates users to the retailer's website. this is instagram the first foray into a broader monetization strategy after several failed e-commerce attempts by facebook. speaking of a facebook, set to return earnings wednesday after the bell. zuckerberg says he wants facebook to be a video-first company, as it fuels growth in mobile advertising.
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scarlet fu has the breakdown in this edition of the numbers don't lie. it is huge. as you can see from the user breakdown, you have daily active users, the yellow bars. global monthly active users, the orange bars. total active monthly users are the blue bars. billion.s to $1.7 mobile users are critical because facebook that's 84% of its revenue from handheld devices. they have gone from the world's biggest social network to the owner of popular mobile apps ranging from facebook to whatsapp, messenger, instagram. each has one billion users, except for instagram, which has half a billion. they -- of their average revenue rose to $3.82. the metric for north america jumped almost 54%, while europe grew 83%. facebook, not immune from controversy.
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itt month, the company said overestimated the average time of user viewing ads. big brands are pouring ad dollars online, with half of all earnings going to google and facebook alone. one specific area attracting money is instagram. is photo sharing app expecting a surge revenue over the next few years. another driver is whatsapp. the number of people using them globally, in may top 2 billion in 2018. facebook monetizes different platforms. it stands to garner the largest revenue around the world. hellodistinct apps facebook to ramp up its investment in more futuristic initiatives, such as virtual reality and connecting the world to the internet. emily: that was scarlet fu. for today's edition of out of this world, and what can be
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called the ultimate absentee cast yoursa astronaut v from thecast her space station. ote astronauts are able to vote this way thanks to a 1997 bill passed in texas, which allows a space explorers to vote while in orbit. that does it for this edition of bloomberg tech. tomorrow, another big day of earnings with alibaba out before the bell. following after the close, remember, all episodes are live streaming on twitter. check us out. this is bloomberg. ♪
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♪ >> the fed wraps up its two day meeting later on when they. farmers -- on wednesday. emerging markets are ready for a rate hike this year. angie: stocks fall on u.s. election jitters. gold strengthens as investors seek haven. dhabi's mobile the law in te


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